| R        | ANNUAL      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                         |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                   |
|     | For      the fiscal year ended January 3, 2009                                                                                                         |
| or  |
| £   | TRANSITION      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                     |
|     |                                                                                                                                                   |
|     | For      the transition period      from                  to |

| Delaware                                                            | 02-0415170                               |
|---------------------------------------------------------------------|------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) | (I.R.S.Employer      Identification No.) |

| Title      Of Each Class[Missing Graphic Reference] |   | Name      Of Each Exchange On Which Registered[Missing Graphic Reference] |
|-----------------------------------------------------|--------|---------------------------------------------------------------------------|
| Common      stock, par value $0.01 per share        |   | The      NASDAQ Global Market                                             |

|   | Documents      Incorporated by Reference |
|--------|------------------------------------------|

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|                                    |   |                                                                                                                          | PAGE   |
|-----------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|--------|
| PART      1                             |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       1.  |   | Business.                                                                                                                     | 3      |
|       1A. |   | Risk      Factors.**                                                                                                          | 18     |
|       1B. |   | Unresolved      Staff Comments.                                                                                               | 26     |
|       2.  |   | Properties.                                                                                                                   | 27     |
|       3.  |   | Legal      Proceedings.                                                                                                       | 28     |
|       4.  |   | Submission      of Matters to a Vote of Security Holders.                                                                     | 28     |
|                                    |   |                                                                                                                          |   |
| PART      II                            |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       5.  |   | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities. | 29     |
|       6.  |   | Selected      Financial Data.                                                                                                 | 29     |
|       7.  |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations.                        | 31     |
|       7A. |   | Quantitative      and Qualitative Disclosures About Market Risk.                                                              | 51     |
|       8.  |   | Financial      Statements and Supplementary Data.                                                                             | 52     |
|       9.  |   | Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure.                               | 87     |
|       9A. |   | Controls      and Procedures.                                                                                                 | 87     |
|       9B. |   | Other      Information.                                                                                                       | 93     |
|                                    |   |                                                                                                                          |   |
| PART      III                           |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       10. |   | Directors,      Executive Officers and Corporate Governance.                                                                  | 93     |
|       11. |   | Executive      Compensation.                                                                                                  | 94     |
|       12. |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters.                     | 94     |
|       13. |   | Certain      Relationships and Related Transactions, and Director      Independence.                                          | 94     |
|       14. |   | Principal      Accountant Fees and Services.                                                                                  | 95     |
|                                    |   |                                                                                                                          |   |
| PART      IV                            |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       15. |   | Exhibits      and Financial Statement Schedules.                                                                              | 95     |
|                                    |   | Signatures.                                                                                                                   | 96     |

| * | Capitalized      terms not defined herein shall have the same meanings ascribed to them in      the Glossary of Item 1. |
|---|-------------------------------------------------------------------------------------------------------------------------|

| ** | See      Part I – Item 1A for cautionary statements regarding forward-looking      statements included in this Annual Report on Form  10-K. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------|

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Item 1. Business.

| ·   | invented      the technology that enables DI®      presses; |
|--------------------|------------------------------------------------------------------|

| ·   | invented      chemistry-free printing plates; |
|--------------------|-----------------------------------------------|

| ·   | have      significantly streamlined the print production  workflow; |
|--------------------|---------------------------------------------------------------------|

| ·   | have      helped transition offset printing from a craft-based manual process to an      automated manufacturing process;and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

| ·   | plan      to continue to innovate by providing high quality fully integrated digital      solutions and services while forming all encompassing relationships with      our customers. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | 45%      of all printed work in the world is short-run and time      sensitive; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | By      2010, 33% of all print jobs are expected to require a 24-hour      turnaround; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | 80%      of four-color jobs are now produced in runs of less than 5,000;      and |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Approximately      90% of digital printing is non-personalized, and can be produced on a      DI®      press |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Digital      Printing, which includes digital presses, consumables and      workflow; |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | CTP,      which is responsible for digital platemaking systems, consumables and      workflow; and |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Traditional,      which operates as a dealer for Presstek products such as polyester CTP      platemaking and other partners products for our  customers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | EAME      (Europe, Africa, Middle East); |
|--------------------|------------------------------------------|

| ·   | Americas      (North America and Latin America);and |
|--------------------|-----------------------------------------------------|

