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<SEC-DOCUMENT>0001104659-04-022690.txt : 20040805
<SEC-HEADER>0001104659-04-022690.hdr.sgml : 20040805
<ACCEPTANCE-DATETIME>20040805162323
ACCESSION NUMBER:		0001104659-04-022690
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20040630
FILED AS OF DATE:		20040805

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AXT INC
		CENTRAL INDEX KEY:			0001051627
		STANDARD INDUSTRIAL CLASSIFICATION:	SEMICONDUCTORS & RELATED DEVICES [3674]
		IRS NUMBER:				943031310
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-24085
		FILM NUMBER:		04955021

	BUSINESS ADDRESS:	
		STREET 1:		4821 TECHNOLOGY DRIVE
		CITY:			FREMONT
		STATE:			CA
		ZIP:			94538
		BUSINESS PHONE:		5106835900

	MAIL ADDRESS:	
		STREET 1:		4311 SOLAR WAY
		CITY:			FREMONT
		STATE:			CA
		ZIP:			94538

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AMERICAN XTAL TECHNOLOGY
		DATE OF NAME CHANGE:	19971217
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a04-8678_110q.htm
<DESCRIPTION>10-Q
<TEXT>
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<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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<p style="font-weight:bold;margin:0in 0in .0001pt;text-align:center;text-autospace:none;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;">UNITED STATES<br>
SECURITIES AND EXCHANGE COMMISSION</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Washington,
DC. 20549</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="center">

</font></div>


<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">FORM 10-Q</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(Mark One)</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div align="center">

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.52%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">&#253;</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.72%;">
  <p align="left" style="margin:0in 0in .0001pt 2.0in;text-align:left;text-autospace:none;text-indent:-2.0in;text-justify:inter-ideograph;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">Quarterly report pursuant to
  Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">for the
  quarterly period ended June 30, 2004</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">or</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="7%" valign="top" style="padding:0in 0in 0in 0in;width:7.52%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="3" face="Wingdings" style="font-family:Wingdings;font-size:12.0pt;font-weight:bold;">o</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.72%;">
  <p align="left" style="margin:0in 0in .0001pt 1.75in;text-align:left;text-autospace:none;text-indent:-1.75in;text-justify:inter-ideograph;"><b><font size="3" face="Times New Roman" style="font-size:12.0pt;font-weight:bold;">Transition report pursuant to
  Section 13 or 15(d) of the Securities Exchange Act of 1934</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 1.75in;text-align:left;text-autospace:none;text-indent:-1.75in;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="3" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">for the transition period
  from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></p>
  </td>
 </tr>
</table>

</div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Commission
File Number 000-24085</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="center">

</font></div>


<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="5" face="Times New Roman" style="font-size:18.0pt;font-weight:bold;">AXT, INC.</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Exact
name of registrant as specified in its charter)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;text-transform:uppercase;">DELAWARE</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">94-3031310</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(State
  or other jurisdiction of<br>
  Incorporation or organization)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="49%" valign="top" style="padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(I.R.S.
  Employer<br>
  Identification No.)</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">4281
Technology Drive, Fremont, California 94538</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Address
of principal executive offices) (Zip code)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">(510)
683-5900</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Registrant&#146;s
telephone number, including area code)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="center">

</font></div>


<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES </font><font face="Wingdings" style="font-family:Wingdings;">&#253;</font>
NO <font face="Wingdings" style="font-family:Wingdings;">o</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate by check mark whether the registrant is an
accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES </font><font face="Wingdings" style="font-family:Wingdings;">o</font>
NO <font face="Wingdings" style="font-family:Wingdings;">&#253;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Indicate the number of shares outstanding of each of
the issuer&#146;s classes of common stock, as of the latest practicable date.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="49%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Class</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="49%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Outstanding at July 23, 2004</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Common Stock, $.001 par value</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="49%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:49.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,046,320</font></p>
  </td>
 </tr>
</table>

<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in;">

<p align="center" style="border:none;margin:0in 0in .0001pt;padding:0in;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

</div>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">FORM 10-Q</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">TABLE OF CONTENTS</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartI_FinancialInformation" title="Click to goto PART I. FINANCIAL INFORMATION">PART I. FINANCIAL INFORMATION</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_FinancialStatements" title="Click to goto Item 1. Financial Statements">Item 1. Financial Statements
  (unaudited)</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedConsolidatedBalanceSheets" title="Click to goto CONDENSED CONSOLIDATED BALANCE SHEETS">Condensed Consolidated
  Balance Sheets as of June 30, 2004 and December 31, 2003</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedConsolidatedStatementsOfOpe" title="Click to goto CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS">Condensed
  Consolidated Statements of Operations for the three and six month periods
  ended June 30, 2004 and 2003</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#CondensedConsolidatedStatementsOfCas" title="Click to goto CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS">Condensed
  Consolidated Statements of Cash Flows for the six month periods ended June
  30, 2004 and 2003</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#NotesToCondensedConsolidatedFinancia" title="Click to goto NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS">Notes
  To Condensed Consolidated Financial Statements</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2_ManagementsDiscussionAndAnal" title="Click to goto ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS">Item
  2. Management&#146;s Discussion and Analysis of Financial Condition and Results of
  Operations</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_QualitativeAndQuantitativeDis" title="Click to goto ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK">Item
  3. Quantitative and Qualitative Disclosures About Market Risk</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_ControlsAndProcedures" title="Click to goto ITEM 4. CONTROLS AND PROCEDURES">Item 4. Controls and
  Procedures</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#PartIiOtherInformation" title="Click to goto PART II OTHER INFORMATION">PART II. OTHER INFORMATION</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item1_LegalProceedings" title="Click to goto Item 1. Legal Proceedings">Item
  1. Legal Proceedings</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item2_ChangesInSecuritiesAndUseOf" title="Click to goto Item 2. Changes in Securities and Use of Proceeds">Item
  2. Changes in Securities and Use of Proceeds</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item3_DefaultsUponSeniorSecurities" title="Click to goto Item 3. Defaults upon Senior Securities">Item 3.
  Defaults upon Senior Securities</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item4_SubmissionOfMattersToAVote" title="Click to goto Item 4. Submission of Matters to a Vote of Security Holders">Item
  4. Submission of Matters to a Vote of Security Holders</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item5_OtherInformation" title="Click to goto Item 5. Other Information">Item
  5. Other Information</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Item6_ExhibitsAndReportsOnForm8k" title="Click to goto Item 6. Exhibits and Reports on Form 8-K">Item 6.
  Exhibits and Reports on Form 8-K</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="94%" valign="top" style="padding:0in 0in 0in 0in;width:94.3%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-autospace:none;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;"><a href="#Signatures" title="Click to goto SIGNATURES">Signatures</a></font></p>
  </td>
  <td width="5%" valign="top" style="padding:0in 0in 0in 0in;width:5.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='2',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="PartI_FinancialInformation"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PART I. FINANCIAL INFORMATION</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item1_FinancialStatements"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 1. Financial Statements</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="CondensedConsolidatedBalanceSheets"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONDENSED CONSOLIDATED BALANCE SHEETS</font></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited, in thousands, except per share data)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">June 30,<br>
  2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">December
  31,<br>
  2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current assets</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,783</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24,339</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Short-term investments</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,858</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,669</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts receivable, net of allowance of $4,946 and
  $4,304 as of June 30, 2004 and December 31, 2003, respectively</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,390</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,297</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21,822</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24,083</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Prepaid expenses and other current assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,572</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,301</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets held for sale</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,000</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,000</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">64,425</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">71,689</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Property, plant and equipment</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20,968</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21,795</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,290</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,237</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restricted deposits</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,615</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,302</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total Assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">97,298</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">107,023</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Liabilities:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current portion of long-term debt</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,923</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,694</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,791</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,638</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,802</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,296</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued restructuring</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,040</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13,556</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,628</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Long-term debt, net of current portion</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,885</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,842</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other long-term liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,282</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,255</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total </font>liabilities</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,723</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24,725</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stockholders&#146; Equity:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Preferred stock, $</font>0.001 par value per share; 2,000
  shares authorized; 833 shares issued and outstanding</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,532</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,532</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Common stock, $</font>0.001 par value per share; 70,000 shares authorized; 23,047 and
  22,957 shares issued and outstanding, respectively</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">155,371</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">155,178</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accumulated deficit</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(85,335</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(78,928</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accumulated other comprehensive income</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,007</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,516</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total stockholders&#146; equity</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">74,575</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">82,298</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total Liabilities and Stockholders&#146; Equity</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">97,298</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">107,023</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See accompanying notes to condensed consolidated
financial statements.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='3',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="CondensedConsolidatedStatementsOfOpe"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</font></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited, in thousands, except per share data)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenue</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,524</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,519</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,300</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,054</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cost of revenue</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,695</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,844</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,938</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16,106</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gross profit</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">829</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">675</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,362</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">948</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating expenses:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Selling, general and administrative</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,203</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,819</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,973</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,319</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Research and development</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">350</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">368</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">691</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">747</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restructuring charge</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,077</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,077</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total operating expenses</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,630</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,187</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,741</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,066</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from operations</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,801</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,512</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,379</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(5,118</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest expense</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">58</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">108</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">167</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">223</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other expense (income), net</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">113</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,269</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(54</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,038</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss before provision for income taxes</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,972</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,889</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,492</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,379</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Provision for incomes taxes</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">97</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">137</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from continuing operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,069</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,889</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,629</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,379</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Discontinued operations:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss) from discontinued operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,747</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,574</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from disposal</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11,100</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11,100</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,847</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,736</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,407</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,053</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted loss per share:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from continuing operations</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.18</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.17</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.29</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.28</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss) from discontinued operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.01</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.61</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.01</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.69</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.17</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.78</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.28</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.97</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted shares used in per share
  calculations</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,045</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,702</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,020</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,665</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See accompanying notes to condensed consolidated
financial statements.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='4',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="CondensedConsolidatedStatementsOfCas"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS</font></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited, in thousands)</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CASH FLOWS FROM OPERATING ACTIVITIES:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,407</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,053</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Adjustments to reconcile net loss to </font>net cash used in operations:</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Depreciation</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,437</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,456</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Amortization of marketable securities
  premium/discount</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">123</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">225</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Non-cash restructuring charge</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,077</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss on disposal</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11,100</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Impairment write-down on investments</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,257</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain on disposal of property, plant and equipment</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stock based compensation</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">28</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Changes in assets and liabilities:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts receivable, net</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,907</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,261</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,755</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Prepaid expenses</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,271</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,487</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font>9</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(70</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">153</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(830</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(531</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1272</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income taxes</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">636</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 40.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other long-term liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">27</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(107</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 50.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used in operating activities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(185</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(388</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CASH FLOWS FROM INVESTING ACTIVITIES:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Purchases of property, plant and equipment</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(702</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,704</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Proceeds from sale of property, plant and equipment</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,172</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Purchases of </font>marketable
  securities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(20,650</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,808</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Proceeds from sale of marketable securities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10,422</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,700</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">Decrease (i</font>ncrease</font>) in restricted cash</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,151</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,623</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 50.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash (used in) provided by investing activities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,779</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,737</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CASH FLOWS FROM FINANCING ACTIVITIES:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Proceeds from (payments of):</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Issuance of common stock</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">193</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">185</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Capital leases payments</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,204</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Long-term debt payments</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,728</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(485</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 50.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used in financing activities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,535</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,504</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Effect of exchange rate changes</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(57</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(45</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net decrease in cash and cash equivalents</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(9,556</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(200</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" style="padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents at the beginning of the
  period</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24,339</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13,797</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="71%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:71.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents at the end of the period</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,783</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13,597</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">See accompanying notes to condensed consolidated
financial statements.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='5',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="NotesToCondensedConsolidatedFinancia"><font size="2" face="Times New Roman" style="font-size:10.0pt;">NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS</font></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Unaudited)</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 1. Basis of Presentation</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The accompanying </font>interim condensed consolidated financial statements of AXT, Inc.
(&#147;AXT&#148; or the &#147;Company&#148;) are unaudited,
and have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, certain information and footnote disclosure normally included
in financial statements prepared in accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted. In the opinion of management,
the unaudited condensed consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, considered
necessary to present fairly the financial position, results of operations and
cash flows of AXT and its subsidiaries for all periods presented.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Management of the Company
has made a number of estimates and assumptions relating to the reporting of
assets and liabilities and the disclosure of contingent assets and liabilities
to prepare these condensed consolidated financial statements in conformity with
accounting principles</font>
generally accepted in the United States of America. Actual results could
differ materially from those estimates.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The results of operations
are not necessarily indicative of the results to be expected in the future or
for the full fiscal year. It is recommended that these condensed consolidated
financial statements be read in conjunction with the Company&#146;s consolidated
financial statements and the notes thereto included in its 2003 Annual Report
on Form 10-K and its Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on March 29, 2004 and May 24, 2004, respectively.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenues from continuing
operations increased in fiscal 2003 compared to fiscal 2002. In response to
continued net losses, the Company has taken measures including the continued
shifting of production to China to reduce costs and increase cash flows. As of
June 30, 2004, the Company had available cash, cash equivalents and liquid
short-term investments of $34.6 million, excluding restricted deposits. The
Company believes that its existing cash and liquid investments, cash generated
from operations, coupled with additional efforts to reduce expenditures in
support of the continuing substrate business will be sufficient to meet working
capital expenditure requirements for the next 12 months. However, existing cash
and liquid investments could decline during the remainder of 2004 due to a
weakening of the economy, a loss in revenue, or changes in our planned cash
outlay.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If the Company&#146;s sales
decrease, the ability to generate cash from operations will be adversely
affected which could adversely affect its future liquidity, requiring it to use
cash at a more rapid rate than expected and to seek additional capital. There can
be no assurance that such additional capital will be available or, if available</font>, that it will be at terms acceptable
to the Company.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certain reclassifications
have been made to the prior years consolidated financial statements to conform
to current period presentation.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">2</font>. Discontinued
Operations</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On June 24, 2003, the
Company announced the discontinuation of its opto-electronics division, which
was established as part of the acquisition of Lyte Optronics, Inc. in May 1999.
Accordingly, the results of operations of the opto-electronics division have
been segregated from continuing operations and are reported separately as
discontinued operations in the consolidated statements of operations. The
discontinued opto-electronics division manufactured blue, cyan, and green
high-brightness light emitting diodes (HBLEDs) for the illumination markets,
including full-color displays, wireless handset backlighting and traffic
signals, and also manufactured vertical cavity surface emitting lasers (VCSELs)
and laser diodes for fiber optic communications and storage area networks.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On September 27, 2003 the
Company completed a sale of substantially all of the assets of its
opto-electronics business to Lumei Optoelectronics, Corp. and Dalian Luming
Science and Technology Group, Co., Ltd. for the Chinese Renminbi equivalent of
$9.6 million. Proceeds of $1.0 million will be held in escrow for up to one
year and will not be recorded until all claims, if any, are settled. We expect
this escrow to be released, if no claims are made against it, on or about
September 28, 2004. Of this $1.0 million escrow, up to $250,000 will be held in
escrow for a second year and will not be recorded until all claims, if any, are
settled. The Company retains a building located in Monterey Park, CA, that it
intends to sell in 2004. This asset has been classified as </font>held for sale on the condensed consolidated balance sheets as of June 30,
2004 and December 31, 2003.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='6',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company recorded a
loss on disposal of $9.5 million during the nine months ended September 30,
2003.&#160; The Company recorded a gain on
discontinued operations of $0.2 million during the three and six month periods
ended June 30, 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s financial
statements have been presented to reflect the opto-electronics business as a
discontinued operation for all periods presented. Operating results of the
discontinued operation are as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="90%" style="border-collapse:collapse;width:90.0%;">
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenue</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,897</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,019</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cost of revenue</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,443</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,119</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gross loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,546</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,100</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating expenses:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Selling, general and administrative</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">750</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,536</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Research and development</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">342</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">707</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Impairment costs</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total operating expenses</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(222</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,092</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(222</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,243</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss)&#160;
  from operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,638</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,343</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest expense</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">109</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">231</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss) before benefit for income taxes and loss
  on disposal</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2,747</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,574</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Income tax (benefit)</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss on disposal</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11,100</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(11,100</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net gain (loss)</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(13,847</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">222</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.44%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(15,674</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.2in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The carrying value of the assets and liabilities of
the discontinued opto-electronics business included in the consolidated balance
sheets are as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="70%" style="border-collapse:collapse;width:70.0%;">
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">June 30,
  2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">December
  31, 2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current assets:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">560</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">539</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts receivable, net</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">250</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets held for sale</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,000</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,000</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total current assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,579</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,789</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other assets</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">200</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">200</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,779</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,989</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Current liabilities:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accounts payable</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">43</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Accrued liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">462</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,232</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total liabilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">462</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,275</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" style="padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net assets</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,317</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">714</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="56%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:56.8%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total liabilities and net assets</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.04%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.2%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,779</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.84%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.18%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,989</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.02%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets held for sale
consist of a building and are carried at management&#146;s estimated fair value less
costs to sell.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='7',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">3</font>. Accounting for
Stock Options</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company records
compensation expense for employee stock options based upon their intrinsic
value on the date of grant pursuant to Accounting Principles Board Opinion No.
25 (APB 25), &#147;Accounting for Stock Issued to Employees&#148; and has adopted the
disclosure-only alternative of Statement of Financial Accounting Standards No.
123</font> (SFAS 123)
&#147;Accounting for Stock-Based Compensation&#148;. Because the Company establishes the
exercise price based on the fair market value of the Company&#146;s stock at the
date of grant, the options have no intrinsic value upon grant, and therefore no
expense is recorded. Each quarter, the Company reports the potential dilutive
impact of stock options in its diluted earnings per share using the
treasury-stock method. Out-of-the-money stock options (i.e., options where the
average sales price of our common stock as reported on the Nasdaq National
Market during the period is below the exercise price of the option) are not
included in diluted earnings per share.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As required under SFAS
123 and Statement of Financial Accounting Standards No. 148 (SFAS 148),
&#147;Accounting for Stock-Based Compensation Transition and Disclosure,&#148; the pro
forma effects of stock-based compensation on net income</font> (loss) and net income (loss) per common share had
the Company applied the fair value recognition principles of SFAS 123 to
employee stock options have been estimated at the date of grant using the
Black-Scholes option-pricing model.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Black-Scholes
option-pricing model was developed for use in estimating the fair value of
traded options that have no restrictions and are fully transferable and
negotiable in a free trading market. Black-Scholes does not consider the
employment, transfer or vesting restrictions that are inherent in the Company&#146;s
employee options. Use of an option valuation model, as required by SFAS 123,
includes highly subjective assumptions based on long-term predictions,
including the expected stock price volatility and average life of each option
grant. Because the Company&#146;s employee options have characteristics
significantly different from those of freely traded options, and because
changes in the assumptions underlying the option-pricing model can materially
affect the Company&#146;s estimate of the fair value of those options, in the
Company&#146;s opinion, the existing valuation models, including Black-Scholes, are
not reliable single measures and may misstate the fair value of the Company&#146;s
employee options.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company calculated
the fair value of each option grant on the date of grant using the
Black-Scholes option pricing model as prescribed by SFAS 123 using the
following assumptions:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="55%" style="border-collapse:collapse;margin-left:1.25in;width:55.0%;">
 <tr>
  <td width="57%" valign="bottom" style="padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="38%" colspan="3" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:38.32%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.46%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" style="padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.46%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Weighted average risk free interest rate</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.6</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.96%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.7</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.46%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" style="padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Expected life (in years)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.0</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.0</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.46%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dividend yield</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.46%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" style="padding:0in 0in 0in 0in;width:57.26%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Volatility</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">85.3</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.96%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">114.0</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.46%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The weighted average fair
value as of the date of grant of options granted during the six months ended
June 30, 2004 and 2003 were $1.97 and $1.05, respectively.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='8',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Had compensation cost for
the Company&#146;s options been determined based on the fair value at the grant
dates, as prescribed in SFAS 123 and SFAS 148, the Company&#146;s pro forma net loss
and net loss per share would have been summarized as follows (in thousands</font>, except per share data):</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="75%" style="border-collapse:collapse;margin-left:1.0in;width:75.02%;">
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="27%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:27.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="27%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:27.2%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss :</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As reported</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,847</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.8%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,736</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,407</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.94%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,053</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Stock-based compensation
  determined under fair value method</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(253</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,743</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(846</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,566</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pro forma net loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,100</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.8%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(19,479</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(7,253</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.94%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(25,619</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss per share:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As reported:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.17</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.8%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.78</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.28</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.94%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.97</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pro forma net loss :</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.18</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.8%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.86</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.32</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.94%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1.13</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" style="padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Shares used in per share calculation:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="40%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:40.9%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.38%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,045</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.52%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,702</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.44%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,020</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:12.66%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,665</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Because additional option
grants are expected to be made each quarter, the above pro forma disclosures
are not representative of pro forma effects on reported net income (loss) for
future quarters.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">4</font>. Investments</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company classifies
its investment securities as available-for-sale securities as prescribed by
Statement of Financial Accounting Standards No. 115 </font>(SFAS 115) &#147;Accounting for Certain Investments in Debt and Equity
Securities.&#148; All investments are carried at fair market value, which is
determined based on quoted market prices, with net unrealized gains and losses
included in comprehensive income, net of tax. A decline in the market value of
the security below cost that is deemed other than temporary is charged to
earnings, resulting in the establishment of a new cost basis for the security.
The components of investments as of June 30, 2004 are summarized as follows (in
thousands):</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div align="center">

