<SEC-DOCUMENT>0000840715-12-000061.txt : 20121121
<SEC-HEADER>0000840715-12-000061.hdr.sgml : 20121121
<ACCEPTANCE-DATETIME>20121121101827
ACCESSION NUMBER:		0000840715-12-000061
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20121115
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20121121
DATE AS OF CHANGE:		20121121

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CLEARONE COMMUNICATIONS INC
		CENTRAL INDEX KEY:			0000840715
		STANDARD INDUSTRIAL CLASSIFICATION:	RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
		IRS NUMBER:				870398877
		STATE OF INCORPORATION:			UT
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-33660
		FILM NUMBER:		121219892

	BUSINESS ADDRESS:	
		STREET 1:		5225 WILEY POST WAY
		STREET 2:		SUITE 500
		CITY:			SALT LAKE CITY
		STATE:			UT
		ZIP:			84116
		BUSINESS PHONE:		8019757200

	MAIL ADDRESS:	
		STREET 1:		5225 WILEY POST WAY
		STREET 2:		SUITE 500
		CITY:			SALT LAKE CITY
		STATE:			UT
		ZIP:			84116

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GENTNER COMMUNICATIONS CORP
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GENTNER ELECTRONICS CORP
		DATE OF NAME CHANGE:	19910808
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<TYPE>8-K
<SEQUENCE>1
<FILENAME>clrofinancialsrelease_8k.htm
<DESCRIPTION>CLEARONE FORM 8-K 2012 Q3 EARNINGS
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<P style="margin:0px" align=center><B>UNITED STATES</B></P>
<P style="margin:0px" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="margin:0px" align=center><B>WASHINGTON, D.C. 20549</B></P>
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<P style="margin:0px; font-size:16pt" align=center><B>FORM 8-K</B></P>
<P style="margin:0px" align=justify>&#160;</P>
<P style="margin:0px" align=center><B>CURRENT REPORT PURSUANT</B></P>
<P style="margin:0px" align=center><B>TO SECTION 13 OR 15(D) OF</B></P>
<P style="margin:0px" align=center><B>THE SECURITIES EXCHANGE ACT OF 1934</B></P>
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<P style="margin:0px" align=center>Date of report (Date of earliest event reported): <B><U>November 15, 2012</U></B></P>
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<P style="margin:0px; font-size:16pt" align=center><B><U>ClearOne Communications, Inc.</U></B></P>
<P style="margin:0px" align=center>(Exact Name of Registrant as Specified in Its Charter)</P>
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<P style="margin:0px" align=center><B><U>Utah</U></B></P>
<P style="margin:0px" align=center>(State or Other Jurisdiction of Incorporation)</P>
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</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=345.067><P style="margin:0px; padding-right:1.067px" align=center><B>87-0398877</B></P>
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<TR><TD style="margin-top:0px" valign=top width=383.467><P style="margin:0px; padding-right:1.067px" align=center>(Commission File Number)</P>
</TD><TD style="margin-top:0px" valign=top width=39.467><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=345.067><P style="margin:0px; padding-right:1.067px" align=center>(I.R.S. employer</P>
<P style="margin:0px; padding-right:1.067px" align=center>identification number)</P>
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<TR><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=554.133><P style="margin:0px; padding-right:1.067px" align=center><B>5225 Wiley Post Way, Suite 500</B></P>
<P style="margin:0px; padding-right:1.067px" align=center><B>Salt Lake City, Utah</B></P>
</TD><TD style="margin-top:0px" valign=top width=33.8><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=180.067><P style="margin:0px; padding-right:1.067px" align=center><B>&#160;</B></P>
<P style="margin:0px; padding-right:1.067px" align=center><B>84116</B></P>
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<TR><TD style="margin-top:0px" valign=top width=554.133><P style="margin:0px; padding-right:1.067px" align=center>(Address of principal executive offices)</P>
</TD><TD style="margin-top:0px" valign=top width=33.8><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=180.067><P style="margin:0px; padding-right:1.067px" align=center>(Zip Code)</P>
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<P style="margin:0px" align=center><B><U>(801) 975-7200</U></B></P>
<P style="margin:0px" align=center>(Registrant<font style='font-family:Arial Unicode MS,Times New Roman'>&#8217;</font>s Telephone Number, Including Area Code)</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px" align=center><B><U>Not applicable</U></B></P>
<P style="margin:0px" align=center>(Former Name or Former Address, if Changed Since Last Report)</P>
<P style="margin:0px" align=justify>&#160;</P>
<P style="margin:0px">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">[&#160;&#160;&#160;]&#160;&#160;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>
<P style="margin:0px">[&#160;&#160;&#160;]&#160;&#160;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>
<P style="margin:0px">[&#160;&#160;&#160;]&#160;&#160;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>
<P style="margin:0px">[&#160;&#160;&#160;]&#160;&#160;Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) </P>
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<P style="margin:0px; page-break-before:always"><B>Item 2.02. &nbsp;Results of Operations and Financial Condition</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px; text-indent:48px">On November 15, 2012, ClearOne Communications, Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2012. The full text of the press release is attached as Exhibit 99.1</P>
<P style="margin:0px">&#160;</P>
<P style="margin:0px"><B>Item 9.01. Financial Statements and Exhibits</B></P>
<P style="margin-top:0.067px; margin-bottom:0px"><BR></P>
<P style="margin-top:0.067px; margin-bottom:0px">(d) Exhibits.</P>
<P style="margin-top:0.067px; margin-bottom:0px">&nbsp;</P>
<P style="line-height:0.05pt; margin:0px"><BR></P>
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<TR><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=bottom width=91.467><P style="margin:0px; padding-right:1.067px; font-size:8pt"><B>Exhibit No.</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=19.467><P style="margin:0px; padding-right:1.067px; font-size:5pt" align=center><B>&nbsp;</B></P>
</TD><TD style="margin-top:0px; border-bottom:1.333px solid #000000" valign=bottom width=657.067><P style="margin:0px; padding-right:1.067px; font-size:8pt" align=center><B>Description</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=91.467><P style="margin:0px; padding-right:1.067px">&nbsp;</P>
</TD><TD style="margin-top:0px" valign=bottom width=19.467><P style="margin:0px; padding-right:1.067px">&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=657.067><P style="margin:0px; padding-right:1.067px">&nbsp;</P>
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<TR><TD style="margin-top:0px" valign=top width=91.467><P style="margin:0px; padding-right:1.067px">Exhibit 99.1</P>
</TD><TD style="margin-top:0px" valign=bottom width=19.467><P style="margin:0px; padding-right:1.067px; font-size:5pt">&nbsp;</P>
</TD><TD style="margin-top:0px" valign=top width=657.067><P style="margin:0px; padding-right:1.067px">Press Release dated November 15, 2012 titled <font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>ClearOne Reports 2012 Third Quarter Financial Results<font style='font-family:Arial Unicode MS,Times New Roman'>&#8221;</font>.</P>
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<P style="margin:0px; page-break-before:always" align=center><B>SIGNATURES</B></P>
<P style="margin:0px" align=justify>&#160;</P>
<P style="margin:0px">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 hereunto duly authorized.</P>
<P style="margin:0px" align=justify>&#160;</P>
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<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=477.6 colspan=2><P style="margin:0px; padding-right:2.4px" align=justify>CLEARONE COMMUNICATIONS, INC.</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px">&#160;</P>
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<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px">&#160;</P>
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<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px" align=justify>Date:&#160;November 21, 2012</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px" align=justify>By:</P>
</TD><TD style="margin-top:0px; border-bottom:2px solid #000000" valign=top width=424.667><P style="margin:0px; padding-right:1.067px" align=justify>/s/ Narsi Narayanan</P>
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<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px" align=justify>Narsi Narayanan</P>