<table border="0" cellspacing="0" cellpadding="0" width="67%" style="border-collapse:collapse;width:67.02%;">
 <tr>
  <td width="49%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Available
  for sale</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Cost</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Unrealized<br>
  Gain /(loss)</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Aggregate<br>
  Fair value</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Money market</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.08%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,898</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.1%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.1%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,898</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Corporate bonds</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,103</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(67</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,036</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Government agency bonds</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,275</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,274</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Corporate equity securities</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,</font>464</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,210</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,</font>674</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.08%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">32,740</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.1%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,142</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.1%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33,882</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Recorded as :</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash equivalents</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.08%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,409</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Short-term investments</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,858</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restricted deposits</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,615</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="bottom" style="padding:0in 0in 0in 0in;width:49.78%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.08%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33,882</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:14.04%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

</div>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">5</font>. Assets Held for
Sale</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Assets held for sale at
June 30, 2004 consist of a building located in Monterey Park, California, which
is part of the Company&#146;s discontinued opto-electronics division (see Note 2).
This building is carried at management&#146;s estimated fair value less costs to
sell, totaling $1.0 million as of both June 30, 2004 and December 31, 2003.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">6</font>. Inventories</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The components of inventory
are summarized as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<div align="center">

<table border="0" cellspacing="0" cellpadding="0" width="50%" style="border-collapse:collapse;width:50.0%;">
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">June 30,<br>
  2004</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">December
  31,<br>
  2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories:</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Raw </font>materials</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.4%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,951</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" style="padding:0in 0in 0in 0in;width:17.38%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,086</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Work </font>in process</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,724</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16,027</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Finished </font>goods</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,147</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="19%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:19.98%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">970</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.84%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.26%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.4%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21,822</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:3.32%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.38%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">24,083</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

</div>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">7</font>. Restructuring Charge</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s
restructuring accrual is summarized as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="31%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">For the
  three month period ended<br>
  June 30, 2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Restructuring<br>
  Accrual as of<br>
  March&nbsp;31,<br>
  2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Additions/<br>
  Reversals</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Payments</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Restructuring<br>
  Accrual as of<br>
  June&nbsp;30, 2004</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Future lease payments related to abandoned
  facilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">690</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">690</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" style="padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Workforce reduction</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">387</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">350</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,077</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,040</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="31%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">For the
  six month period ended<br>
  June 30, 2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Restructuring<br>
  Accrual as of<br>
  December 31, 2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Additions/<br>
  Reversals</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Payments</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Restructuring<br>
  Accrual as of<br>
  June 30, 2004</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Future lease payments related to abandoned
  facilities</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">690</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">690</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" style="padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Workforce reduction</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">387</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.02%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">350</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="31%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:31.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,077</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.72%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,040</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">During the three
and six month period ended June 30, 2004, the Company recorded a restructuring
charge of $1.1 million related to the reduction in force effected in June 2004,
and to leas</font>e
costs associated with facilities located in California that are no longer
required to support production.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The remaining
restructuring accrual for future lease payments related to abandoned facilities
of $0.7 million and workforce reduction of $0.4 million is expected to be paid
out through calendar 2004, and is included on the accompanying condensed
consolidated balance sheet as accrued restructuring.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">10</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='10',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">8</font>. Net Loss Per
Share</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic </font>net loss per common share is
calculated by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding during the period. Diluted
net loss per common and common equivalent shares include the dilutive effect of
common stock equivalents outstanding during the period calculated using the
treasury stock method. Common stock equivalents consist of the shares issuable
upon the exercise of stock options.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A reconciliation of the
numerators and denominators of the basic and diluted net loss per share
calculations is summarized as follows (in thousands</font>, except per share data):</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="22%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="22%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:22.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Numerator:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,847</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,736</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,407</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,053</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Less : Preferred stock dividends</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(44</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(44</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(88</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(88</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss available to common stockholders</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,891</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,780</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,496</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,141</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Denominator:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Denominator for basic net loss per share - weighted
  average common shares</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,045</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,702</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,020</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,665</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Effect of dilutive securities:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Common stock options</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Denominator for dilutive net loss per share</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,045</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,702</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23,020</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22,665</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" style="padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Basic and diluted net loss per share</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-top:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.17</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-top:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.78</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-top:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.28</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-top:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:8.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.97</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="51%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:51.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Options excluded from diluted net loss per share as
  the impact is antidilutive</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,916</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,124</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,916</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,231</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note </font></b><b><font style="font-weight:bold;">9</font>. Comprehensive
Loss</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The components of
comprehensive loss are summarized as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="77%" style="border-collapse:collapse;margin-left:1.5in;width:77.0%;">
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3,847</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(17,736</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(6,407</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(22,053</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Foreign currency translation gain (loss)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(57</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(45</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Unrealized gain (loss) on available for sale
  investments</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(296</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">921</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1,452</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">677</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Comprehensive loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(4,142</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(16,814</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(7,916</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(21,421</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 1</font></b><b><font style="font-weight:bold;">0</font>. Segment
Information</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company has one
operating segment comprising the design, development, manufacture and
distribution of high-performance compound semiconductor substrates. The
Company&#146;s operating segment reports to the Interim Chief Executive Officer.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company sells its
substrates products in the United States and in other parts of the world, and
maintains operations in the United States, Japan and China. Revenues by
geographic location based on the country where the customer is located </font>are summarized as follows (in
thousands):</p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="77%" style="border-collapse:collapse;margin-left:1.5in;width:77.0%;">
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net revenues:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">United States</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,142</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,013</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,199</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,917</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Europe</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,287</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,731</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,702</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,040</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Canada</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">35</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">84</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">89</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">107</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Japan</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,023</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,298</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,259</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,786</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Taiwan</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,539</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,655</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5,683</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,144</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Asia Pacific and other</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,498</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,738</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,368</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3,060</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="42%" valign="bottom" style="padding:0in 0in 0in 0in;width:42.98%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Consolidated</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,524</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,519</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19,300</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.68%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17,054</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='11',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 1</font></b><b><font style="font-weight:bold;">1</font>. Corporate
Affiliates</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s investments
in its corporate affiliates are summarized as follows (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="85%" style="border-collapse:collapse;width:85.0%;">
 <tr>
  <td width="43%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Affiliate</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Investment<br>
  Balance<br>
  June 30,<br>
  2004</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="11%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.62%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Investment<br>
  Balance<br>
  December 31,<br>
  2003</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="13%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Accounting<br>
  Method</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="11%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:11.48%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Ownership<br>
  Percentage</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Xilingol Tongli Ge Co. Ltd.</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.52%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">820</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.52%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.1%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">822</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Equity</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:11.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">25</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Emeis han Jia Mei High Pure Metals Co., Ltd.</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">599</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.62%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">603</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" style="padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Equity</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">25</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beijing Ji Ya Semiconductor Material Co., Ltd.</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,071</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.62%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,071</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Consolidated</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">51</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Nanjing Jin Mei Gallium Co., Ltd.</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">616</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:11.62%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">616</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" style="padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Consolidated</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" valign="bottom" style="padding:0in 0in 0in 0in;width:11.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">88</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in .7pt 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.0%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beijing BoYu Manufacturing Co., Ltd.</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">409</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.62%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">409</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:13.58%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Consolidated</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="11%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:11.48%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">70</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="265" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="9" style="border:none;"></td>
  <td width="65" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="9" style="border:none;"></td>
  <td width="62" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="84" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="71" style="border:none;"></td>
  <td width="6" style="border:none;"></td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The investment balances
for those affiliates accounted for under the equity method are included within
&#147;Other assets&#148; in the condensed consolidated balance sheets. The minority
interest for those affiliates that are consolidated is included within &#147;Other
long-term liabilities&#148; in the condensed consolidated balance sheets and within
&#147;Other income, net&#148; on the condensed consolidated statements of operations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Undistributed retained
earnings relating to the Company&#146;s corporate affiliates was $1,380,000 as of
June 30, 2004 and $794,000 as of June 30, 2003. Net income recorded from the
Company&#146;s corporate affiliates were $382</font>,000 and $612,000 for the three month and six month periods ended
June 30, 2004, respectively. Net loss recorded from the Company&#146;s corporate
affiliates were $41,000 and $67,000 for the three and six month periods ended
June 30, 2003, respectively.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company invested in
these companies because each provides materials that are important to the
Company&#146;s substrate business, each can provide products at lower cost than
other suppliers, and each has a market beyond that provided by the Company. As
of June 30, 2004, the Company had no obligations to make further investments in
any of these companies, although it may choose to do so under certain
conditions.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 1</font></b><b><font style="font-weight:bold;">2</font>. Commitments and
Contingencies</b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">From time to time the
Company is involved in judicial or administrative proceedings concerning
matters arising in the ordinary course of our business. The Company does not
expect that any of these matters, individually or in the aggregate, will have a
material adverse effect on our business, financial condition, cash flows or
results of operation.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On April 15, 2003,
Sumitomo Electric Industries, Ltd., (SEI) filed a complaint in the Tokyo
District Court, Civil Division against us and our Japanese distributor alleging
patent infringement of two patents held by SEI in Japan. The suit seeks
penalties from AXT in the amount of $1.67 million plus interest and court costs
and the cessation of AXT&#146;s sales of gallium arsenide substrates in Japan. AXT
intends to defend itself vigorously in these lawsuits and continues to sell its
products in Japan. Both parties have completed submitting arguments and
evidence in litigation in Japan. The Company retains all of its options which
include appealing any court decision and launching an effort to have Sumitomo&#146;s
patent invalidated in Japan.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On June 11, 2003, Cree,
Inc. filed a complaint in the United States Court for Northern District of
California against the Company alleging patent infringement. The complaint
sought damages and injunction against infringement. On July 23, 2003, the
Company filed a counter complaint in the United States Court for Northern
District of California, denying any patent infringement and alleging that
Cree&#146;s actions were intentionally designed to interfere with the Company&#146;s
prospective business relationships. The Company reached an agreement with Cree
resolving the disputes between us and signed a settlement agreement on March 5,
2004. The resolution of the disputes did not have a material adverse impact on
the Company&#146;s consolidated financial position or results of operations. All
parties signed a final release regarding all disputes between them on April 15,
2004.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">12</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='12',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company has entered
into contracts to supply several large customers with GaAs wafers. The
contracts guarantee the delivery of a certain number of wafers between January
1, 2001 and December 31, 2004 with a current contract value of $1.0 million.
The contract sales prices are subject to review quarterly and can be adjusted
in the event that raw material prices change. In the event of non-delivery of
the determined wafer quantities in any monthly delivery period, the Company
could be subject to non-performance penalties of between 5% and 10% of the
value of the delinquent monthly deliveries. The Company has not received any
claims for non-performance penalties due to non-delivery. Partial prepayments
received for these supply contracts totaling $793,000 and $994,000 are included
in accrued liabilities in the accompanying condensed consolidated balance
sheets as of June 30, 2004 and December 31, 2003. As of June 30, 2004, the
Company has met all of its current delivery obligations under these contracts
and expects to continue to meet delivery requirements during the remainder of
the contract terms.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company indemnifies
certain customers for attorney fees and damages and costs awarded against these
parties in certain circumstances if its products are found to infringe certain
patents and they are sued by the patent holder and awarded damages. There are
limits on and exceptions to its potential liability for indemnification
relating to intellectual patent infringement claims. The Company cannot
estimate the amount of potential future payments, if any, that it might be required
to make as a result of these agreements. To date, the Company has not paid any
claim or been required to defend any action related to its indemnification
obligations, and accordingly, the Company has not accrued any amounts for such
indemnification obligations. However, we may record charges in the future as a
result of these indemnification obligations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company&#146;s financial
statements include accruals for potential product liability and warranty claims
based on the Company&#146;s claims experience. Such costs are accrued at the time
revenue is recognized. As of June 30, 2004 and December 31, 2003, accrued
product warranties totaled $135,000 and $0 respectively, and are included in
&#147;accrued liabilities&#148; in the accompanying condensed consolidated balance sheets.
If there is a material increase in customer claims compared with our historical
experience, or if costs of servicing claims are greater than expected, we may
record a charge against cost of sales.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following table reconciles changes in the Company&#146;s accrued product
warranties which is included in accrued liabilities for the three and six month
periods ended </font>June 30,
2004 and 2003, respectively (in thousands):</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;"> Months Ended </font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">June 30</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">,</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="26%" colspan="5" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:26.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;"> Months Ended </font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">June 30</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">,</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">200</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">4</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">200</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">3</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">200</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">4</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">200</font></b><b><font size="1" style="font-size:8.0pt;font-weight:bold;">3</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="border:none;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Beginning accrued warranty and related costs</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">135</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Charged to cost of revenue</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">135</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Actual warranty expenditures</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.0%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="43%" valign="bottom" style="padding:0in 0in 0in 0in;width:43.02%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Ending accrued warranty and related costs</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">135</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">135</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.3%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="10%" valign="bottom" style="border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In April 2004, the
Company determined that it ha</font>d not followed requirements for testing of products and provision
of testing data and information relating to customer requirements for certain
shipments made over the past several years. Since April 2004, the Company has
continued to notify the affected customers concerning its findings. The Company
has established a reserve based on its best estimate of future returns related
to this matter. Although actual returns may differ, the Company does not
believe future claims in the aggregate will be material. One of the customers
has cancelled outstanding orders for scheduled future deliveries totaling
approximately $352,000. This customer represented approximately 2.8% of the Company&#146;s total consolidated
revenue for the three month period ended June 30, 2004 and 3.7% of the Company&#146;s total consolidated
revenue for the six month period ended June 30, 2004. The Company has recorded
a reserve for sale returns of $745,000 and believes this is adequate to cover
any product returns related to this matter, however, the Company is unable to
assess the impact that this matter might have, if any, on our future revenues
or gross margins. Approximately $125,000 of the $745,000 sales returns reserve
has been utilized in July 2004.&#160; Refer to &#147;Item 4 Controls and
Procedures&#148; for further information.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">13</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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</font></div>