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<TR><TD style="margin-top:0px" valign=top width=290.4><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px" align=justify>Vice President of Finance</P>
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</TD><TD style="margin-top:0px" valign=top width=52.933><P style="margin:0px; padding-right:1.067px">&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=424.667><P style="margin:0px; padding-right:1.067px">&#160;</P>
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<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>2
<FILENAME>exhibit_99z1.htm
<DESCRIPTION>EXHIBIT 99.1 PRESS RELEASE
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<DIV style="width:720px"><P style="margin:0px; font-family:Arial" align=right><B>Exhibit 99.1</B></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><img src="exhibit_99z1001.jpg" alt="[exhibit_99z1001.jpg]" align=middle></P>
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<P style="margin:0px"><B><U>Contact: </U></B></P>
<P style="margin:0px">Brent Johnson</P>
<P style="margin:0px">Investor Relations </P>
<P style="margin:0px">801-303-3577</P>
<P style="margin:0px">brent.johnson@clearone.com</P>
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<P style="margin:0px" align=center><B>CLEARONE REPORTS 2012 THIRD QUARTER FINANCIAL RESULTS</B></P>
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<P style="margin:0px"><B>SALT LAKE CITY, UTAH </B><font style='font-family:Arial Unicode MS,Times New Roman'>&#8212;</font><B> November 15, 2012 </B><font style='font-family:Arial Unicode MS,Times New Roman'>&#8212;</font> ClearOne (NASDAQ: CLRO) today reported its financial results for the three and nine months ended September 30, 2012.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">For the 2012 third quarter, revenue was $11.6 million compared with $11.5 million for the third quarter of 2011. &nbsp;Gross profit was $6.7 million, or 58% of revenue, compared with $7.0 million, or 61% of revenue, for the third quarter of 2011. &nbsp;Operating income was $1.4 million and net income was $929,000, or $0.10 per diluted share. &nbsp;For the third quarter of 2011, which included a favorable judgment award of $3.7 million, operating income was $5.4 million and net income was $3.4 million, or $0.36 per diluted share. &nbsp;Non-GAAP net income, which excludes proceeds from litigation, share-based compensation and other non-operating items, rose to $1.3 million, or $0.14 per diluted share, from $1.2 million, or $0.13 per diluted share, for the third quarter of 2011. &nbsp;Non-GAAP Adjusted EBITDA was $2.1 million, or $0.23 per diluted share, for third quarters of both 2012 and 2011.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">For the first nine months of 2012, revenue was $33.4 million compared with $34.1 million for the same period in 2011. &nbsp;Gross profit was $19.9 million, or 60% of revenue, compared with $20.4 million, or 60% of revenue, for the first nine months of 2011. &nbsp;Operating income was $3.2 million and net income was $2.0 million, or $0.21 per diluted share. &nbsp;For the first nine months of the prior year, which included the $3.7 judgment award, operating income was $8.4 million and net income was $5.5 million, or $0.59 per diluted share. &nbsp;Non-GAAP net income was $2.8 million, or $0.30 per diluted share, compared to $3.8 million, or $0.41 per diluted share, for the nine-month period of 2011. &nbsp;Non-GAAP Adjusted EBITDA was $5.2 million, or $0.56 per diluted share, compared with $6.6 million, or $0.71 per diluted share, for the first nine months of 2011.</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px">The reconciliation between GAAP and Non-GAAP measures is available in the tables attached to this release.</P>
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<P style="margin:0px"><font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>Revenue for the 2012 third quarter increased slightly over the same period last year, driven by increased sales in our EMEA region, offset by a decline in revenues from our Asia Pacific region,<font style='font-family:Arial Unicode MS,Times New Roman'>&#8221;</font> said Zee Hakimoglu, President, Chief Executive Officer and Chairman of ClearOne. &nbsp;<font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>During the quarter, we made solid progress strengthening our balance sheet as evidenced by our increased cash position and lower inventory levels. &nbsp;</P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>While the technology companies continue to be impacted by global economic headwinds, our business had performed better than many of our industry peers. &nbsp;Looking ahead, we plan to launch several new products over the next three months, which will provide positive momentum as we enter 2013.<font style='font-family:Arial Unicode MS,Times New Roman'>&#8221;</font></P>
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<P style="margin:0px">At September 30, 2012, the company had cash and cash equivalents of $14.3 million, up $3.9 million from June 30, 2012, and no debt. </P>
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<P style="margin:0px; page-break-before:always"><B>Recent Highlights:</B></P>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:12pt; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">September 2012. The company launched an enhanced corporate website, which streamlines the user experience with new organization of the full breadth of ClearOne audio and video products and solutions. </P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:12pt; clear:left; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">October 2012. The company<font style='font-family:Arial Unicode MS,Times New Roman'>&#8217;</font>s president, CEO and chairman, Zee Hakimoglu, received the 2012 InfoComm International Women in AV Award; created to raise awareness of the growing role of female professionals in the male-dominated field of audiovisual technology.</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:12pt; clear:left; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">October 2012. The company established a distribution agreement with Ingram Micro Inc. under which Ingram Micro will distribute ClearOne's new line of software-based video conferencing solutions and its USB, analog and VoIP conference phones to authorized technology resellers in the U.S.</P>
<P style="margin-top:0px; margin-bottom:-2px; text-indent:24px; width:48px; font-family:Symbol; font-size:12pt; clear:left; float:left">&#183;</P>
<P style="margin:0px; padding-left:48px; text-indent:-2px">October 2012. The company launched the MagicBox on-premise Entry-Level Server (ELS) to extend its web-based, digital signage offering. &nbsp;The ELS runs MagicBox WebSuite software applications for digital signage, including content creation and asset management inside a browser for a comprehensive content management experience <font style='font-family:Arial Unicode MS,Times New Roman'>&#8212;</font> from design to verification. </P>
<P style="margin:0px; clear:left"><BR></P>
<P style="margin:0px"><B>Non-GAAP Financial Measures</B></P>
<P style="margin:0px">ClearOne provides non-GAAP financial information in the form of Non-GAAP net income, Adjusted EBITDA and corresponding earnings per share to investors to supplement GAAP financial information. &nbsp;ClearOne believes that excluding certain items from GAAP results allows ClearOne's management to better understand ClearOne's consolidated financial performance from period to period as management does not believe that the excluded items are reflective of underlying operating performance. &nbsp;Non-GAAP net income, Adjusted EBITDA and corresponding earnings per share excludes certain costs and expenses, the details of which are provided in the tables below containing the reconciliation between GAAP and Non-GAAP financial measures. &nbsp;The exclusion of these items in the non-GAAP presentation should not be interpreted as implying that these items are non-recurring, infrequent, or unusual. &nbsp;ClearOne believes non-GAAP financial measures will provide investors with useful information to help them evaluate ClearOne's operating results and projections. &nbsp;This non-GAAP financial information is not meant to be considered in isolation or as a substitute for operating income, net income or other financial measures prepared in accordance with GAAP. &nbsp;There are limitations to the use of non-GAAP financial measures. &nbsp;Other companies, including companies in ClearOne's industry, may calculate non-GAAP financial measures differently than ClearOne does, limiting the usefulness of those measures for comparative purposes. &nbsp;A detailed reconciliation of Non-GAAP net income to GAAP net income is included with this news release. </P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><B>About ClearOne</B></P>
<P style="margin:0px">ClearOne is a global company that designs, develops and sells conferencing, collaboration, streaming and digital signage solutions for audio, video and data multimedia communication. &nbsp;The performance and simplicity of its advanced comprehensive solutions enhance the quality of life. &nbsp;ClearOne products offer unprecedented levels of functionality, reliability and scalability. &nbsp;More information about the company can be found at www.clearone.com.</P>
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<P style="margin:0px"><I>This release contains <font style='font-family:Arial Unicode MS,Times New Roman'>&#8220;</font>forward-looking<font style='font-family:Arial Unicode MS,Times New Roman'>&#8221;</font> statements that are based on present circumstances and on ClearOne<font style='font-family:Arial Unicode MS,Times New Roman'>&#8217;</font>s predictions with respect to events that have not occurred, that may not occur, or that may occur with different consequences and timing than those now assumed or anticipated. &nbsp;Such forward-looking statements, including the successful commercialization of expected future product launches and any statements of the plans and objectives of management for future operations, are not guarantees of future performance or results and involve risks and uncertainties that could cause actual events or results to differ materially from the events or results described in the forward-looking statements. &nbsp;Such forward-looking statements are made only as of the date of this release and ClearOne assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances. &nbsp;Readers should not place undue reliance on these forward-looking statements.</I></P>
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<P style="margin:0px" align=center># # #</P>
<P style="margin-top:5.533px; margin-bottom:5.533px; color:#0000FF"><U>http://www.b2i.us/irpass.asp?BzID=509&amp;to=ea&amp;s=0</U></P>
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<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=394.667 /><TD width=122.667 /><TD width=118.667 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=636 height=17 colspan=3><P style="margin:0px; font-size:9pt" align=center><B>CLEARONE COMMUNICATIONS, INC. </B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=636 height=17 colspan=3><P style="margin:0px; font-size:9pt" align=center><B>CONDENSED CONSOLIDATED BALANCE SHEETS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=636 height=17 colspan=3><P style="margin:0px; font-size:9pt" align=center><B>(Dollars in thousands, except par value)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>September 30, 2012</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>December 31, 2011</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=122.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>Unaudited</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt" align=center><B>ASSETS</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Current assets:</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Cash and cash equivalents</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-right:-89.333px; margin-bottom:-2px; text-indent:9.333px; width:98.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:89.333px; font-size:9pt; float:left" align=right>14,332&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-right:-85.333px; margin-bottom:-2px; text-indent:9.333px; width:94.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:85.333px; font-size:9pt; float:left" align=right>16,683&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=34><P style="margin:0px; font-size:9pt">Receivables, net of allowance for doubtful accounts of $64 and $149, respectively</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=34><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>7,667&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=34><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>8,457&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Inventories</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>11,992&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>12,565&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Deferred income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>3,025&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>2,987&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Prepaid expenses and other assets</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>1,448&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>740&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total current assets</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>38,464&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>41,432&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Long-term inventories, net</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>2,432&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>1,905&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Property and equipment, net</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>1,971&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>2,338&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Intangibles, net</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>5,636&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>2,690&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Goodwill</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>1,939&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>1,153&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Other assets</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>64&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>41&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=18><P style="margin:0px; text-indent:12px; font-size:9pt">Total assets</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=122.667 height=18><P style="margin-top:0px; margin-right:-89.333px; margin-bottom:-2px; text-indent:9.333px; width:98.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:89.333px; font-size:9pt; float:left" align=right>50,506&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=118.667 height=18><P style="margin-top:0px; margin-right:-85.333px; margin-bottom:-2px; text-indent:9.333px; width:94.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:85.333px; font-size:9pt; float:left" align=right>49,559&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=18><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt" align=center><B>LIABILITIES AND SHAREHOLDERS' EQUITY</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Current liabilities:</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Accounts payable</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-right:-89.333px; margin-bottom:-2px; text-indent:9.333px; width:98.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:89.333px; font-size:9pt; float:left" align=right>1,411&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-right:-85.333px; margin-bottom:-2px; text-indent:9.333px; width:94.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:85.333px; font-size:9pt; float:left" align=right>2,814&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Accrued liabilities</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>2,568&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>2,534&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Deferred product revenue</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>3,545&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>3,404&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total current liabilities</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>7,524&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>8,752&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Deferred income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>128&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>101&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Deferred rent</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>454&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>494&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Other long-term liabilities</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>686&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>548&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total liabilities</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>8,792&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>9,895&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Shareholders' equity:</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=394.667 height=34><P style="margin:0px; font-size:9pt">Common stock, par value $0.001, 50,000,000 shares authorized,9,191,099 and 9,098,152 shares issued and outstanding, &nbsp;respectively</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=34><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>9&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=34><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>9&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Additional paid-in capital</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>40,550&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>40,073&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Treasury stock at cost - 94,744 shares as of September 30, 2012</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>(384)</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; font-size:9pt">Retained earnings (accumulated deficit)</P>