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<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 13. Foreign Exchange Contracts
and Transaction Gains/Losses</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company uses
short-term forward exchange contracts for hedging purposes to reduce the
effects of adverse foreign exchange rate movements. The Company has purchased
foreign exchange contracts to hedge against certain trade accounts receivable
denominated in Japanese yen. The change in the fair value of the forward contracts
is recognized as part of the related foreign currency transactions as they
occur. As of June 30, 2004, the Company had no outstanding commitments with
respect to foreign exchange contracts.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Company incurred
foreign currency transaction exchange losses of $(75,000) and $(11,000) for the
three and six month periods ended June 30, 2004, respectively, and foreign
currency transaction exchange gains of $1</font>3,000 and $65,000
for the three and six month periods ended June 30, 2003, respectively.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Note 14. Recent Accounting
Pronouncements</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In January 2003, the
Financial Accounting Standards Board </font>&#160;(FASB) issued
Interpretation No. 46 (FIN 46), <i><font style="font-style:italic;">Consolidation
of Variable Interest Entities</font></i>, which addresses consolidation by
business enterprises of variable interest entities, or VIEs, either that do not
have sufficient equity investment at risk to permit the entity to finance its
activities without additional subordinated financial support, or in which the
equity investors lack an essential characteristic of a controlling financial
interest. In December 2003, the FASB completed deliberations of proposed
modifications to FIN 46, or FIN 46(R), resulting in an effective date of no
later than the first interim or annual period ending after March 15, 2004. The
Company&#146;s adoption of FIN 46(R) did not have an impact on our results of
operations or financial position.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:13.5pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In April 2004, the Emerging Issues Task
Force issued Statement No. 03-06, (EITF 03-06), <i><font style="font-style:italic;">Participating Securities and the
Two-Class Method under FASB Statement No. 128, Earnings Per Share</font></i>.
EITF 03-06 addresses a number of questions regarding the computation of
earnings per share by companies that have issued securities other than common
stock that contractually entitle the holder to participate in dividends and
earnings of the company when, and if, it declares dividends on its common
stock. The issue also provides further guidance in applying the two-class
method of calculating earnings per share, clarifying what constitutes a
participating security and how to apply the two-class method of computing
earnings per share once it is determined that a security is participating,
including how to allocate undistributed earnings to such a security. EITF 03-06
was effective for fiscal periods beginning after March 31, 2004. The adoption
of EITF 03-06 did not have a material effect on the Company&#146;s results of
operations or financial position.</font></p>

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<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item2_ManagementsDiscussionAndAnal"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 2. MANAGEMENT&#146;S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">This Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations
includes a number of forward-looking statements made pursuant to the provisions
of Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are based upon management&#146;s current views with respect to future
events and financial performance, and are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. Such risks and uncertainties include
those set forth under &#147;Risks Related to our Business&#148; below. Forward-looking
statements may be identified by the use of terms such as &#147;anticipates,&#148;
&#147;believes,&#148; &#147;estimates,&#148; &#147;expects,&#148; &#147;intends,&#148; and similar expressions.
Statements concerning our financial position, business strategy and plans or
objectives for future operations are forward-looking statements.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">These forward-looking
statements are not guarantees of future performance. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of the date hereof. This discussion should be read in conjunction with
Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations included in the Company&#146;s Annual Report on Form 10-K for the year
ended December 31, 2003 and the condensed consolidated financial statements
included elsewhere in this report.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Overview</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We were founded in 1986
to commercialize and enhance our proprietary vertical gradient freeze (VGF)
technique for producing high-performance compound semiconductor substrates. As
a result of the discontinuance of our opto-electronics division, and the sale
of substantially all of the assets of this business in 2003, we now have one
operating segment: our substrate division. We made our first substrate sales in
1990 and our substrate division currently sells gallium arsenide (GaAs) and
indium phosphide (InP) substrates to manufacturers of semiconductor devices for
use in applications such as fiber optic and wireless telecommunications, light
emitting diodes (LEDs) and lasers. We also sell raw materials including gallium
and germanium through our participation in majority- and minority-owned joint
ventures. We have the capability to manufacture germanium substrates for use in
satellite solar cells but withdrew from this business during 2000 so that we
could more profitably use our then constrained capacity. We are now trying to
requalify our germanium substrates with the few existing satellite solar cell
system manufacturers.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our total revenue from
continuing operations was $9.5 million for the second quarter of 2004, $8.5
million for the second quarter of 2003 and $9.8 million for the first quarter
of 2004. In the second quarter of 2004 we incurred a loss from continuing
operations of $4.1 million compared with a loss of $3.9 million for the second
quarter of 2003 and a loss of $2.6 million for the first quarter of 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On June 24, 2003, we
announced the discontinuation of our opto-electronics division, which we
established as part of our acquisition of Lyte Optronics, Inc. in May 1999.
Accordingly, the results of operations of the opto-electronics division have
been segregated from continuing operations and are reported separately as discontinued
operations in our consolidated statements of operations for all periods
presented (see Note 3 of the notes to our condensed consolidated financial
statements for details regarding the accounting for discontinued operations).
The discontinued opto-electronics division manufactured blue, cyan, and green
high-brightness light emitting diodes (HBLEDs) for the illumination markets,
including full-color displays, wireless handset backlighting and traffic
signals, and also manufactured vertical cavity surface emitting lasers (VCSELs)
and laser diodes for fiber optic communications and storage area networks.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On September 27, 2003 we
completed a sale of substantially all of the assets of our opto-electronics
business to Lumei Optoelectronics, Corp. and Dalian Luming Science and
Technology Group, Co., Ltd. for the China Renminbi (RMB) equivalent of $9.6
million. During the first quarter of 2004, $7.8 million was converted to US
dollars. The remaining funds were converted to US dollars in early April 2004.
$1.0 million of the sales proceeds is maintained in an escrow account for up to
one year after the sale date and will not be recorded until all claims made
against the escrow, if any, are settled. We expect this escrow to be released,
if no claims are made against it, on or about September 28, 2004. Of this $1.0
million escrow, up to $250,000 will be held in escrow for a second year and
will not be recorded until all claims made against the escrow, if any, are
settled. We retain a building located in Monterey Park, CA, that we </font>intend to sell in 2004. This asset is
classified as held for sale on our condensed consolidated
balance sheets as of December 31, 2003 and June 30, 2004.</p>

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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our continuing business,
primarily sales of our substrate products, is dependant on the semiconductor
industry, which is highly cyclical and has historically experienced downturns
both as a result of economic changes and of overcapacity. We experienced a
growth period that lasted from our initiation of sales in 1990 through the
first half of 2001. In the second half of 2001, we experienced a $44.9 million,
or 58.5% decrease in revenue compared with the first half as a result of the
rapid decline in the mobile and fiber optic telecommunications markets.
Together with other industry participants, we experienced lower revenues,
slower bookings, push outs and cancellation of orders. As such, we recorded
losses in the third and fourth quarters of 2001.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">During the first half of
2002 our revenues grew due to improvements in the wireless market. In the
second half of 2002 our revenue fell, however, because the substrate industry
was still facing excess capacity that caused prices to decline, and because we
experienced a loss of market share after two competitors developed technologies
similar to ours. In addition, certain customers selected competitors&#146; products
in order to diversify their supply sources and due to the belief that the
competitors&#146; substrates offered better surface qualities. Full year 2002
revenue declined $63.9 million, or 58.8% compared with 2001. We recorded losses
in each quarter of 2002 and incurred impairment charges against fixed assets
and inventory due to the decline in demand and prices. In reaction to the
economic downturn, we initiated an aggressive effort to reduce substrate
manufacturing costs. This included moving much of our substrate manufacturing
operations to China, reducing capacity in our Fremont, CA facility and
developing and investing in key low-cost raw material sources.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In 2003, we believe that
the wireless communications and HBLED markets grew, but our revenue did not
increase until the fourth quarter of 2003 due to continued reductions in prices
and the time required to improve our substrate surface quality and regain some
lost customers. Revenue for 2003 fell by $10.2 million, or 22.6% compared with
2002. We recorded net losses in each quarter of 2003. During 2003 we continued
to shift more of our manufacturing operations to China and reduced our costs incurred
in the United States.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">During the first half of
2004, our revenue increased compared with the fourth quarter of 2003, primarily
as a result of increased demand for HBLEDs. We recorded net losses in the first
two quarters of 2004. During the second quarter of 2004, we announced plans to
cease all production activities in the United States and to manufacture our
products only in China.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We cannot predict the
level of future industry demand or of our ability to regain lost market share,
but they have impacted our ability to sell our products and operate profitably.
If demand for our products remains depressed for an extended period, our
business will be harmed as a result. Our business performance will be most
influenced by market demand for compound semi-conductor substrates, our ability
to offer products that equal or exceed the quality provided by competitors,
product pricing, our ability to shift more of our manufacturing production to
China, and our ability to create and defend our intellectual property while not
infringing on the intellectual property of others.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In April 2004, we
determined that we ha</font>d
not followed requirements for testing of products and provision of testing data
and information relating to customer requirements for certain shipments made
over the past several years. We have notified the affected customers concerning
our findings. We have established a reserve based on our best estimate of
future returns related to this matter. Although actual returns may differ, we
do not believe future claims in the aggregate will be material. One of our
customers has cancelled outstanding orders for scheduled future deliveries
totaling approximately $352,000. This customer represented approximately 2.8%
of our total consolidated revenue for the three month period ended June 30,
2004 and 3.7% of our total consolidated revenue for the six month period ended
June 30, 2004. We have recorded a reserve for sales returns of $745,000 and
believe this is adequate to cover any product returns related to this matter,
however, we are unable to assess the impact that this matter might have, if
any, on our future revenues or gross margins. Approximately $125,000 of the
$745,000 sales returns reserve has been utilized in July 2004.&#160; See &#147;Item 4. Controls and Procedures&#148; for
further information.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In June 2004, we incurred
a restructuring charge of $1.1 million as a result of our decision to close
down the remaining manufacturing facilities in the US.&#160; This charge is comprised of costs related to
the reduction in force effected in June 2004, and lease costs associated with
the facilities located in California that are no longer required to support
production. See Note 8 of the notes </font>to our condensed consolidated financial statements for further
details.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For the second quarter of
2004, our revenue from continuing operations increased to $9.5 million from
$8.5 million in the second quarter of 2003, primarily due to greater sales of
GaAs substrates, which benefited from increasing demand from our key end-use
markets, red and amber HBLEDs and wireless handsets. Our gross margin also
increased from the second quarter of 2003 to 8.7 percent due to higher yields
and a greater share of our production being completed in China.</font></p>