</TD><TD style="margin-top:0px" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>1,539&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>(418)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total shareholders' equity</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=122.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:98.667px; font-size:9pt; float:left" align=right>41,714&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=118.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:94.667px; font-size:9pt; float:left" align=right>39,664&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=394.667 height=18><P style="margin:0px; text-indent:12px; font-size:9pt">Total liabilities and shareholders' equity</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=122.667 height=18><P style="margin-top:0px; margin-right:-89.333px; margin-bottom:-2px; text-indent:9.333px; width:98.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:89.333px; font-size:9pt; float:left" align=right>50,506&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=118.667 height=18><P style="margin-top:0px; margin-right:-85.333px; margin-bottom:-2px; text-indent:9.333px; width:94.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:85.333px; font-size:9pt; float:left" align=right>49,559&#160;</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=202 /><TD width=120.6 /><TD width=14.8 /><TD width=104 /><TD width=14.8 /><TD width=116.733 /><TD width=14.8 /><TD width=110.733 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.467 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>CLEARONE COMMUNICATIONS, INC.</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.467 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.467 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>(Dollars in thousands, except per share value)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=38><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=239.4 height=38 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Three months ended September 30,</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=38><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=242.267 height=38 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Nine Months ended September 30,</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:8pt; float:left" align=right><B>2012</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:8pt; float:left" align=right><B>2011&#160;</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:8pt; float:left" align=right><B>2012&#160;</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:8pt; float:left" align=right><B>2011&#160;</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Revenue</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-right:-88px; margin-bottom:-2px; text-indent:9.333px; width:97.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:88px; font-size:9pt; float:left" align=right>11,573</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-right:-70.667px; margin-bottom:-2px; text-indent:9.333px; width:80px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:70.667px; font-size:9pt; float:left" align=right>11,511&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-right:-84px; margin-bottom:-2px; text-indent:9.333px; width:93.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:84px; font-size:9pt; float:left" align=right>33,382&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-right:-77.333px; margin-bottom:-2px; text-indent:9.333px; width:86.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:77.333px; font-size:9pt; float:left" align=right>34,102&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Cost of goods sold</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>4,856</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>4,534&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>13,464&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>13,666&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Gross profit</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>6,717</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>6,977&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>19,918&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>20,436&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Operating expenses:</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Sales and marketing</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>1,821</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>2,184&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>6,209&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>6,274&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Research and product development</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>1,959</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>1,796&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>5,996&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>5,249&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">General and administrative</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>1,545</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>1,333&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>4,736&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>4,166&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>(250)</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Total operating expenses</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>5,325</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>1,611&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>16,691&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>11,987&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Operating income</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>1,392</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>5,366&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>3,227&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>8,449&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Other income (expense), net</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>29</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>(4)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>40&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>15&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Income before income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>1,421</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>5,362&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>3,267&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>8,464&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Provision for income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>492</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>1,987&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>1,310&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>2,956&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=18><P style="margin:0px; font-size:9pt">Net income</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=120.6 height=18><P style="margin-top:0px; margin-right:-88px; margin-bottom:-2px; text-indent:9.333px; width:97.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:88px; font-size:9pt; float:left" align=right>929</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=104 height=18><P style="margin-top:0px; margin-right:-70.667px; margin-bottom:-2px; text-indent:9.333px; width:80px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:70.667px; font-size:9pt; float:left" align=right>3,375&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=116.733 height=18><P style="margin-top:0px; margin-right:-84px; margin-bottom:-2px; text-indent:9.333px; width:93.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:84px; font-size:9pt; float:left" align=right>1,957&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=110.733 height=18><P style="margin-top:0px; margin-right:-77.333px; margin-bottom:-2px; text-indent:9.333px; width:86.