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<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Critical Accounting Policies and
Estimates</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have prepared our
consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America. As such, we have had to
make estimates, assumptions and judgments that affect the amounts reported on
our financial statements. These estimates, assumptions and judgments about
future events and their effects on our results cannot be determined with
certainty, and are made based upon our historical experience and on other
assumptions that are believed to be reasonable under the circumstances. These
estimates may change as new events occur or additional information is obtained,
and we may periodically be faced with uncertainties, the outcomes of which are
not within our control and may not be known for a prolonged period of time. The
discussion and analysis of our results of operations and financial condition
are based upon these consolidated financial statements. We have identified the
policies below as critical to our business operations and understanding of our
financial condition and results of operations. A critical accounting policy is
one that is both material to the presentation of our financial statements and
requires us to make difficult, subjective or complex judgments that could have
a material effect on our financial condition and results of operations. They
may require us to make assumptions about matters that are highly uncertain at
the time of the estimate, and different estimates that we could have used, or
changes in the estimate that are reasonably likely to occur, may have a
material impact on our financial condition or results of operations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We believe that the
following are our critical accounting policies:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Revenue Recognition</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We recognize revenue upon
shipment of products to our customers provided that we have received a signed
purchase order, the price is fixed or determinable, title has transferred,
collection of resulting receivables is probable, product returns are reasonably
estimable, there are no customer acceptance requirements and there are no
remaining obligations. We establish a reserve when there is uncertainty
regarding customer acceptance. We assess the probability of collection based on
a number of factors including past history with the customer and credit
worthiness. We provide for future returns based on historical experience,
current economic trends and changes in customer demand at the time revenue is
recognized. During the first quarter of 2004, we increased our reserve for sales
returns by $745,000 related to our failure to follow certain testing
requirements and provision of testing data and information to certain
customers. This reserve was based on discussions with some of the affected
customers and review of specific shipments made during the quarter. Except for
sales in Japan and some sales in Taiwan, which in both cases are denominated in
Japanese yen, we denominate and collect our international sales in U.S.
dollars.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Allowance for
Doubtful Accounts</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We periodically review the
likelihood of collecting our accounts receivable balances and provide an
allowance for doubtful accounts receivable primarily based upon the age of
these accounts. We provide a 100% allowance for U.S. receivables in excess of
90 days and for foreign receivables in excess of 120 days. As of June 30, 2004
our accounts receivable balance was $4.4 million, which is net of an allowance
for doubtful accounts of $4.9 million.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Warranty Reserve</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We maintain a warranty
reserve based upon our claims experience during the prior twelve months. Such
costs are accrued at the time revenue is recognized. As of June 30, 2004,
accrued product warranties totaled $135,000.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Inventory</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Inventories are stated at
the lower of cost or market. Cost is determined using the standard cost method.
Finished goods and work-in-process inventories include material, labor and
manufacturing overhead costs. We routinely evaluate the levels of our inventory
in light of current market conditions in order to identify excess and obsolete
inventory and we provide a valuation allowance for certain inventories based
upon the age and quality of the product. Competitive delivery times are
frequently less than the time required for us to manufacture a product,
requiring us to build some work-in-process inventories in anticipation of
orders. If orders are not obtained for the products built, the products will
ultimately be deemed obsolete and we will establish a reserve for their value.
We also review our inventory to ensure costs can be realized upon ultimate sale
to our customers. If we determine that the value of any items in ending
inventory exceeds the sales value less any related selling costs, a reserve is
established for the difference.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">17</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Impairment of
Long-Lived Assets</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We evaluate the
recoverability of property, equipment, and intangible assets in accordance with
Statement of Financial Accounting Standards No. 144, or SFAS No. 144,
&#147;Accounting for the Impairment or Disposal of Long-Lived Assets.&#148; When events
and circumstances indicate that long-lived assets may be impaired, we compare
the carrying value of the long-lived assets to the projection of future
undiscounted cash flows attributable to such assets and in the event that the
carrying value exceeds the future undiscounted cash flows, we record an
impairment charge against income equal to the excess of the carrying value over
the asset&#146;s fair value.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Investments</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We determine the
appropriate classification of investments at the time of purchase.
Available-for-sale investments are carried at their fair value based on quoted
market prices as of the balance sheet date. The amortized cost of securities is
adjusted for amortization of premiums and accretion of discounts to maturity.
Such amortization is included in &#147;other (income) and expense, net.&#148; Realized
gains or losses are determined on the specific identification method and are
reflected in &#147;other (income) and expense, net.&#148; Net unrealized gains or losses
are recorded directly in stockholders&#146; equity. Those unrealized losses that are
deemed to be other than temporary are reflected in &#147;interest and other income,
net.&#148; We also maintain minority investments in private companies which are
accounted for under the cost basis. These investments are reviewed for other
than temporary declines in value on a quarterly basis. Reasons for other than
temporary declines in value include whether the related company would have
insufficient cash flow to operate for the next twelve months, significant
changes in the operating performance and changes in market conditions.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Income Taxes</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We account for deferred
income taxes using the liability method, under which the expected future tax
consequences of timing differences between the book and tax basis of assets and
liabilities are recognized as deferred tax assets and liabilities. Valuation
allowances are established when necessary to reduce net deferred tax assets
when management estimates, based on available objective evidence, that it is
more likely than not that the future income tax benefit represented by the net
deferred tax asset will not be realized.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Results of Operations</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The following table sets
forth certain information relating to the operations of the Company expressed
as a percentage of total revenues for the periods indicated:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="95%" style="border-collapse:collapse;width:95.02%;">
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="23%" colspan="3" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:23.34%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Three
  Months Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="21%" colspan="3" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:21.54%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Six Months
  Ended<br>
  June 30,</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="9%" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2004</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="8%" valign="bottom" style="border-bottom:solid windowtext .5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">2003</font></b></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Revenues</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">100.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">100.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">100.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">100.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cost of revenues</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">91.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">92.1</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">92.9</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">94.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gross profit</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8.7</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.9</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7.1</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.6</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Operating expenses:</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Selling, general and administrative</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33.6</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33.1</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">30.9</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31.2</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Research and development</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.7</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.6</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restructuring charge</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">11.3</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.6</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 30.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total operating expenses</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">48.6</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">37.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">40.1</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">35.6</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from operations</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(39.9</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(29.5</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(33.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(30.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interest expense</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.6</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0.9</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other (expense) income, net</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1.2</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14.9</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">0.3</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6.1</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss before provision for income taxes</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(41.7</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(45.7</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(33.6</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Provision for incomes taxes</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1.0</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(0 .7</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Loss from continuing operations</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(42.7</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(45.7</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(34.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(37.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Discontinued operations:</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss) from discontinued operations, net of tax</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(162.5</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="9%" valign="bottom" style="padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.1</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(91.9</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 20.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Gain (loss) from disposal</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="9%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:solid windowtext .5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#151;</font></p>
  </td>
  <td width="3%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in .7pt 0in;width:46.82%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net loss</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in .7pt 0in;width:10.3%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(40.4</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)%</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in .7pt 0in;width:9.7%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(208.2</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)%</font></p>
  </td>
  <td width="9%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in .7pt 0in;width:9.54%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(33.2</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)%</font></p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in .7pt 0in;width:8.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(129.3</font></p>
  </td>
  <td width="3%" valign="bottom" style="padding:0in 0in .7pt 0in;width:3.14%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)%</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">18</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='18',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-ba.htm',USER='snswamy',CD='Aug  4 22:34 2004' -->
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Three months ended June 30, 2004
compared with three months ended June 30,</font></b>  <b><font style="font-weight:bold;">2003</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Revenue
from continuing operations. </font></i>Revenue from continuing
operations increased $1.0 million, or 11.8%, to $9.5 million for the three
months ended June 30, 2004 compared with $8.5 million for the three months
ended June 30, 2003.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total GaAs substrate
revenue increased $</font>0.5
million, or 6.5%, to $7.5 million for the three months ended June 30, 2004
compared with $7.0 million for the three months ended June 30, 2003. Sales of
5&#148; and 6&#148; diameter GaAs substrates were $1.3 million for the three months ended
June 30, 2004 compared with $0.8 million for the three months ended June 30,
2003. InP substrate revenue increased $30,000, or 6.0%, to $533,000 for the
three months ended June 30, 2004 compared with $503,000 for the three months
ended June 30, 2003. The increase in GaAs substrate revenue during the past
year is due to market growth in the HBLED and wireless handset markets and to
our ability to gain share among some Asian customers.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">International revenue
increased to 77.1% of total revenue from continuing operations for the three
months ended June 30, 2004 compared with 76.4% of total revenue from continuing
operations for the three months ended June 30, 2003. The increase was primarily
due to a greater share of our GaAs substrates being used in opto-electronics
applications and the majority of our customers for these applications being in
Asia.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Gross
margin. </font></i>Gross margin increased to 8.7% of total revenue for
the three months ended June 30, 2004 compared with 7.9% of total revenue for
the three months ended June 30, 2003. The increase was primarily due to a
larger sales volume that enabled us to cover more fixed costs as well as
reduced costs that we incurred as a result of moving most of our production to
China, where we incur lower production costs than in our California operations.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Selling,
general and administrative expenses. </font></i>Selling, general and
administrative expenses increased to $3.2 million for the three months ended
June 30, 2004 compared with $2.8 million for the three months ended June 30,
2003. The increase is due to an additional accrual of $350,000 for legal fees
related to an investigation by our Audit Committee into product testing and
compliance practices in second quarter of&#160;
2004. As a percentage of revenue, selling, general and administrative
expenses were 33.6% for the three months ended June 30, 2004 compared with
33.1% for the three months ended June 30, 2003.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Research
and development expenses. </font></i>Research and development expenses
decreased $18,000, or 4.9%, to $350,000 for the three months ended June 30,
2004 compared with $368,000 for the three months ended June 30, 2003. As a
percentage of total revenue, research and development expenses were 3.7% for
the three months ended June 30, 2004 compared with 4.3% for the three months
ended June 30, 2003. Although we reduced research and development expenses as
part of our effort to adjust costs in line with our current business, we
believe that continued investment in product development is critical to
attaining our strategic objectives of maintaining and increasing our technology
leadership, and as a result, we expect research and development expenses to
remain at current levels or increase in future periods. Research and
development efforts during the first quarter of 2004 were focused primarily on
improving the yield and surface quality of our GaAs substrates.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Interest
expense. </font></i>Interest expense decreased $50,000, or 46.3%, to
$58,000 for the three months ended June 30, 2004 compared with $108,000 for the
three months ended June 30, 2003. Interest expense decreased due to lower debt
levels as we continue to pay down our debt.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Other
income and expense, net. </font></i>Other expense decreased $1.2 million
to $113,000 for the three months ended June 30, 2004 compared with other
expense of $1.3 million for the three months ended June 30, 2003. The decrease
was mainly due to an impairment charge in 2003 related to a non-consolidated
subsidiary for $1.3 million.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Provision
for income taxes. </font></i>Due to our continuing operating losses in
the United States and uncertainty regarding future profitability, we recorded a
full valuation allowance for our US losses against our net deferred tax assets
of $34.6 million in 2003. We incurred a tax liability of
$97,000 for our overseas businesses for the three months ended June 30, 2004.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Six months ended June 30, 2004
compared with six months ended June 30,</font></b>  <b><font style="font-weight:bold;">2003</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Revenue
from continuing operations. </font></i>Revenue from continuing
operations increased&#160; $2.2 million, or
13.2%, to $19.3 million for the six months ended June 30, 2004 compared with
$17.1 million for the six months ended June 30, 2003.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Total GaAs substrate
revenue increased $1.5 million, or 11.0%, to $15.5 million for the six months
ended June 30, 2004 compared with $14.0 million for the six months ended June
30, 2003. Sales of 5&#148; and 6&#148; diameter GaAs substrates were $2.8 million for the
six</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">19</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">months ended June 30,
2004 compared with $</font>2.1
million for the six months ended June 30, 2003. InP substrate revenue decreased
$18,000, or 1.7%, to $1.1
million for the six months ended June 30, 2004 compared with $1.1 million for
the six months ended June 30, 2003. The increase in GaAs substrate revenue
during the past year is due to market expansion in the HBLED and wireless
handset markets and to our ability to gain share among Asian customers.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">International revenue
increased to 77.8% of total revenue from continuing operations for the six
months ended June 30, 2004 compared with 64.6% of total revenue from continuing
operations for the six months ended June 30, 2003. The increase was primarily
due to a greater share of our GaAs substrates being used in opto-electronics
applications and the majority of our customers for these applications being in
Asia.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Gross
margin. </font></i>Gross margin increased to 7.1% of total revenue for
the six months ended June 30, 2004 compared with 5.6% of total revenue for the
six months ended June 30, 2003. The increase was primarily due to a larger
sales volume that enabled us to cover more fixed costs as well as reduced costs
that we incurred as a result of moving most of our production to China, where we
incur lower production costs than in our California operations.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Selling,
general and administrative expenses. </font></i>Selling, general and
administrative expenses increased to $6.0 million for the six months ended June
30, 2004 compared with $5.3 million for the six months ended June 30, 2003. The
increase is due to an additional accrual of $350,000 for legal fees related to
the investigation by our Audit Committee into product testing and compliance
practices in second quarter of 2004, and $300,000 for auditing and
Sarbanes-Oxley related expenses for 2004. As a percentage of revenue, selling,
general and administrative expenses were 30.9% for the six months ended June
30, 2004 compared with 31.2% for the six months ended June 30, 2003.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Research
and development expenses. </font></i>Research and development expenses
decreased $56,000, or 7.5%, to $691,000 for the six months ended June 30, 2004
compared with $747,000 for the six months ended June 30, 2003. As a percentage
of total revenue, research and development expenses were 3.6% for the six
months ended June 30, 2004 compared with 4.4% for the six months ended June 30,
2003. Although we reduced research and development expenses as part of our
effort to adjust costs in line with our current business, we believe that
continued investment in product development is critical to attaining our
strategic objectives of maintaining and increasing our technology leadership,
and as a result, we expect research and development expenses to remain at
current levels or increase in future periods. Research and development efforts
during the first quarter of 2004 were focused primarily on improving the yield
and surface quality of our GaAs substrates.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Interest
expense. </font></i>Interest expense decreased $56,000, or 25.1%,
to $167,000 for the six months ended June 30, 2004 compared with $223,000 for the six months ended June
30, 2003. Interest expense includes a prepayment penalty incurred by
voluntarily repaying off a loan before it was due with an outstanding principal
balance of $781,000, which we acquired in 1996.&#160; Interest expense decreased due to lower debt levels as we
continue to pay down our debt.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Other
income and expense, net. </font></i>Other income increased $1.1 million
to $54,000 for the six months ended June 30, 2004 compared with other expense
of $1.0 million for the six months ended June 30, 2003. The increase was mainly
due to an impairment charge in 2003 related to a non-consolidated subsidiary
for $1.3 million.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;">Provision
for income taxes. </font></i>Due to our continuing operating losses in
the United States and uncertainty regarding future profitability, we recorded a
full valuation allowance for our US losses against our net deferred tax assets
of $34.6 million in 2003. We incurred a tax liability of
$137,000 for our overseas businesses for the six months ended June 30, 2004.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Liquidity and Capital Resources</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We consider cash and cash
equivalents, and short-term investments as liquid and available for use.
Short-term investments are comprised of government bonds and high-grade
commercial debt instruments. Also included in short-term investments is our
common stock investment in Finisar Corporation. As of June 30, 2004, our
principal sources of liquidity were $34.6 million in cash and cash equivalents
and short-term investments, excluding restricted deposits.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents
and short-term investments, excluding $2.3 million and $3.7 million for our
investment in Finisar common stock as of June 30, 2004 and December 31, 2003,
respectively, decreased $3.0 million to $32.3</font> million as of June 30, 2004 compared
with $35.3 million as of December 31, 2003.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

</div>


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<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents
decreased $9.6 million to $14.8 million as of June 30, 2004 compared with $24.3
million as of December 31, 2003. Short-term investments increased by $</font>5.2 million to $19.9 million as of June 30, 2004
compared with $14.7 million as of
December 31, 2003. We converted approximately $7.8 million of the total $9.6
million of Chinese Renminbi from the sale of our opto-electronic assets into
United States dollars during the first quarter of 2004 and invested most of
that into short-term investments. The remaining funds were converted in early
April 2004.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used by
operating activities of $185,000 for the six month period ended June 30, 2004
was comprised primarily of our net loss adjusted for non-cash items which
netted to $2.8 million, consisting primarily of depreciation of $2.4 million,
and by a $2.6 million net change in assets and liabilities. The net change in
assets and liabilities resulted primarily from a decrease in accounts
receivable and inventory </font>partially
offset by an increase in prepaid expenses and a decrease in accrued
liabilities.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net accounts receivable
decreased by $1.9 million, or 30.3%, to $4.4 million as of June 30, 2004
compared with $6.3 million as of December 31, 2003. The decrease reflects
better collections from customers and an additional sales returns reserve of
$745,000 recorded in the first quarter of 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net inventories decreased
$2.</font>3 million, or
9.4% to $21.8 million as of
June 30, 2004 compared with $24.1 million as of December 31, 2003. The Company
adopted a strategy of using inventory to conserve cash during the first half of
2004. During the second half of 2004, we do not expect to maintain the same
rate of net inventory decrease as we experienced in first half of 2004.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used by investing
activities of $6.8 million for the quarter ended June 30, 2004 includes
purchases of property and equipment of $0.7 million primarily used to transfer
production capacity to China for the substrate division, and purchases of high
grade investment securities with maturities of less than two years totaling
$20.7 million, partially offset by sales of high grade investment securities
totaling $10.4 million and a change in the investments providing our restricted
cash of $4.2 million.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We do not have any plans
to initiate any major new capital spending projects through 2004. We are
currently completing certain projects at our China facilities and closing our
remaining manufacturing facilities in Fremont, California. We expect to invest
approximately $2.0 million in capital projects in 2004. We believe that our
existing and planned facilities and equipment are sufficient to fulfill current
and expected future orders.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Net cash used in
financing activities of $2.5 million consisted of scheduled payments of $2.7 million
related to long-term borrowings, partially offset by proceeds of $0.2 million
through our employee stock compensation programs.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our main Fremont,
California manufacturing facility is financed by long-term borrowings, which
were refinanced by taxable variable rate revenue bonds in 1998. These bonds
mature in 2023 and bear interest at a variable rate that was 1.4% as of June
30, 2004. The bonds are traded in the public market. Repayment of principal and
interest under the bonds is supported by a letter of credit from our bank and
is paid on a quarterly basis. We have the option to redeem the bonds in whole
or in part during their term. As of June 30, 2004, $8.5 million was outstanding
under these bonds.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As of June 30, 2004</font>, the credit facility maintained by
us with a bank included a letter of credit supporting repayment of our
industrial bonds with an outstanding amount of $8.6 million. The Company has
pledged and placed certain investment securities with an affiliate of the bank
as additional collateral for this facility. We have also pledged certain
investments for a credit facility for our workers compensation insurance. As a
result, $8.6 million of our cash and short-term investments are restricted.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We currently hold a note
payable secured by certain buildings and land in China totaling $1.5 million as
of June 30, 2004. The balance on this note is due in December 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We believe that we have
adequate cash and investments to meet the Company&#146;s needs over the next 12
months. If our sales decrease, however, our ability to generate cash from
operations will be adversely affected which could adversely affect our future
liquidity, require us to use more cash at a more rapid rate than expected, and
require us to seek additional capital. There can be no assurance that such
additional capital will be available or, if available it will be at terms
acceptable to the Company. Cash from operations could be affected by various
risks and uncertainties, including, but not limited to those set forth below
under &#147;Risks Related to Our Business.&#148;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Outstanding contractual
obligations as of June 30, 2004 are summarized as follows (in thousands):</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">21</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<div align="center">

<table border="0" cellspacing="0" cellpadding="0" width="54%" style="border-collapse:collapse;width:54.98%;">
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Debt</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Operating<br>
  Leases</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Total</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2004 (remaining six months)</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,818</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">717</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,535</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2005</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">420</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,222</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,642</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2006</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">420</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">901</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,321</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2007</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">420</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">681</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,101</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2008</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">385</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">681</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1,066</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" style="padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Thereafter</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">6,345</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2,855</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.04%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,200</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="46%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:46.14%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">9,808</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">7,057</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.5%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:2.36%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="12%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:12.68%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">16,865</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.24%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

</div>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We lease certain office
space, manufacturing facilities and property under long-term operating leases
expiring at various dates through March 2013. Total rent expense under these
operating leases w</font>as
approximately $352,000 and $705,000 for the three month and six month periods
ended June 30, 2004, respectively.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Recent Accounting Pronouncements</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In January 2003, the
Financial Accounting Standards Board</font> (FASB) issued Interpretation No. 46, or FIN 46, <i><font style="font-style:italic;">Consolidation of Variable Interest Entities</font></i>,
which addresses consolidation by business enterprises of variable interest
entities, or VIEs, either: (1) that do not have sufficient equity investment at
risk to permit the entity to finance its activities without additional
subordinated financial support, or (2) in which the equity investors lack an
essential characteristic of a controlling financial interest. In December 2003,
the FASB completed deliberations of proposed modifications to FIN 46, or FIN
46(R), resulting in an effective date of no later than the first interim or
annual period ending after March 15, 2004. The Company&#146;s adoption of FIN 46(R)
did not have an impact on our results of operations or financial position.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:13.5pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In April 2004, the Emerging Issues Task
Force issued Statement No. 03-06, (EITF 03-06), <i><font style="font-style:italic;">Participating Securities and the
Two-Class Method under FASB Statement No. 128, Earnings Per Share</font></i>.
EITF 03-06 addresses a number of questions regarding the computation of
earnings per share by companies that have issued securities other than common
stock that contractually entitle the holder to participate in dividends and
earnings of the company when, and if, it declares dividends on its common
stock. The issue also provides further guidance in applying the two-class
method of calculating earnings per share, clarifying what constitutes a
participating security and how to apply the two-class method of computing
earnings per share once it is determined that a security is participating,
including how to allocate undistributed earnings to such a security. EITF 03-06
was effective for fiscal periods beginning after March 31, 2004. The adoption
of EITF 03-06 did not have a material effect on the Company&#146;s results of
operations or financial position.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:13.5pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Risks Related to Our Business</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We may incur claims
or other liabilities or obligations related to our failure</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">to follow requirements
for testing of products and provision of testing data</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">and information relating to customer
requirements. Additionally, customers may</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">cancel or reduce future shipments in
response to these failures.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have recently
determined that we ha</font>d
not followed requirements for testing of products and provision of testing data
and information relating to customer requirements. See preceeding &#147;Item 2.
Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operation - Overview&#148; and &#147;Item 4. Controls and Procedures&#148; below for further
information. Although we are notifying affected customers concerning our
findings, there can be no assurance that we will not incur customer claims or
other liabilities or obligations in connection with this matter, nor, if we
receive any such claims, that we will not have to restate results from prior
periods. In addition, revenue in future periods may be adversely impacted if
customers cancel or reduce orders or decide not to continue ordering from us as
a result of this disclosure. We have been notified of several cancellations of
future orders by customers pending further information regarding enhancements
to our product testing and quality control systems. We cannot be sure that we
will not receive additional cancellations of orders by other customers, or fail
to win expected future orders from customers, as a result of our disclosure of
our investigation conclusions.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">22</font></p>


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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Because of power
shortages in China, we may have to temporarily close our China operations,
which would adversely impact our ability to manufacture our products, meet
customer orders, and result in reduced revenues for the period.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Chinese government has indicated that the country faces
a power crunch this summer and that power demand in 24 provinces outstripped
supply in peak periods during the first four months of 2004. Instability in
electrical supply has caused sporadic outages among residential consumers. As a
result, the Chinese government has called for tough measures to ease the energy
shortage which is expected to last at least through 2005.&#160; Provinces have imposed power brownouts to
reduce electricity demand and some companies in Beijing have been ordered to
give their employees a week off to ease the pressure on power supply.&#160; It is anticipated that the plants, most of
which are state-owned, will be closed and reopened on a staggered schedule to
reduce power consumption during the capital&#146;s hottest months, with the first
closings occurring in early July.&#160; The
policy is expected to continue until the end of August.&#160; We closed most of our operations for a week
in late July 2004 in conformance with this policy.&#160; If we are required to make additional temporary closures of our
Beijing operations, we will be unable to manufacture our products, and will be
unable to meet customer orders except from inventory on hand.&#160; As a result, we could lose sales, adversely
impacting our revenues, and our relationships with our customers could suffer,
impacting our ability to generate future sales.&#160; In addition, if power is shut off at our Beijing operations at
any time, either voluntarily or as a result of unplanned brownouts, during
certain phases of our manufacturing process including our crystal growth phase,
the work in process may be ruined and rendered unusable, causing us to incur
expense that will not be covered by revenue, and negatively impacting our cost
of goods sold and gross margins.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Intellectual
property infringement claims may be costly to resolve and could divert
management attention.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Other companies may hold
or obtain patents on inventions or may otherwise claim proprietary rights to
technology necessary to our business. The markets in which we compete are
comprised of competitors who in some cases hold substantial patent portfolios
covering aspects of products that could be similar to ours. We could become
subject to claims that we are infringing patent, trademark, copyright or other
proprietary rights of others, and have been sued by a substrate competitor
concerning alleged patent infringement. On April 15, 2003, Sumitomo Electric
Industries, Ltd., (SEI) filed a complaint in the Tokyo District Court, Civil
Division against the Company and its Japanese distributor alleging patent infringement
of two patents held by SEI in Japan. The suit seeks penalties from us in the
amount of $1.67 million plus interest and court costs and the cessation of our
sales of gallium arsenide substrates in Japan. We intend to defend ourself
vigorously in these law suits. Both parties have completed submitting arguments
and evidence in litigation in Japan and we currently retain all of our options
which include appealing any court decision and launching an effort to have
Sumitomo&#146;s patent invalidated in Japan. However, there can be no assurance that
the court will not rule against us on the infringement claim, or that we can
settle this matter on terms acceptable to us, if at all.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Litigation to determine
the validity of alleged claims, such as that between us and Sumitomo, could be
time-consuming and result in significant expense to us and divert the efforts
of our technical and management personnel, whether or not the litigation is
ultimately determined in our favor. If a law suit is decided against us, including
the lawsuit with Sumitomo, we could be subject to significant liabilities,
requiring us to seek costly licenses or preventing us from manufacturing and
selling our products. We may not be able to obtain required licensing
agreements on terms acceptable to us or at all. If we lose the litigation with
Sumitomo, we may have to pay royalties to Sumitomo on products sold in Japan,
or cease sales of our products to customers in Japan.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we fail to
comply with environmental and safety regulations, we may be subject to
significant fines or cessation of our operations; in addition, we could be
subject to suits for personal injuries caused by hazardous materials.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are subject to
federal, state and local environmental and safety laws and regulations in all
of our operating locations. These laws, rules and regulations govern the use,
storage, discharge and disposal of hazardous chemicals during manufacturing,
research and development, and sales demonstrations. If we fail to comply with
applicable regulations, we could be subject to substantial liability for
clean-up efforts, personal injury and fines or suspension or cessation of our
operations. In March 2001, we settled a claim made by the California
Occupational Saftey and Health Administration, or Cal-OSHA, in an investigation
primarily regarding impermissible levels of potentially hazardous materials in
certain areas of our manufacturing facility in Fremont, California for
$200,415, and we have recently been the target of press allegations concerning
our environmental compliance programs and exposure of our employees to
hazardous materials, and there is a possibility that former employees may file
litigation against us. Although we have put in place engineering,
administrative and personnel protective equipment programs to address these
issues, our ability to expand or continue to operate our present locations
could be restricted or we could be required to acquire costly remediation
equipment or incur other significant expenses. Existing or future changes in
laws or regulations in the United States and China may require us to incur
significant expenditures or liabilities, or may restrict our operations. In
addition, our employees could be exposed to chemicals or other hazardous
materials at our facilities and we may be subject to lawsuits seeking damages
for wrongful death or personal injuries allegedly caused by exposure to
chemicals or</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">23</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">hazardous materials at
our facilities.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If litigation is brought
against us, litigation is inherently uncertain and while we would expect to
defend ourself vigorously, it is possible that our business, financial
condition, results of operations or cash flows, could be affected in any
particular period by such litigation if brought against us.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The semiconductor
industry is cyclical and has experienced a downturn which has</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">adversely impacted our
operating results.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our continuing business
depends in significant part upon manufacturers of electronic and
opto-electronic semiconductor devices, as well as the current and anticipated
market demand for such devices and products using such devices. As a supplier
to the semiconductor industry, we are subject to the business cycles that
characterize the industry. The timing, length and volatility of these cycles
are difficult to predict. The semiconductor industry has historically been
cyclical because of sudden changes in demand for semiconductors and capacity
requirements, including capacity utilizing the latest technology. The rate of
changes in demand, including end demand, is high, and the effect of these
changes upon us occurs quickly, exacerbating the volatility of these cycles.
These changes have affected the timing and amounts of customers&#146; capital
equipment purchases and investments in new technology. These industry cycles
create pressure on our net sales, gross margin and net income.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The industry has
previously experienced periods of oversupply that result in significantly
reduced demand for semiconductor devices and components, including our
products, both as a result of general economic changes and overcapacity. When
these periods occur, our operating results and financial condition are
adversely affected, and create pressure on our revenue, gross margins and net
income. Inventory buildups in telecommunications products and slower than
expected sales of computer equipment resulted in overcapacity and led to
reduced sales by our customers, and therefore reduced purchases of our
products. During periods of weak demand such as those experienced over the past
years, customers typically reduce purchases, delay delivery of products and/or
cancel orders of component parts such as our products. Increased price
competition has resulted, causing pressure on our net sales, gross margin and
net income. We experienced cancellations, price reductions, delays and push
outs of orders, which have resulted in reduced revenues. If the economic
downturn were to continue, or occur again in the future, further order
cancellations, reductions in order size or delays in orders will materially
adversely affect our business and results of operations. Actions to reduce our
costs, such as those we have recently taken, may be insufficient to align our
structure with prevailing business conditions. We may be required to undertake
additional cost-cutting measures, and may be unable to invest in marketing,
research and development and engineering at the levels we believe are necessary
to maintain our competitive position. Our failure to make these investments could
seriously harm our business.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">During periods of
increasing demand for semiconductor devices, we must have sufficient
manufacturing capacity and inventory to meet customer demand, and must be able
to attract, hire, train and retain qualified employees to meet demand. It
appears that the semiconductor industry is in the early stages of an upturn and
increasing demand. However, we cannot predict the sustainability of a recovery,
if any, and the industry&#146;s rate of growth in this recovery, if it occurs. If we
are unable to effectively manage our resources and production capacity during
an industry upturn, there could be a material adverse effect on our business,
financial condition and results of operations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If the economy
recovers and we are again in a period of high demand for our</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">products, we may be
unable to expand our manufacturing capacity quickly enough</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">to meet increased demand, we may
make decisions to expand capacity that are not</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">profitable, and we may be unable to
lower our costs or increase revenue.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">It appears that the
industry may be in an upturn, which may cause demand to increase rapidly as it
has in prior years after other cyclical downturns in the economy and the
industries in which we operate. If this happens, in order to meet increased
demand and maintain our market share, we may need to increase production, which
could require us to build new facilities, expand and modify our existing
facilities, purchase additional manufacturing equipment, and add qualified
staff. If we are not at that time able to expand our manufacturing capacity, we
will be unable to increase production, which may adversely impact our ability
to meet increased production demand while reducing unit costs, margins and
improving our operating results.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We are currently constructing
and modifying facilities in California and China. Our construction activities
subject us to a number of risks, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>unforeseen environmental or
engineering problems;</p>

<p align="left" style="margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>unavailability or late
delivery of production equipment;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>delays in completing new
facilities;</p>

<p align="left" style="margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>delays in bringing production
equipment on-line;</p>

<p align="left" style="margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>work stoppages or delays;</p>

<p align="left" style="margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>inability to recruit and train
qualified staff; and</p>

<p align="left" style="margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .45in;text-align:left;text-autospace:none;text-indent:-.2in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160; </font>unanticipated cost increases
and restrictions imposed by requirements of local, state or federal regulatory
agencies in the&#160;&#160; United States and
China.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If any of these risks
occurs, construction may be costlier than anticipated and completion could be
delayed, which could hurt our ability to expand capacity and increase our
sales. In addition, if we experience delays in expanding our manufacturing
capacity, we may not be able to timely meet customer requirements, and we could
lose future sales. We are also completing selective investments in equipment
and facilities as part of our previously planned capacity expansion. To offset
the additional fixed operating expenses, we must increase our revenue by
increasing production and improving yields. If demand for our products does not
grow, if prices decline significantly, or if our yields do not improve as
anticipated, we may be unable to offset these costs against increased revenue,
which would adversely impact our operating results.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Unpredictable
fluctuations in our operating results could disappoint analysts</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">or our investors, which
could cause our stock price to decline.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have not over the past
year been able to sustain growth, and may not be able to return to historic
growth levels in the current economic environment. Our net loss in 2002 was the
largest in our history and our losses continued during 2003. We believe we will
endure losses for at least part of 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We have and may continue
to experience significant fluctuations in our revenue and earnings. Our
quarterly and annual revenue and operating results have varied significantly in
the past and may vary significantly in the future due to a number of factors,
including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>decline in
general economic conditions or downturns in the industry in which we compete;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>fluctuations
in demand for our products;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>expansion of
our manufacturing capacity;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>expansion of
our operations in China;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>limited
availability and increased cost of raw materials;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the volume and
timing of orders from our customers, and cancellations, push outs and delays of
customer orders;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>fluctuation of
our manufacturing yields;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>decreases in
the prices of our competitors&#146; products;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>costs incurred
in connection with any future acquisitions of businesses or technologies;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>increases in
our expenses, including expenses for research and development; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>our ability to
develop, manufacture and deliver high quality products in a timely and
cost-effective manner.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Due to these factors, we
believe that period-to-period comparisons of our operating results may not be meaningful
indicators of our future performance. Our operating results have over the past
year at times been below the expectations of securities analysts or</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">investors. If this occurs
again in future periods, the price of our common stock could decline or
fluctuate.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A substantial percentage
of our operating expenses are fixed in the short term and we may be unable to
adjust spending to compensate for an unexpected shortfall in revenues. As a
result, any delay in generating revenue could cause our operating results to be
below the expectations of market analysts or investors, which could also cause
our stock price to fall.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our results of
operations may suffer if we do not effectively manage our</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">inventory.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We must manage our
inventory of component parts, work-in-process, and finished goods effectively
to meet changing customer requirements, while keeping inventory costs down and
improving gross margins. Some of our products and supplies have in the past and
may in the future become obsolete while in inventory due to changing customer
specifications, or become excess inventory due to decreased demand for our
products and an inability to sell the inventory within a foreseeable period.
Furthermore, if current costs of production increase or sales prices drop below
the standard prices at which we value inventory, we may need to take a charge
for a reduction in inventory values. We have in the past had to take inventory
valuation and impairment charges. If we are not successfully able to manage our
inventory, we may need to write off unsaleable, obsolete or excess inventory,
which could adversely affect our results of operations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Decreases in
average selling prices of our products may reduce gross margins.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The market for compound
semiconductor substrates is characterized by pressures on average selling
prices resulting from factors such as increased competition or overcapacity. We
may experience price pressures on our products, and if average selling prices
decline in the future, our revenues and gross margins could decline. We may be
unable to reduce the cost of our products sufficiently to counter the effect of
lower selling prices and allow us to keep pace with competitive pricing
pressures and our margins could be adversely affected.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The disposal of our
opto-electronics business may fail to result in the</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">benefits we anticipate.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We may not obtain the
benefits we expect as a result of discontinuation of our opto-electronics
business, such as greater strategic focus on our core businesses. We may be
required to return to the buyer some or all of the $1 million of the sale
proceeds which will be held in escrow should the buyer successfully claim that
we breached one of the representations or warranties made to it. Our building
in Monterey Park may not be sold for the $1 million at which we are carrying it
on our balance sheet. We may incur additional costs associated with the
discontinued operations which could materially reduce our short term earnings.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">A reoccurrence of
Severe Acute Respiratory Syndrome (SARS) or the outbreak of a</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">different contagious
disease may adversely impact our manufacturing operations</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">and some of our key suppliers and
customers.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The majority of our
substrate manufacturing activities are conducted in China. In addition, we
source key raw materials, including gallium, from our joint ventures and other
suppliers in China. The 2003 SARS outbreak was most notable in China and a
small number of cases have been reported to date in 2004. One employee at our
LED production facility in China contracted SARS in late April 2003 prompting
us to close the facility for ten days. There was no significant impact to our
ability to fill customer orders. If there were to be another outbreak of SARS
or a different contagious disease and if our employees contracted the disease,
we may be required to temporarily close our manufacturing operations.
Similarly, if one of our key suppliers is required to close for an extended
period, we may not have enough raw material inventory to continue manufacturing
operations. In addition, while we possess management skills among our China
staff that enable us to maintain our manufacturing operations with minimal
on-site supervision from our US-based staff, our business could also be harmed
if travel to or from Asia and the United States is restricted or inadvisable,
as it was during parts of 2003. None of our substrate competitors is as
dependent on manufacturing facilities in China as we are. If our manufacturing
operations were closed for a significant period, we could lose revenue and
market share during that period which would depress our financial performance
and could be difficult to recapture. Finally, if one of our key customers is
required to close for an extended period, we may not be able to ship product to
them, our revenue would decline and our financial performance would suffer.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The impact of
changes in global economic conditions on our customers may cause</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">us to fail to meet
expectations, which would negatively impact the price of our</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">stock.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our operating results can
vary significantly based upon the impact of changes in global economic
conditions on our customers. More specifically, the macro-economic environment
that we faced in 2003 was more uncertain than in some prior periods, lasted
longer than expected and has materially and adversely affected us and our
operating results and may continue to do so. The revenue</font></p>