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:77.333px; font-size:9pt; float:left" align=right>5,508&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=18><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Basic earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-right:-88px; margin-bottom:-2px; text-indent:9.333px; width:97.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:88px; font-size:9pt; float:left" align=right>0.10</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-right:-70.667px; margin-bottom:-2px; text-indent:9.333px; width:80px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:70.667px; font-size:9pt; float:left" align=right>0.37&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-right:-84px; margin-bottom:-2px; text-indent:9.333px; width:93.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:84px; font-size:9pt; float:left" align=right>0.21&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-right:-77.333px; margin-bottom:-2px; text-indent:9.333px; width:86.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:77.333px; font-size:9pt; float:left" align=right>0.61&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Diluted earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-right:-88px; margin-bottom:-2px; text-indent:9.333px; width:97.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:88px; font-size:9pt; float:left" align=right>0.10</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-right:-70.667px; margin-bottom:-2px; text-indent:9.333px; width:80px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:70.667px; font-size:9pt; float:left" align=right>0.36&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-right:-84px; margin-bottom:-2px; text-indent:9.333px; width:93.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:84px; font-size:9pt; float:left" align=right>0.21&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-right:-77.333px; margin-bottom:-2px; text-indent:9.333px; width:86.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:77.333px; font-size:9pt; float:left" align=right>0.59&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Basic weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>9,113,713</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>9,089,919&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>9,106,455&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>9,005,221&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=202 height=17><P style="margin:0px; font-size:9pt">Diluted weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=120.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:97.333px; font-size:9pt; float:left" align=right>9,193,574</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=104 height=17><P style="margin-top:0px; margin-bottom:-2px; width:80px; font-size:9pt; float:left" align=right>9,358,292&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=116.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:93.333px; font-size:9pt; float:left" align=right>9,219,161&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=110.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:86.667px; font-size:9pt; float:left" align=right>9,276,619&#160;</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
</DIV><TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=271 /><TD width=67.733 /><TD width=87 /><TD width=67.733 /><TD width=14.8 /><TD width=73.067 /><TD width=87 /><TD width=71.067 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=739.4 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>CLEARONE COMMUNICATIONS, INC.</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=739.4 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>RECONCILIATION OF GAAP TO NON-GAAP NET INCOME</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=739.4 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>(Dollars in thousands, except per share value)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=222.467 height=17 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Quarter ended September 30, 2012</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=231.133 height=17 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Quarter ended September 30, 2011</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=15><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=15><P style="margin:0px; font-size:8pt" align=center><B>GAAP</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=15><P style="margin:0px; font-size:8pt" align=center><B>Adjustments</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=15><P style="margin:0px; font-size:8pt" align=center><B>Non-GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=15><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.067 height=15><P style="margin:0px; font-size:8pt" align=center><B>GAAP</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=15><P style="margin:0px; font-size:8pt" align=center><B>Adjustments</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=71.067 height=15><P style="margin:0px; font-size:8pt" align=center><B>Non-GAAP</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Revenue</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>11,573</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>11,573</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>11,511&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>11,511&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Cost of goods sold</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>4,856</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(2)</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>4,854</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>4,534&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>4,534&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Gross profit</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>6,717</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>2&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>6,719</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>6,977&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>6,977&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Operating expenses:</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Sales and marketing</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,821</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(15)</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,806</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>2,184&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(4)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>2,180&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Research and product development</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,959</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(9)</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,950</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,796&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(4)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,792&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">General and administrative</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,545</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(467)</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,078</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,333&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(267)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,066&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>3,702&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Total operating expenses</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>5,325</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(491)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>4,834</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,611&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>3,427&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>5,038&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Operating income</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,392</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>493&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,885</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>5,366&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(3,427)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,939&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Other income, net</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>29</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>29</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>(4)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>(4)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Income before