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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">growth and profitability
of our business depends on the overall demand for our substrates, and we are
particularly dependant on the market conditions for the wireless, solid-state
illumination, fiber optics and telecommunications industries. Because our sales
are primarily to major corporate customers whose businesses fluctuate with
general economic and business conditions, a softening of demand for products
that use our substrates, caused by a weakening economy may result in further or
prolonged decreased revenues. Customers may find themselves facing excess
inventory from earlier purchases, and may defer or reconsider purchasing
products due to the downturn in their business and in the general economy.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we do not
successfully develop new products to respond to rapidly changing</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">customer requirements, our
ability to generate sales and obtain new customers</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">may suffer.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our success depends on
our ability to offer new products and product features that incorporate leading
technology and respond to technological advances. In addition, our new products
must meet customer needs and compete effectively on quality, price and
performance. The life cycles of our products are difficult to predict because
the markets for our products are characterized by rapid technological change,
changing customer needs and evolving industry standards. If our competitors
introduce products employing new technologies or performance characteristics,
our existing products could become obsolete and unmarketable. During the past
year, we have seen our competitors selling more substrates manufactured using a
crystal growth technology similar to ours, which has eroded our technological
differentiation. If we fail to offer new products, we may not generate
sufficient revenue to offset our development costs and other expenses or meet
our customers&#146; requirements. Other companies, including Triquent, are actively
developing substrate materials that could be used to manufacture devices that
could provide the same high-performance, low-power capabilities as GaAs- and
InP-based devices at competitive prices. If these substrate materials or VGF
derived products are successfully developed and semiconductor device
manufacturers adopt them, demand for our GaAs substrates could decline and our
revenue could suffer.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The development of new
products can be a highly complex process, and we may experience delays in
developing and introducing new products. Any significant delays could cause us
to fail to timely introduce and gain market acceptance of new products.
Further, the costs involved in researching, developing and engineering new
products could be greater than anticipated.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our operating
results depend in large part on further customer acceptance of</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">our existing substrate
products manufactured in China.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To shift more of our
substrate manufacturing operations to China successfully, we will need our
customers to qualify products manufactured in China. If we are unable to
achieve qualifications for these products, our China facility will be
underutilized, our investments in China will not be recouped and we will be
unable to lower our costs by moving to China. We may lose sales of our products
to competitors who are not manufacturing in China, or whose operations in China
have already been qualified by customers. All of these events could reduce our
revenue but increase our cost structure. In addition, we announced a plan to
stop producing products in China during the third quarter of 2004. If customers
do not fully qualify our China production by the time we cease our California
production, we may lose additional customers.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Furthermore, some
customers have reduced their orders from us until our surface quality is as
good and consistent as that offered by competitors. As a result, some customers
are now allocating their requirements for VGF grown substrates across more
competitors and we believe that we have lost revenue and market share as a
result of these customer decisions, which we may be unable to recover. If we
are unable to retain our market share, our revenue and performance will
decline.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Intense competition
in the markets for our products could prevent us from</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">increasing revenue and sustaining
profitability.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The markets for our
products are intensely competitive. We face competition for our substrate
products from other manufacturers of substrates, such as Freiberger, Hitachi
Cable, Japan Energy and Sumitomo Electric and from semiconductor device
manufacturers that produce substrates for their own use, and from companies,
such as Triquent, that are actively developing alternative materials to GaAs and
some semiconductor devices are being marketed using these materials. We believe
that at least two of our competitors are shipping high volumes of GaAs
substrates manufactured using a technique similar to our VGF technique. Other
competitors may develop and begin using similar technology. If we are unable to
compete effectively, our revenue may not increase and we may be unable to be
profitable. We face many competitors that have a number of significant
advantages over us, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>greater
experience in the business;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>more
manufacturing experience;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">27</font></p>


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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>extensive
intellectual property;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>broader name
recognition; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>significantly
greater financial, technical and marketing resources.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our competitors could
develop new or enhanced products that are more effective than our products are.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The level and intensity
of competition has increased over the past year and we expect competition to
continue to increase in the future. Competitive pressures caused by the current
economic conditions have resulted in reductions in the prices of our products,
and continued or increased competition could reduce our market share, require
us to further reduce the prices of our products, affect our ability to recover
costs or result in reduced gross margins.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Defects in our
products could diminish demand for our products.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our products are complex
and may contain defects. We have experienced quality control problems with some
of our products over the past two years, which caused customers to return
products to us, reduce orders for our products, or both. If we continue to
experience quality control problems, or experience these or other problems in
new products, customers may cancel or reduce orders or purchase products from
our competitors and sales of our products could decline. Defects in our
products could cause us to incur higher manufacturing costs and suffer product
returns and additional service expenses, all of which could adversely impact
our operating results.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If new products developed
by us contain defects when released, our customers may be dissatisfied and we
may suffer negative publicity or customer claims against us, lose sales or
experience delays in market acceptance of our new products.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we have low product
yields, the shipment of our products may be delayed and</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">our operating results may be
adversely impacted.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our products are
manufactured using complex technologies, and the number of usable substrates we
can produce can fluctuate as a result of many factors, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>impurities in
the materials used;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>contamination
of the manufacturing environment;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>substrate
breakage;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>equipment
failure, power outages or variations in the manufacturing process; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>performance of
personnel involved in the manufacturing process.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If our yields decrease,
our revenue could decline because many of our manufacturing costs are fixed, or
would increase. We have experienced product shipment delays and difficulties in
achieving acceptable yields on both new and older products, and delays and poor
yields have adversely affected our operating results. We may experience similar
problems in the future and we cannot predict when they may occur or their
severity. In particular, many of our manufacturing processes are new and are
still being refined, which can result in lower yields.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We derive a
significant portion of our revenue from international sales, and</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">our ability to sustain
and increase our international sales involves</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">significant risks.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our revenue growth depends
in part on the expansion of our international sales and operations.
International sales represented 77.8% of our total revenue for the six months
ended June 30, 2004 and 64.6% for the six months ended June 30, 2003. We expect
that sales to customers outside the U.S. will continue to represent a
significant portion of our revenue, particularly sales to customers in Asia.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Currently, an increasing
percentage of our sales are to customers headquartered in Asia. Certain
manufacturing facilities and</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">suppliers are also
located outside the U.S. Managing our global operations presents challenges,
including periodic regional economic downturns, trade balance issues, varying
business conditions and demands, political instability, variations in
enforcement of intellectual property and contract rights in different
jurisdictions, differences in the ability to develop relationships with
suppliers and other local businesses, changes in U.S. and international laws and
regulations including U.S. export restrictions, fluctuations in interest and
currency exchange rates, the ability to provide sufficient levels of technical
support in different locations, cultural differences, shipping delays and
terrorist acts or acts of war, among other risks. Many of these challenges are
present in China, which represents a large potential market for semiconductor
equipment and where AXT anticipates significant opportunity for growth. Global
uncertainties with respect to: (i) economic growth rates in various countries;
(ii) sustainability of demand for electronics products; (iii) capital spending
by semiconductor manufacturers; (iv) price weakness for certain semiconductor
devices; and (v) political instability in regions where we have operations may
also affect our business, financial condition and results of operations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our dependence on
international sales involves a number of risks, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>changes in
tariffs, import or export restrictions and other trade barriers;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>unexpected
changes in regulatory requirements;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>longer periods
to collect accounts receivable;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>changes in
export license requirements;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>political and
economic instability;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>unexpected
changes in diplomatic and trade relationships; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>foreign
exchange rate fluctuations.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our sales are denominated
in U.S. dollars, except for sales to our Japanese and some Taiwanese customers,
which are denominated in Japanese yen. Thus, increases in the value of the U.S.
dollar could increase the price of our products in non-U.S. markets and make
our products more expensive than competitors&#146; products in these markets. Also,
denominating some sales in Japanese yen subjects us to fluctuations in the
exchange rates between the U.S. dollar and the Japanese yen. The functional currencies
of our Japanese and Chinese subsidiaries are the local currencies. We incur
transaction gains or losses resulting from consolidation of expenses incurred
in local currencies for these subsidiaries, as well as in translation of the
assets and liabilities of these assets at each balance sheet date. If we do not
effectively manage the risks associated with international sales, our revenue,
cash flows and financial condition could be adversely affected.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Demand for our
products may decrease if our customers experience difficulty</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">manufacturing, marketing
or selling their products.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our products are used as
components in our customers&#146; products. Accordingly, demand for our products is
subject to factors affecting the ability of our customers to successfully
introduce and market their products, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the
competition our customers face in their particular industries;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the technical,
manufacturing, sales and marketing and management capabilities of our
customers;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the financial
and other resources of our customers; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the inability
of our customers to sell their products if they infringe third party
intellectual property rights.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">If demand for the end
user applications for which our products are used decreases, or our customers
are unable to develop, market and sell their products, demand for our products
will decrease.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">29</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The financial
condition of our customers may affect their ability to pay</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">amounts owed to us.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Many of our customers are
facing business downturns that have reduced their cash balances and their
prospects. We frequently allow our customers to pay for products we ship to
them within 30 to 120 days after delivery. Subsequent to our shipping a
product, some customers have been unable to make payments as due, reducing our
cash balances and causing us to incur charges to allow for a possibility that
some accounts might not be paid. At least three customers that owed us a
significant amount have filed for bankruptcy protection and we are unlikely to
receive a substantial portion or any of the amounts owed to us as part of a
bankruptcy settlement. Other customers may also be forced to file for
bankruptcy. If our customers do not pay their accounts when due, we will be
required to incur charges that would reduce our earnings.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We purchase
critical raw materials and parts for our equipment from single or</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">limited sources, and
could lose sales if these sources fail to fill our needs.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We depend on a limited
number of suppliers for certain raw materials, components and equipment used in
manufacturing our products, including key materials such as quartz tubing,
polishing solutions, and paralytic boron nitride. We generally purchase these
materials through standard purchase orders and not pursuant to long-term supply
contracts and no supplier guarantees supply of raw materials or equipment to
us. If we lose any of our key suppliers, our manufacturing efforts could be
significantly hampered and we could be prevented from timely producing and delivering
products to our customers. We have experienced delays obtaining critical raw
materials and spare parts, including gallium, due to shortages of these
materials. We may experience delays due to shortages of materials and may be
unable to obtain an adequate supply of materials. These shortages and delays
could result in higher materials costs and cause us to delay or reduce
production of our products. If we have to delay or reduce production, we could
fail to meet customer delivery schedules and our revenue and operating results
could suffer.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The loss of one or
more of our key substrate customers would significantly hurt</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">our operating results.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">A small number of
substrate customers have historically accounted for a substantial portion of
our total revenue. Five customers accounted for 35.6% and 34.6% of our total
revenue for the three month and six month periods ended June 30, 2004,
respectively. One customer accounted for 5.8% and 9.5% of our revenue for the
three month and six month periods ended June 30, 2004. We expect that a
significant portion of our future revenue will continue to be derived from a
limited number of substrate customers. Our customers are not obligated to
purchase a specified quantity of our products or to provide us with binding forecasts
of product purchases. In addition, our customers may reduce, delay or cancel
orders at any time without any significant penalty, and during the past year,
we have experienced slower bookings, significant push outs and cancellation of
orders from some customers. In addition, due to the difficult economic
environment, several of our previously large customers have stopped operations
entirely. If we lose a major customer or if a customer cancels, reduces or
delays orders, our revenue would decline. In addition, customers that have
accounted for significant revenue in the past may not continue to generate
revenue for us in any future period. Any delay in scheduled shipments of our
products could cause net sales to fall below our expectations and the expectations
of market analysts or investors, causing our stock price to decline.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our substrate
products have a long qualification cycle that makes it difficult</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">to plan our expenses and
forecast our results.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Customers typically place
orders with us for our substrate products three months to a year or more after
our initial contact with them. The sale of our products may be subject to
delays due to our customers&#146; lengthy internal budgeting, approval and
evaluation processes. During this time, we may incur substantial expenses and
expend sales, marketing and management efforts while the customers evaluate our
products. These expenditures may not result in sales of our products. If we do
not achieve anticipated sales in a period as expected, we may experience an unplanned
shortfall in our revenue. As a result, we may not be able to cover expenses,
causing our operating results to vary. In addition, if a customer decides not
to incorporate our products into its initial design, we may not have another
opportunity to sell products to this customer for many months or even years. In
the current competitive and economic climate, the average sales cycle for our
products has lengthened even further and is expected to continue to make it
difficult to accurately forecast our future sales. We anticipate that sales of
any future substrate products will also have lengthy sales cycles and will,
therefore, be subject to risks substantially similar to those inherent in the
lengthy sales cycle of our current substrate products.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we are unable to
protect our intellectual property, we may lose valuable</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">assets or incur costly litigation.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We rely on a combination
of patents, copyrights, trademark and trade secret laws, non-disclosure
agreements and other intellectual property protection methods to protect our
proprietary technology. However, we believe that, due to the rapid pace of
technological innovation in the markets for our products, our ability to
establish and maintain a position of technology leadership also depends on</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

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</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">the skills of our
development personnel.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Despite our efforts to
protect our intellectual property, a third party could develop products or
processes similar to ours. Our means of protecting our proprietary rights may
not be adequate and our competitors may independently develop similar
technology, duplicate our products or design around our patents. We believe
that at least two of our competitors have begun to ship GaAs substrates
produced using a process similar to our VGF technique. Our competitors may also
develop and patent improvements to the VGF technology upon which we rely, and
thus may limit any exclusivity we enjoy by virtue of our patents or trade
secrets.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">It is possible that
pending or future United States or foreign patent applications made by us will
not be approved, that our issued patents will not protect our intellectual
property, or that third parties will challenge the ownership rights or the
validity of our patents. In addition, the laws of some foreign countries may
not protect our proprietary rights to as great an extent as do the laws of the
United States and it may be more difficult to monitor the use of our
intellectual property. Our competitors may be able to legitimately ascertain non-patented
proprietary technology embedded in our systems. If this occurs, we may not be
able to prevent the development of technology substantially similar to ours.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We may have to resort to
costly litigation to enforce our intellectual property rights, to protect our
trade secrets or know-how or to determine their scope, validity or
enforceability. Enforcing or defending our proprietary technology is expensive,
could cause us to divert resources and may not prove successful. Our protective
measures may prove inadequate to protect our proprietary rights, and if we fail
to enforce or protect our rights, we could lose valuable assets.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We need to continue
to improve or implement our systems, procedures and</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">controls and may not receive
favorable attestation of our internal control</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">systems by our independent auditors.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The new requirements
adopted by the Securities and Exchange Commission in response to the passage of
the Sarbanes-Oxley Act of 2002 will require annual review and evaluation of our
internal control systems, and attestation of these systems by our independent
accountants. We are currently reviewing our internal control procedures and
considering further documentation of such procedures that may be necessary.
Although the guidelines for the evaluation and attestation of internal control
systems have been finalized, the evaluation and attestation processes are new
and untested. Therefore, we can give no assurances that our systems will
satisfy the new requirements of the Securities and Exchange Commission or that
we will receive a favorable review and attestation by our independent auditors.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In the past, periods of
rapid growth and expansion has strained our management and other resources. The
expansion of our manufacturing capacity and the shift of manufacturing
operations to China placed and continue to place a significant strain on our
operations and management resources. We recently upgraded our inventory control
systems and may implement additional systems relating to consolidation of our
financial results. If we fail to manage these changes effectively, our
operations may be disrupted.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To manage our business
effectively, we may need to implement additional and improved management
information systems, further develop our operating, administrative, financial
and accounting systems and controls, add experienced senior level managers, and
maintain close coordination among our executive, engineering, accounting,
marketing, sales and operations organizations.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If we fail to
manage periodic contractions, we may utilize our cash balances</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">and our existing cash
and cash equivalent balances could decline.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We anticipate that our
existing cash resources will fund any anticipated operating losses, purchases
of capital equipment and provide adequate working capital for the next twelve
months. However, our liquidity is affected by many factors including, among
others, the extent to which we pursue additional capital expenditures, the
level of our production, and other factors related to the uncertainties of the
industry and global economies. If we fail to manage our contractions
successfully we may draw down our cash reserves, which would adversely affect
our operating results and financial condition, reduce our value and may impinge
our ability to raise debt and equity funding in the future, at a time when we
may be required to raise additional cash. Accordingly, there can be no
assurance that events in the future will not require us to seek additional
capital, or, if so required, that such capital will be available on terms
acceptable to us, if at all. As part of our effort to reduce costs, we may lose
key staff, production resources, and technology that we will need to grow when
end markets recover. These events could reduce our ability to grow profitably
as markets recover.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We anticipate that our
existing cash resources will fund any anticipated operating losses, purchases
of capital equipment and provide adequate working capital for the next twelve
months. Our liquidity is affected by many factors including, among others, the
extent to which we pursue additional capital expenditures, the level of our
production efforts, and other factors related to the</font></p>