income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,421</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>493&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,914</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>5,362&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(3,427)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,935&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Provision for income taxes</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>492</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>171&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>663</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,987&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(1,285)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>702&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=18><P style="margin:0px; font-size:9pt">Net income</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=67.733 height=18><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>929</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=87 height=18><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>322&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=67.733 height=18><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,251</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=73.067 height=18><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>3,375&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=87 height=18><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(2,142)</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=71.067 height=18><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,233&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=18><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Basic earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>0.10</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>0.14</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.37&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.14&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Diluted earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>0.10</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>0.14</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.36&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.13&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Basic weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>9,113,713</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>9,113,713</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,089,919&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,089,919&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Diluted weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>9,193,574</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>9,193,574</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,358,292&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,358,292&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt"><B><U>The adjustments consist of the following:</U></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Share-based compensation</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>65&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>48&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Amortization of purchased intangibles</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>222&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>87&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=338.733 height=17 colspan=2><P style="margin:0px; font-size:9pt">Legal expenses for litigation relating to indemnification of former</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=338.733 height=17 colspan=2><P style="margin:0px; text-indent:12px; font-size:9pt">officers, intellectual property claims and our claim for damages</P>
</TD><TD style="margin-top:0px" valign=top width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>162&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>139&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Acquisition related expenses</P>
</TD><TD style="margin-top:0px" valign=top width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>44&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>493&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(3,428)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=338.733 height=17 colspan=2><P style="margin:0px; font-size:9pt">Provision for income taxes affected by the above adjustments</P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>171&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=87 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(1,285)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total adjustments</P>
</TD><TD style="margin-top:0px" valign=bottom width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>322&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=67.733 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.067 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=87 height=17><P style="margin-top:0px; margin-right:-53.333px; margin-bottom:-2px; text-indent:9.333px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(2,143)</P>
</TD><TD style="margin-top:0px" valign=bottom width=71.067 height=17><P style="margin:0px"><BR></P>
</TD></TR>
</TABLE>
<DIV style="width:720px"><P style="margin:0px"><BR></P>
<P style="margin-top:0px; margin-bottom:11.133px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=271 /><TD width=70.667 /><TD width=72.533 /><TD width=62.667 /><TD width=14.8 /><TD width=70.667 /><TD width=72.533 /><TD width=64 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.867 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>CLEARONE COMMUNICATIONS, INC.</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.867 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>RECONCILIATION OF GAAP TO NON-GAAP NET INCOME</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=698.867 height=17 colspan=8><P style="margin:0px; font-size:9pt" align=center><B>(Dollars in thousands, except per share value)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=205.867 height=17 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Nine Months ended September 30, 2012</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=207.2 height=17 colspan=3><P style="margin:0px; font-size:8pt" align=center><B>Nine Months ended September 30, 2011</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>GAAP</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin:0px; font-size:8pt" align=center><B>Adjustments</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=62.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>Non-GAAP</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin:0px; font-size:8pt" align=center><B>GAAP</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin:0px; font-size:8pt" align=center><B>Adjustments</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=64 height=17><P style="margin:0px; font-size:8pt" align=center><B>Non-GAAP</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Revenue</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>33,382&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; width:48px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>33,382</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>34,102&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-right:-49.333px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>34,102</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Cost of goods sold</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>13,464&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(3)</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>13,461</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>13,666&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>13,666</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Gross profit</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>19,918&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>3&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>19,921</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>20,436&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>20,436</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Operating expenses:</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Sales and marketing</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>6,209&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(45)</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>6,164</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>6,274&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(14)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>6,260</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Research and product development</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>5,996&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(26)</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>5,970</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>5,249&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(12)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>5,237</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">General and administrative</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>4,736&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(1,452)</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>3,284</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>4,166&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(1,070)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>3,096</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>(250)</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>250&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>3,702&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>-</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Total operating expenses</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>16,691&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(1,273)</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>15,418</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>11,987&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>2,606&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>14,593</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Operating income</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>3,227&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,276&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>4,503</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>8,449&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(2,606)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>5,843</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Other income, net</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>40&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>40</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>15&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>15</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Income before income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>3,267&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,276&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>4,543</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>8,464&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(2,606)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>5,858</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Provision for (benefit from) income taxes</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,310&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>481&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>1,791</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>2,956&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(943)</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>2,013</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=18><P style="margin:0px; font-size:9pt">Net income</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=70.667 height=18><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>1,957&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=72.533 height=18><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>795&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=62.667 height=18><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; width:48px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>2,752</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=70.667 height=18><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>5,508&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=72.533 height=18><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>(1,663)</P>
</TD><TD style="margin-top:0px; border-bottom:3px double #000000" valign=bottom width=64 height=18><P style="margin-top:0px; margin-right:-49.333px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>3,845</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=18><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=18><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Basic earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.21&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; width:48px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>0.30</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.61&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-right:-49.333px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>0.43</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Diluted earnings per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.21&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; width:48px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>0.30</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-right:-56px; margin-bottom:-2px; width:56px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>0.59&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-right:-49.333px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>0.41</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Basic weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,106,455&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>9,106,455</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,005,221&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>9,005,221</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Diluted weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,219,161&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>9,219,161</P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin-top:0px; margin-bottom:-2px; width:56px; font-size:9pt; float:left" align=right>9,276,619&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin-top:0px; margin-bottom:-2px; width:49.333px; font-size:9pt; float:left" align=right>9,276,619</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt"><B><U>The adjustments consist of the following:</U></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=16><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=top width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>(250)</P>
</TD><TD style="margin-top:0px" valign=top width=62.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=16><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Share-based compensation</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>176&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>131&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Amortization of purchased intangibles</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>554&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>263&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=341.667 height=17 colspan=2><P style="margin:0px; font-size:9pt">Legal expenses for litigation relating to indemnification of former</P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=341.667 height=17 colspan=2><P style="margin:0px; text-indent:12px; font-size:9pt">officers, intellectual property claims and our claim for damages</P>
</TD><TD style="margin-top:0px" valign=top width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>526&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>841&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; font-size:9pt">Acquisition related expenses</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>270&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=16><P style="margin:0px; font-size:9pt">Total of adjustments before taxes</P>
</TD><TD style="margin-top:0px" valign=top width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>1,276&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=62.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=14.8 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(2,467)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=16><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=16><P style="margin:0px; text-indent:12px; font-size:9pt">Income taxes affected by the above adjustments</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>481&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=62.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=70.667 height=16><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=72.533 height=16><P style="margin-top:0px; margin-bottom:-2px; width:53.333px; font-size:9pt; float:left" align=right>(893)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=16><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=271 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">Total adjustments</P>