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<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">uncertainties of the
industry and global economies. Accordingly, there can be no assurance that
events in the future will not require us to seek additional capital sooner, or,
if so required, that such capital will be available on terms acceptable to us
if at all.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We have made and
may continue to make strategic investments in raw materials</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">suppliers, which may not
be successful and may result in the loss of all or</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">part of our investment.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Through fiscal 2003, we
have recorded minority investments in raw material suppliers in China, that
provide us with opportunities to gain supply of key raw materials that are
important to our substrate business, and other products at lower cost than
other suppliers. These affiliates each have a market beyond that provided by
us. As of June 30, 2004, we had no obligations to make further investments in
any of these companies, although we may choose to do so under certain
conditions. We do not have influence over all of these companies, each of which
is located in China, and in some we have made only a strategic, minority
investment. We may not be successful in achieving the financial, technological
or commercial advantage upon which any given investment is premised, and we
could end up losing all or part of our investment.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Any future
acquisitions may disrupt our business, dilute stockholder value or</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">distract management
attention.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">As part of our strategy,
we may consider acquisitions of, or significant investments in, businesses that
offer products, services and technologies complementary to ours. Acquisitions
entail numerous risks, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>we may have
difficulty assimilating the operations, products and personnel of the acquired
businesses;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>our ongoing
business may be disrupted;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>we may incur
unanticipated costs;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>our management
may be unable to manage the financial and strategic position of acquired or
developed products, services and technologies;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>we may be
unable to maintain uniform standards, controls, procedures, and policies; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>our
relationships with employees and customers may be impaired as a result of any integration.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.2in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">For example, we incurred substantial costs in
connection with our acquisition of Lyte Optronics in May 1999, including the
assumption of approximately $10.0 million of debt, which was subsequently
repaid, resulting in a decline of cash available. We also incurred consistent
operating losses for the business following the acquisition, and have
discontinued all operations and sold the related assets acquired in our
acquisition of Lyte Optronics during 2003.</font></p>

<p style="margin:0in 0in .0001pt;text-indent:.2in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">To the extent that we
issue shares of our stock or other rights to purchase stock in connection with
any future acquisitions, dilution to our existing stockholders will result and
our earnings per share may suffer. Any future acquisitions may not generate
additional revenue or provide any benefit to our business.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">If any of our
facilities is damaged by actions such as fire, explosion, or</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">natural disaster, we may
not be able to manufacture our products.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The ongoing operation of
our manufacturing and production facilities in California and China is critical
to our ability to meet demand for our products. If we are not able to use all
or a significant portion of our facilities for prolonged periods for any
reason, we will not be able to manufacture products for our customers. For
example, a natural disaster, fire or explosion caused by our use of combustible
chemicals and high temperatures during our manufacturing processes would render
some or all of our facilities inoperable for an indefinite period of time.
Actions outside of our control, such as earthquakes, could also damage our
facilities, rendering them inoperable. Some of our manufacturing and research
and development is currently performed at our Fremont, California facilities,
which are located near an active seismic fault line. If we are unable to
operate our facilities and manufacture our products, we will lose customers and
revenue and our business will be harmed.</font></p>

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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Changes in China&#146;s
political, social and economic environment may affect our</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">financial performance.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our financial performance
may be affected by changes in China&#146;s political, social and economic
environment. The role of the Chinese central and local governments in the
Chinese economy is significant. Chinese policies toward economic
liberalization, and laws and policies affecting technology companies, foreign
investment, currency exchange rates and other matters could change, resulting
in greater restrictions on our ability to do business and operate our
manufacturing facilities in China. Any imposition of surcharges or any increase
in Chinese tax rates could hurt our operating results. The Chinese government
could revoke, terminate or suspend our license for national security and
similar reasons without compensation to us. If the government of China were to
take any of these actions, we would be prevented from conducting all or part of
our business. Any failure on our part to comply with governmental regulations
could result in the loss of our ability to manufacture our products in China.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">China has from time to
time experienced instances of civil unrest and hostilities. Confrontations have
occurred between the military and civilians. Events of this nature could
influence the Chinese economy, result in nationalization of foreign-owned
operations such as ours, and could negatively affect our ability to operate our
facilities in China.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">The effect of
terrorist threats and actions on the general economy could</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">decrease our revenues.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The United States
continues to be on alert for terrorist activity. The potential near- and
long-term impact terrorist activities may have in regards to our suppliers,
customers and markets for our products and the U.S. economy are uncertain.
There may be embargos of ports or products, or destruction of shipments or our
facilities, or attacks that affect our personnel. There may be other potential
adverse effects on our operating results due to a significant event that we
cannot foresee. Since we perform substantially all of our manufacturing
operations in China, and a significant portion of our customers are located
outside of the Untied States, terrorist activity or threats against US-owned
enterprise are a particular concern to us.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Our stock price has
been and may continue to be volatile.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our stock price has
fluctuated significantly since we began trading on the NASDAQ National Market.
For the twelve months ended June 30, 2004, the high and low closing sales
prices of our common stock were $4.58 and $1.20, respectively. A number of
factors could cause the price of our common stock to continue to fluctuate
substantially, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>actual or
anticipated fluctuations in our quarterly or annual operating results;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>changes in
expectations about our future financial performance or changes in financial estimates
of securities analysts;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>announcements
of technological innovations by us or our competitors;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>new product
introduction by us or our competitors;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>large customer
orders or order cancellations; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the operating
and stock price performance of comparable companies.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In addition, the stock
market in general has experienced extreme volatility that often has been
unrelated to the operating performance of particular companies. These broad
market and industry fluctuations may adversely affect the trading price of our
common stock, regardless of our actual operating performance.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">We have adopted
certain anti-takeover measures that may make it more difficult</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">for a third party to
acquire us.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Our board of directors
has the authority to issue up to 2,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of those shares without
any further vote or action by the stockholders. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights
of the holders of any preferred stock that may be issued in the future. The
issuance of shares of preferred stock, while potentially providing desirable
flexibility in connection with possible acquisitions and for other corporate
purposes, could have the effect of making it more difficult for a third party
to acquire a majority of our outstanding voting stock. We have no present
intention to issue shares of preferred stock.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On April 24, 2001, our
board of directors adopted a preferred stock purchase rights plan intended to
guard against certain takeover</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">tactics. The adoption of
this plan was not in response to any proposal to acquire us, and the board is
not aware of any such effort. The existence of this plan could also have the
effect of making it more difficult for a third party to acquire a majority of
our outstanding voting stock. In addition, certain provisions of our
certificate of incorporation may have the effect of delaying or preventing a
change of control, which could adversely affect the market price of our common
stock.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In addition, provisions
in our amended and restated certificate of incorporation and bylaws may have
the effect of delaying or preventing a merger, acquisition or change of control
of us, or changes in our management, including:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the division
of our board of directors into three separate classes, each with three year
terms;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the right of
our board to elect a director to fill a space created by a board vacancy or the
expansion of the board;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the ability of
our board to alter our bylaws;</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the ability of
our board to authorize the issuance of up to 2,000,000 shares of blank check
preferred stock; and</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the
requirement that only our board or the holders of at least 10% of our
outstanding shares may call a special meeting of our stockholders.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Furthermore, because we
are incorporated in Delaware, we are subject to the provisions of Section 203
of the Delaware General Corporation Law. These provisions prohibit large
stockholders, in particular those owning 15% or more of the outstanding voting
stock, from consummating a merger or combination with a corporation unless:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>66 2/3% of the
shares of voting stock not owned by these large stockholders approve the merger
or combination, or</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="3" face="Times New Roman" style="font-size:12.0pt;">&#149;</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160; </font>the board of
directors approves the merger or combination or the transaction which resulted
in the large stockholder owning 15% or more of our outstanding voting stock.</p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><i><font size="2" face="Times New Roman" style="font-size:10.0pt;font-style:italic;font-weight:bold;">Legislative
actions, higher insurance costs and potential new accounting</font></i></b>
<b><i><font style="font-style:italic;font-weight:bold;">pronouncements are
likely to cause our general and administrative expenses to</font></i></b>  <b><i><font style="font-style:italic;font-weight:bold;">increase and impact our future
financial position and results of operations.</font></i></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In order to comply with
the newly adopted Sarbanes-Oxley Act of 2002, as well as proposed changes to
listing standards by NASDAQ, and proposed accounting changes by the Securities
and Exchange Commission, we may be required to increase our internal controls,
hire additional personnel and additional outside legal, accounting and advisory
services, all of which will cause our general and administrative costs to
increase. Insurers may increase premiums as a result of the high claims rates
they incurred over the past year, and our premiums for our various insurance
policies, including our directors&#146; and officers&#146; insurance policies, increased
during 2003. Proposed changes in the accounting rules, including legislative
and other proposals to account for employee stock options as a compensation
expense among others, could materially increase the expense that we report
under generally accepted accounting principles and adversely affect our
operating results.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item3_QualitativeAndQuantitativeDis"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 3<i><font style="font-style:italic;">. </font></i>QUALITATIVE AND QUANTITATIVE DISCLOSURES
ABOUT MARKET RISK</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Foreign Currency Risk</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We use short-term forward
exchange contracts for hedging purposes to reduce the effects of adverse
foreign exchange rate movements. We have purchased foreign exchange contracts
to hedge against certain trade accounts receivable denominated in Japanese yen.
The change in the fair value of the forward contracts is recognized as part of
the related foreign currency transactions as they occur. As of June 30, 2004,
we had no outstanding commitments with respect to foreign exchange contracts.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">34</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='34',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-bc.htm',USER='snswamy',CD='Aug  4 22:36 2004' -->
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</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Interest Rate Risk</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents
earning interest and certain variable rate debt instruments are subject to
interest rate fluctuations. The following table sets forth the probable impact
of a 10% change in interest rates (in thousands):</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="78%" style="border-collapse:collapse;margin-left:.8in;width:78.0%;">
 <tr>
  <td width="25%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:25.58%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Instrument</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Balance<br>
  June 30,<br>
  2004</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="8%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.86%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Current<br>
  Interest<br>
  Rate</font></b></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in 0in 0in 0in;width:4.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="9%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:9.4%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Current<br>
  Interest<br>
  Income/<br>
  (Expense)</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.72%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.88%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Proforma<br>
  10% Interest<br>
  Rate Decline<br>
  Income/(Expense)</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.6%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.56%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Proforma<br>
  10% Interest<br>
  Rate Increase<br>
  Income/(Expense)</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.92%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="25%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:25.58%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Cash and cash equivalents</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.7%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:8.62%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">14,783</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:8.86%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.00</font></p>
  </td>
  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in .7pt 0in;width:4.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="7%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:7.74%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">148</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="14%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.22%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">133</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.6%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.9%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">163</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.92%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr>
  <td width="25%" valign="bottom" style="padding:0in 0in 0in 0in;width:25.58%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Bonds</font></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" style="padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">8,300</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="8%" valign="bottom" style="padding:0in 0in 0in 0in;width:8.86%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.42</font></p>
  </td>
  <td width="4%" valign="bottom" style="padding:0in 0in .7pt 0in;width:4.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">%</font></p>
  </td>
  <td width="9%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:9.4%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(118</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.72%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.88%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(106</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in .7pt 0in;width:2.6%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
  <td width="15%" colspan="2" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:15.56%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(130</font></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in .7pt 0in;width:.92%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">)</font></p>
  </td>
 </tr>
 <tr>
  <td width="25%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:25.58%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.82%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="10%" colspan="2" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:10.32%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.34%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="8%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:8.86%;">
  <p align="right" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:4.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="7%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:7.74%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">30</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.72%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="14%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.22%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">27</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.6%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;border-bottom:double windowtext 1.5pt;padding:0in 0in 0in 0in;width:1.66%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">$</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border-bottom:double windowtext 1.5pt;border-left:none;border-right:none;border-top:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.9%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">33</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.92%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="144" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="48" style="border:none;"></td>
  <td width="13" style="border:none;"></td>
  <td width="50" style="border:none;"></td>
  <td width="22" style="border:none;"></td>
  <td width="9" style="border:none;"></td>
  <td width="44" style="border:none;"></td>
  <td width="15" style="border:none;"></td>
  <td width="9" style="border:none;"></td>
  <td width="80" style="border:none;"></td>
  <td width="15" style="border:none;"></td>
  <td width="9" style="border:none;"></td>
  <td width="78" style="border:none;"></td>
  <td width="5" style="border:none;"></td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Equity Risk</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We also maintain minority
investments in private and publicly traded companies. These investments are
reviewed for other than temporary declines in value on a quarterly basis. Reasons
for other than temporary declines in value include whether the related company
would have insufficient cash flow to operate for the next twelve months,
significant changes in the operating performance and changes in market
conditions. In 2003, we recorded $2.0 million in charges to other expense to
write down our investment in two private US companies. As of June 30, 2004, the
minority investments we continue to hold amounted to $2.0 million.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item4_ControlsAndProcedures"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">ITEM 4<i><font style="font-style:italic;">. </font></i>CONTROLS AND PROCEDURES</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a) Under the supervision and with the participation
of our management, our Interim Chief Executive Officer and Chief Financial
Officer have evaluated the effectiveness of our disclosure controls and
procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended. Based upon that evaluation, our Interim Chief
Executive Officer and our Chief Financial Officer concluded that the our
disclosure controls and procedures were effective as of the end of the period
covered by this quarterly report, except as described below relating to certain
product testing procedures, as of the end of the period covered by this
quarterly report.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In March 2004, as part of
the Company&#146;s implementation of our Code of Business Conduct and Ethics, we
learned of certain failures to comply with requirements for product testing and
the provision of testing data and information relating to requirements of
certain customers. The Audit Committee of the Company&#146;s Board of Directors
conducted an investigation into our product testing practices and procedures,
with the assistance of outside counsel.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The investigation
confirmed that certain requirements for product testing and the provision of
testing data and information relating to certain customer requirements were not
being complied with. We implemented measures to ensure greater operational
controls and compliance with customer requirements. As a result of the
investigation, the Audit Committee concluded that certain executive management
changes should be implemented. Donald L. Tatzin, formerly Chief Financial
Officer, has been appointed Interim Chief Executive Officer, Wilson W. Cheung,
our Vice President, Corporate Controller, has been promoted to Chief Financial
Officer. Morris Young, Ph.D., formerly our Chairman, President and Chief
Executive Officer, will be responsible for improving and expanding the
Company&#146;s China operation. He will also remain a director. The Board of
Directors has also determined to separate the role of Chairman and Chief Executive
Officer, and accordingly, Jesse Chen, a current AXT board member, has become
Chairman of the Board. In addition, the Audit Committee concluded that
additional review of the organization and performance of operations, quality
control and product testing would be conducted, resulting in possible
additional changes in management and non-management functions. The Audit
Committee also instructed management to implement additional training programs
for employees involved in production, testing and quality assurance. The Audit
Committee believes that these measures will address the issues raised above and
provide the necessary operational oversight and assurance that the Company is
complying with the requirements for product testing and the provision of
testing data and other customer information.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b) No significant changes in internal controls over
financial reporting were made during the quarter ended June 30, 2004, although
as described above, we implemented executive management changes, including a
change in our Chief Executive Officer and Chief Financial Officer roles, during
the quarter, and are implementing operational changes and measures to improve
our operational controls over product testing, provision of testing and other
customer data and quality assurance.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">35</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='35',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-bc.htm',USER='snswamy',CD='Aug  4 22:36 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="PartIiOtherInformation"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">PART II OTHER INFORMATION</font></b></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item1_LegalProceedings"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item
1. Legal Proceedings</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">From time to time the
Company is involved in judicial or administrative proceedings concerning
matters arising in the ordinary course of business. The Company does not expect
that any of these matters, individually or in the aggregate, will have a
material adverse effect on its business, financial condition, cash flows or
results of operation.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On April 15, 2003,
Sumitomo Electric Industries, Ltd., (SEI) filed a complaint in the Tokyo
District Court, Civil Division against the Company and its Japanese distributor
alleging patent infringement of two patents held by SEI in Japan. The suit
seeks penalties from AXT in the amount of $1.67 million plus interest and court
costs and the cessation of AXT&#146;s sales of gallium arsenide substrates in Japan.
AXT intends to defend itself vigorously in these lawsuits and continues to sell
its products in Japan. Both parties have completed submitting arguments and
evidence in litigation in Japan. We retain all of our options which include
appealing any court decision and launching an effort to have Sumitomo&#146;s patent
invalidated in Japan.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On June 11, 2003, Cree,
Inc. filed a complaint in the United States Court for Northern District of
California against the Company alleging patent infringement. The complaint
sought damages and injunction against infringement. On July 23, 2003, the
Company filed a counter complaint in the United States Court for Northern
District of California, denying any patent infringement and alleging that
Cree&#146;s actions were intentionally designed to interfere with the Company&#146;s
prospective business relationships. The Company reached an agreement with Cree
resolving the disputes between us and signed a settlement agreement on March 5,
2004. The resolution of the disputes did not have a material adverse impact on
the Company&#146;s consolidated financial position or results of operations. All
parties signed a final release regarding all disputes between them on April 15,
2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item2_ChangesInSecuritiesAndUseOf"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 2. Changes in Securities and Use
of Proceeds</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item3_DefaultsUponSeniorSecurities"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 3. Defaults upon Senior
Securities</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item4_SubmissionOfMattersToAVote"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 4. Submission of Matters to a
Vote of Security Holders</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT held its annual
meeting of stockholders at its headquarters in Fremont, California on May 18,
2004.&#160; Of the 23,042,982 shares
outstanding as of the record date, 20,907,474 shares were represented by proxy
at the meeting.&#160; Proxies were solicited
by the Company pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended.&#160; At the meeting, AXT&#146;s
stockholders voted on the following matters:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 31.5pt;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Proposal to elect one class III
director to hold office for a three-year term, and until his successor is
elected and qualified.</p>

<p align="left" style="margin:0in 0in .0001pt 31.5pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="69%" style="border-collapse:collapse;margin-left:.5in;width:69.98%;">
 <tr>
  <td width="57%" valign="bottom" style="padding:0in 0in 0in 0in;width:57.88%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.5%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">For</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.86%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:17.26%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Against</font></b></p>
  </td>
  <td width="1%" valign="bottom" style="padding:0in 0in 0in 0in;width:1.92%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="57%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:57.88%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Leonard J. LeBlanc</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.58%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:17.5%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20,732,335</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.86%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="17%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:17.26%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">175,139</font></p>
  </td>
  <td width="1%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:1.92%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt 31.5pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 31.5pt;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Proposal to ratify the
selection of PricewaterhouseCoopers LLP as our independent auditors for the
year ending December 31, 2004.</p>

<p align="left" style="margin:0in 0in .0001pt 31.5pt;text-align:left;text-autospace:none;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="82%" style="border-collapse:collapse;margin-left:.5in;width:82.86%;">
 <tr>
  <td width="48%" valign="bottom" style="padding:0in 0in 0in 0in;width:48.86%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.76%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">For</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.42%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:14.84%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Against</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.1%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="13%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:13.86%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Abstain</font></b></p>
  </td>
  <td width="0%" valign="bottom" style="padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:48.86%;">
  <p align="left" style="margin:0in 0in .0001pt 10.0pt;text-align:left;text-indent:-10.0pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PricewaterhouseCoopers LLP</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.16%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="14%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.76%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">20,825,550</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="14%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:14.84%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">77,174</font></p>
  </td>
  <td width="2%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:2.1%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
  <td width="13%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;border:none;padding:0in 0in 0in 0in;width:13.86%;">
  <p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4,750</font></p>
  </td>
  <td width="0%" valign="bottom" bgcolor="#cceeff" style="background:#CCEEFF;padding:0in 0in 0in 0in;width:.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:1.0pt;">&nbsp;</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item5_OtherInformation"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item
5. Other Information</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">None</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">36</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='36',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-bc.htm',USER='snswamy',CD='Aug  4 22:36 2004' -->
<br clear="all" style="page-break-before:always;">
</font>

<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><a name="Item6_ExhibitsAndReportsOnForm8k"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Item 6. Exhibits and Reports on Form
8-K</font></b></a></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">a. Exhibits</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="6%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Exhibit<br>
  Number</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:90.94%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Description</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.1(1)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restated Certificate of Incorporation</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.2(2)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certificate of Designation, Preferences and Rights
  of Series A Preferred Stock (which is incorporated herein by reference</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.3(3)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Second Amended and Restated Bylaws</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.4</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certificate of Amendment to the Restated Certificate
  of Incorporation</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31.1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Interim Chief Executive Officer
  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31.2</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Chief Financial Officer Pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">32.1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Interim Chief Executive Officer
  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">32.2</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="90%" valign="top" style="padding:0in 0in 0in 0in;width:90.94%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Chief Financial Officer Pursuant to
  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
</table>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="left">

</font></div>


<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to the
exhibit of the same number filed with the SEC with our Annual Report on Form
10-K for the year ended December 31, 1998.</p>

<p align="left" style="margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to
Exhibit 2.1 to registrant&#146;s Form 8-K filed with the SEC on June 14, 1999.</p>

<p align="left" style="margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to
Exhibit 3.4 to registrant&#146;s Form 8-K filed with the SEC on May 30, 2001.</p>

<p align="left" style="margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">b. Reports on Form 8-K</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">We filed or furnished the
following reports on Form 8-K during the quarter ended June 30, 2004:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On May 24, 2004 we
furnished a report on Form 8-K announcing our earnings for the quarter ended
March 31, 2004.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On May 24, 2004, we filed
a report on Form 8-K announcing our executive management changes.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 13.5pt;text-align:left;text-autospace:none;text-indent:.9pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">On June 24, 2004, we
filed a report on Form 8-K announcing our change in certifying accountant</font>s and a workforce reduction at our Fremont manufacturing facility.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">37</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
<!-- SEQ.=1,FOLIO='37',FILE='C:\jms\svasude\04-8678-1\task159207\8678-1-bc.htm',USER='snswamy',CD='Aug  4 22:36 2004' -->
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><a name="Signatures"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">SIGNATURES</font></b></a></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Pursuant to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-indent:.2in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.38%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="51%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:51.38%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated: August 5, 2004</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="46%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interim Chief Executive Officer</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Principal Executive Officer)</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Wilson W. Cheung</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Wilson W. Cheung</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
  </td>
 </tr>
 <tr>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.62%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.96%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="46%" valign="top" style="padding:0in 0in 0in 0in;width:46.42%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(Principal Financial and Accounting Officer)</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">38</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;">&nbsp;</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT INDEX</font></b></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="6%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Exhibit<br>
  Number</font></b></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="center" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="bottom" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:91.28%;">
  <p align="center" style="margin:0in 0in .0001pt;text-align:center;text-autospace:none;text-justify:inter-ideograph;"><b><font size="1" face="Times New Roman" style="font-size:8.0pt;font-weight:bold;">Description</font></b></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.1(1)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Restated Certificate of Incorporation</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.2(2)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certificate of Designation, Preferences and Rights
  of Series A Preferred Stock (which is incorporated herein by reference</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.3(3)</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Second Amended and Restated Bylaws</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.4</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certificate of Amendment to the Restated Certificate
  of Incorporation</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31.1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Interim Chief Executive Officer
  Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">31.2</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Chief Financial Officer Pursuant to
  Section 302 of the Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">32.1</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Interim Chief Executive Officer
  Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="6%" valign="top" style="padding:0in 0in 0in 0in;width:6.82%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">32.2</font></p>
  </td>
  <td width="2%" valign="bottom" style="padding:0in 0in 0in 0in;width:2.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="91%" valign="top" style="padding:0in 0in 0in 0in;width:91.28%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Certification by Chief Financial Officer Pursuant to
  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002.</font></p>
  </td>
 </tr>
</table>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="1" width="25%" noshade color="black" align="left">

</font></div>


<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to the
exhibit as of the same number as filed with the SEC in our Annual Report on
Form 10-K for the year ended December 31, 1998.</p>

<p align="left" style="margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to
Exhibit 2.1 to registrant&#146;s Form 8-K filed with the SEC on June 14, 1999.</p>

<p align="left" style="margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt 15.95pt;text-align:left;text-autospace:none;text-indent:-15.95pt;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(3)</font><font size="1" style="font-size:8.5pt;">&#160; </font>Incorporated by reference to
Exhibit 3.4 to registrant&#146;s Form 8-K filed with the SEC on May 30, 2001.</p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">39</font></p>


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<SEQUENCE>2
<FILENAME>a04-8678_1ex3d4.htm
<DESCRIPTION>EX-3.4
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 3.4</font></b></p>

<p align="right" style="margin:0in 0in .0001pt;text-align:right;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">CERTIFICATE OF AMENDMENT<br>
TO THE<br>
RESTATED CERTIFICATE OF INCORPORATION<br>
OF<br>
AXT, INC.</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Morris S. Young
and Donald L. Tatzin certify that:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>They are the duly
elected and acting President and Secretary, respectively, of AXT, Inc. (the
&#147;Corporation&#148;), a corporation duly organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the provisions of
Sections 228 and 242 thereof, DO HEREBY CERTIFY:</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; </font>That the amendment to
the Corporation&#146;s Restated Certificate of Incorporation set forth in the
following resolution has been approved in accordance with the provisions of
Sections 228 and 242 of the General Corporation Law of the State of Delaware.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#147;RESOLVED, that
the first Paragraph of the FOURTH Article of the Corporation&#146;s Restated
Certificate of Incorporation is hereby amended to read in its entirety as
follows:</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-indent:.5in;text-justify:inter-ideograph;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">FOURTH:</font></u></p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><u><font size="2" face="Times New Roman" style="font-size:10.0pt;">STOCK</font></u></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">The Corporation is
authorized to issue two classes of stock to be designated, respectively,
&#147;Preferred Stock&#148; and &#147;Common Stock.&#148;&#160; The
total number of shares of Preferred Stock the Corporation shall have authority
to issue is 2,000,000, $.001 par value per share, and the total number of
shares of Common Stock the Corporation shall have authority to issue is
70,000,000, $.001 par value per share.&#160;
The shares of Preferred Stock shall initially be undesignated as to
series.&#148;</font></p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt .5in;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">IN WITNESS
WHEREOF, this Certificate of Amendment to the Restated Certificate of
Incorporation has been executed on behalf of the Corporation by its President
and attested by Donald L. Tatzin, its Secretary, this 24th day of May, 2001.</font></p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="47%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:47.1%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="52%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:52.9%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">AXT, INC.</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:47.1%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="52%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:52.9%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:47.1%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="52%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:52.9%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:47.1%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.16%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="1%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:1.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="24%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:24.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Morris S. Young</font></p>
  </td>
  <td width="24%" valign="top" style="padding:0in 0in 0in 0in;width:24.0%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="47%" colspan="4" valign="top" style="padding:0in 0in 0in 0in;width:47.1%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:4.92%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="47%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:47.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Morris S. Young,
  President</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="8" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="8" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="8" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">ATTEST:</font></p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="8" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="100%" colspan="8" valign="top" style="padding:0in 0in 0in 0in;width:100.0%;">
  <p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="3%" valign="top" style="padding:0in 0in 0in 0in;width:3.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="1%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:1.42%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="23%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:23.98%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Donald L. Tatzin</font></p>
  </td>
  <td width="71%" colspan="5" valign="top" style="padding:0in 0in 0in 0in;width:71.54%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="4%" colspan="2" valign="top" style="padding:0in 0in 0in 0in;width:4.48%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="95%" colspan="6" valign="top" style="padding:0in 0in 0in 0in;width:95.52%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Donald L. Tatzin,
  Secretary</font></p>
  </td>
 </tr>
 <tr height="0">
  <td width="22" style="border:none;"></td>
  <td width="10" style="border:none;"></td>
  <td width="173" style="border:none;"></td>
  <td width="134" style="border:none;"></td>
  <td width="23" style="border:none;"></td>
  <td width="13" style="border:none;"></td>
  <td width="173" style="border:none;"></td>
  <td width="173" style="border:none;"></td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


<div align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>a04-8678_1ex31d1.htm
<DESCRIPTION>EX-31.1
<TEXT>
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<div style="font-family:'Times New Roman';">

<p align="right" style="margin:0in 0in .0001pt 13.5pt;text-align:right;text-autospace:none;text-justify:inter-ideograph;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 31.1</font></b></p>

<p align="right" style="margin:0in 0in .0001pt 13.5pt;text-align:right;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></b></p><p style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Donald L. Tatzin, certify that:</font></p><p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>I have reviewed this report on Form 10-Q of AXT, Inc.;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&n
bsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>Based on my knowledge, the financial statements, and other financial information included in this report, fairly present 
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size
:10.0pt;">(a)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the pe
riod covered by this report based on such evaluation; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-22.5pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font>
<font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors:</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;
">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated: August 5, 2004</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="48%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interim Chief Executive Officer</font></p>
  </td>
 </tr>
</table>

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<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>a04-8678_1ex31d2.htm
<DESCRIPTION>EX-31.2
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<div style="font-family:'Times New Roman';"><p style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 31.2</font></b></p><p style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</font></b></p><p style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">I, Wilson W. Cheung, certify that:</font></p><p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-inden
t:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>I have reviewed this report on Form 10-Q of AXT, Inc.;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p 
style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>The registrant&#146;s other certifying officer and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchang
e Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" fa
ce="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(c)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s i
nternal control over financial reporting; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-22.5pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5.</font><font size="1" style="font-size:8.5pt;">&#160;&#160;&#160;&#160; </font>I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors:</p><p style="margin:0in 0in .0001pt .25in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(a)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>All significant deficiencies and material weaknesses in
 the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant&#146;s ability to record, process, summarize and report financial information; and</p><p style="margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="font-size:10.0pt;margin:0in 0in .0001pt .5in;text-indent:-.25in;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(b)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal control over financial reporting.</p>

<p style="margin:0in 0in .0001pt;text-align:justify;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
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  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated: August 5, 2004</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="48%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Wilson W. Cheung</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Wilson W. Cheung</font></p>
  </td>
 </tr>
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  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>a04-8678_1ex32d1.htm
<DESCRIPTION>EX-32.1
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<div style="font-family:'Times New Roman';"><p style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 32.1</font></b></p><p style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</font></b></p><p style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In connection with the Quarterly Report of AXT, Inc. (the &#147;Company&#148;) on
Form 10-Q for the quarter ended June 30, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the &#147;Report&#148;), I, Donald L. Tatzin,
Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (&#147;Section 906&#148;), that, to the best of my knowledge:</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>The Report fully
complies with the requirements of section 13(a) of the Securities and Exchange
Act of 1934 (15 U.S.C. 78m); and</p>

<p align="left" style="margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>The information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated: August 5, 2004</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="48%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Donald L. Tatzin</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="padding:0in 0in 0in 0in;width:48.06%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Interim Chief Executive Officer</font></p>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>


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<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>a04-8678_1ex32d2.htm
<DESCRIPTION>EX-32.2
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<div style="font-family:'Times New Roman';"><p style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">EXHIBIT 32.2</font></b></p><p style="margin:0in 0in .0001pt;text-align:right;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p><p style="margin:0in 0in .0001pt;text-align:center;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</font></b></p><p style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">In connection with the Quarterly Report of AXT, Inc. (the &#147;Company&#148;) on
Form 10-Q for the quarter ended June 30, 2004, as filed with the Securities and
Exchange Commission on the date hereof (the &#147;Report&#148;), I, Wilson W. Cheung,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(&#147;Section 906&#148;), that, to the best of my knowledge:</font></p>

<p align="left" style="margin:0in 0in .0001pt .25in;text-align:left;text-indent:.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(1)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>The Report fully
complies with the requirements of section 13(a) of the Securities and Exchange
Act of 1934 (15 U.S.C. 78m); and</p>

<p align="left" style="margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="left" style="font-size:10.0pt;margin:0in 0in .0001pt .75in;text-align:left;text-indent:-.25in;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">(2)</font><font size="1" style="font-size:8.5pt;">&#160;&#160; </font>The information
contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</p>

<p align="left" style="margin:0in 0in .0001pt;text-align:left;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Dated: August 5, 2004</font></p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">By:</font></p>
  </td>
  <td width="48%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in;width:48.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/ Wilson W. Cheung</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="48%" valign="top" style="border:none;padding:0in 0in 0in 0in;width:48.08%;">
  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Wilson W. Cheung</font></p>
  </td>
 </tr>
 <tr>
  <td width="47%" valign="top" style="padding:0in 0in 0in 0in;width:47.18%;">
  <p align="left" style="font-size:1.0pt;margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;">&nbsp;</p>
  </td>
  <td width="4%" valign="top" style="padding:0in 0in 0in 0in;width:4.76%;">
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  <p align="left" style="margin:0in 0in .0001pt;text-align:left;text-autospace:none;text-justify:inter-ideograph;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">Chief Financial Officer</font></p>
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