</TD><TD style="margin-top:0px" valign=bottom width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>795&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=62.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=14.8 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=70.667 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:3px double #000000" valign=bottom width=72.533 height=17><P style="margin-top:0px; margin-right:-48px; margin-bottom:-2px; text-indent:5.333px; width:53.333px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:48px; font-size:9pt; float:left" align=right>(1,574)</P>
</TD><TD style="margin-top:0px" valign=bottom width=64 height=17><P style="margin:0px"><BR></P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<TABLE style="margin-top:0px; font-size:10pt" cellpadding=0 cellspacing=0><TR height=0 style="font-size:0"><TD width=350.6 /><TD width=5.4 /><TD width=76.6 /><TD width=76.6 /><TD width=5.4 /><TD width=73.4 /><TD width=73.4 /></TR>
<TR><TD style="margin-top:0px" valign=bottom width=661.4 height=17 colspan=7><P style="margin:0px; font-size:9pt" align=center><B>CLEARONE COMMUNICATIONS, INC.</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=661.4 height=17 colspan=7><P style="margin:0px; font-size:9pt" align=center><B>RECONCILIATION OF GAAP NET INCOME TO NON-GAAP ADJUSTED EBITDA</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=661.4 height=17 colspan=7><P style="margin:0px; font-size:9pt" align=center><B>(Dollars in thousands, except per share value)</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=29><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=29><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=153.2 height=29 colspan=2><P style="margin:0px; font-size:8pt" align=center><B>Three months ended September 30,</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=29><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=146.8 height=29 colspan=2><P style="margin:0px; font-size:8pt" align=center><B>Nine months ended September 30,</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:8pt; float:left" align=right><B>2012</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:8pt; float:left" align=right><B>2011&#160;</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:8pt; float:left" align=right><B>2012&#160;</B></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:8pt; float:left" align=right><B>2011&#160;</B></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">GAAP Net Income</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-57.333px; margin-bottom:-2px; text-indent:2.667px; width:60px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:57.333px; font-size:9pt; float:left" align=right>929</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-62.667px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>3,375&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,957&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>5,508&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt"><B><U>Adjustments:</U></B></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Provision for (benefit from) for income taxes</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>492</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>1,987&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,310&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>2,956&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Depreciation and Amortization</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>412</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>285&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>1,166&#160;</P>
</TD><TD style="margin-top:0px; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>872&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt"><B>Non-GAAP EBITDA</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>1,833</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>5,647&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>4,433&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,336&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=350.6 height=17><P style="margin:0px; font-size:9pt">Proceeds from litigation</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>-</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD><TD style="margin-top:0px" valign=top width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>(250)</P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>(3,702)</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Share-based compensation</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>65</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>48&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>176&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>131&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=350.6 height=17><P style="margin:0px; font-size:9pt">Legal expenses for litigation relating to indemnification of former</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=350.6 height=17><P style="margin:0px; text-indent:12px; font-size:9pt">officers, intellectual property claims and our claim for damages</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>162</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>139&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>526&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>841&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=top width=350.6 height=17><P style="margin:0px; font-size:9pt">Acquisition related expenses</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>44</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>270&#160;</P>
</TD><TD style="margin-top:0px" valign=top width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>-&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt"><B>Non-GAAP Adjusted EBITDA</B></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-57.333px; margin-bottom:-2px; text-indent:2.667px; width:60px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:57.333px; font-size:9pt; float:left" align=right>2,104</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-62.667px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>2,132&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>5,155&#160;</P>
</TD><TD style="margin-top:0px; border-top:1px solid #000000; border-bottom:1px solid #000000" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>6,606&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Basic weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>9,113,713</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>9,089,919&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,106,455&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,005,221&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Diluted weighted average shares outstanding</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:60px; font-size:9pt; float:left" align=right>9,193,574</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>9,358,292&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,219,161&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>9,276,619&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin:0px"><BR></P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Basic Adjusted EBITDA per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-57.333px; margin-bottom:-2px; text-indent:2.667px; width:60px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:57.333px; font-size:9pt; float:left" align=right>0.23</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-62.667px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>0.23&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.57&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.73&#160;</P>
</TD></TR>
<TR><TD style="margin-top:0px" valign=bottom width=350.6 height=17><P style="margin:0px; font-size:9pt">Diluted Adjusted EBITDA per common share</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-57.333px; margin-bottom:-2px; text-indent:2.667px; width:60px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:57.333px; font-size:9pt; float:left" align=right>0.23</P>
</TD><TD style="margin-top:0px" valign=bottom width=76.6 height=17><P style="margin-top:0px; margin-right:-62.667px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:62.667px; font-size:9pt; float:left" align=right>0.23&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=5.4 height=17><P style="margin:0px"><BR></P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.56&#160;</P>
</TD><TD style="margin-top:0px" valign=bottom width=73.4 height=17><P style="margin-top:0px; margin-right:-58.667px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left">$</P>
<P style="margin-top:0px; margin-bottom:-2px; width:58.667px; font-size:9pt; float:left" align=right>0.71&#160;</P>
</TD></TR>
</TABLE>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR></P>
<P style="margin:0px"><BR>
<BR></P>
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