| ·   | Asia      Pacific. |
|--------------------|--------------------|

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| a.   | Commercial      printers (generally those with less than 20 employees) that need to      increase their production capacity, level of productivity and output      quality while improving profitability have demonstrated success with our      digital offset products. These printers are often acquiring their first      four-color offset press when they acquire a Presstek    product. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Digital      printers and copy shops, facilities that primarily operate toner-based      digital printing equipment, are acquiring DI®      presses as complementary devices. They are using DI®      presses for jobs that require run lengths greater than 250 copies, a      higher level of quality, or a substrate (coated stock, thick stock,      plastics, etc.) that cannot be effectively produced on a toner based      device. They are also combining digital toner devices and DI®      presses into one workflow to create certain print jobs more profitably.      For example, they may produce a high quality four-color direct mail piece      on the DI®      press, then add a personalized message or pURL (personal URL) using their      toner device. The result is a high-quality personalized piece affordably      produced. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | In-plant      print shops that operate within corporations, colleges and universities      and government agencies are attracted to the ease-of-use, compact      footprint and environmentally responsible nature of our solutions. It is      becoming increasing important that these shops be self sustaining. The      productivity, efficiency and versatility of Presstek solutions helps      in-plants reach this goal. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | During      2008 Presstek was successful in placing several DI®      presses in a number of larger print shops. We believe this is because      DI®      presses are engineered to produce runs between 250 and 20,000 images at a      very low cost. While at the same time market demands are shifting so that      run lengths in this range are increasing, it is leaving a gap in the      production portfolio of many larger commercial print shops. They can      efficiently produce very short-runs (less than 250) on their toner      devices, and runs of 20,000 or more on their conventional offset      presses.  Larger print shops, however, can be more profitable      producing a run of 250 to 20,000 on a Presstek’s DI®.      Presstek believes that larger printers will look at DI®      presses to fill this production gap in their equipment      portfolio. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| a.   | Growth within the      existing market segments that Presstek serves today. Historically      Presstek has served print shops with less than 20 employees, and this      segment makes up approximately 75% of the industry (i.e. number of      printers). Many of these printers have not yet fully embraced digital      printing technologies. In addition, owners of existing DI®      presses and CTP systems will be looking to add capacity or to upgrade      their capabilities (i.e. upgrade a 34DI®      press to a 52DI®, a      semi-automated CTP system to a fully automated solution, or add a PathWay      web-to-print solution). |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Growth up-market to      larger print shops. As print buyers request shorter runs with      faster turnaround times, larger shops often need to outsource these jobs      or run them inefficiently on their larger offset presses or toner presses.      A Presstek’s DI®      press is a good solution for these shops, because it is an offset printing      solution that allows color to be matched to the output of their larger      presses. The DI®      press may also open up new applications for the larger print      shop. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| c.   | Growth of CTP      consumables. It is estimated that the worldwide digital printing      plate market in fiscal 2008 was $3.9 billion. This market is expected to      grow by as much as 36% to $5.3 billion by 2012 based on research from      Vantage Strategic Marketing. Presstek plans to further penetrate this      large consumables market by expanding its range of CTP plates. These      plates will work on both Presstek and third party imaging devices. Aurora      Pro is an example of a product that fits into this area of      growth. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Growth in geographic      regions. The largest portion of Presstek’s sales has historically      come from the United States and Canada. The largest portion of the      worldwide print market, however, is outside North America. Presstek has      established three sales regions; Americas, EAME, and Asia Pacific, to      establish proper distribution by region and to help develop solutions that      fit each market’s specificrequirements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | Products |
|--------|----------|

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 are subject tochanges in delivery schedules and are typically cancelable by our customersuntil a specified time prior to the scheduled delivery date. Accordingly, webelieve our 

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| A1                                                                  | a      printing term referring to a standard paper size capable of printing eight      8.5” x 11” pages on a sheet of paper                                                                                                                         |
|---------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                |                                                                                                                                                                                                                                                            |
| A2                                                                  | a      printing term referring to a standard paper size capable of printing four      8.5” x 11” pages on a sheet of paper                                                                                                                          |
|                                                                |                                                                                                                                                                                                                                                            |
| A3/B3                                                               | a      printing term referring to a standard paper size capable of printing two      8.5” x 11” pages on a sheet of paper                                                                                                                           |
|                                                                |                                                                                                                                                                                                                                                            |
| Ablation                                                            | a      controlled detachment/vaporization caused by a thermal event, this process      is used during the imaging of Presstek’s PEARL and Anthem®      Pro consumables                                                                               |
|                                                                |                                                                                                                                                                                                                                                            |
| Bindery                                                             | operations      done after printing that are required to finish the job. Can include      punching, folding, perforating, trimming and slitting.                                                                                                                |
|                                                                |                                                                                                                                                                                                                                                            |
| Computer-to-plate      (CTP)                                        | a      general term referring to the exposure of lithographic plate material from      a digital database, off-press                                                                                                                                            |
|                                                                |                                                                                                                                                                                                                                                            |
| Direct      Imaging (DI®)                                      | Presstek’s      registered trademark for digital imaging systems that allow image carriers      (film and plates) to be imaged from a digital database, on and      off-press                                                                             |
|                                                                |                                                                                                                                                                                                                                                            |
| Dots      per inch (dpi)                                            | a      measurement of the resolving power or the addressability of an imaging      device                                                                                                                                                                       |
|                                                                |                                                                                                                                                                                                                                                            |
| FM      screening                                                   | referred      to as stochastic screening. A process that converts images into small dots      of variable spacing rather than regularly spaced dots or lined screens.      This technique of laying down halftone dots can produce superior color      results. |
|                                                                |                                                                                                                                                                                                                                                            |
| Infrared                                                            | light      lying outside of the visible spectrum beyond its red-end, characterized by      longer wavelengths; used in our thermal imaging process                                                                                                              |
|                                                                |                                                                                                                                                                                                                                                            |
| Lithography                                                         | printing      from a single plane surface under the principle that the image area      carries ink and the non-image area does not, and that ink and water do not      mix                                                                                      |
|                                                                |                                                                                                                                                                                                                                                            |
| Off-press                                                           | making      a printing plate from either an analog or digital source independent of      the press on which it will be used                                                                                                                                     |
|                                                                |                                                                                                                                                                                                                                                            |
| On-press                                                            | the      use of Presstek’s direct imaging technologies to make a plate directly      from a digital file on the press                                                                                                                                     |
|                                                                |                                                                                                                                                                                                                                                            |
| PEARL                                                               | the      name associated with Presstek’s first generation laser imaging      technologies and related products and consumables                                                                                                                            |
|                                                                |                                                                                                                                                                                                                                                            |
| ProFire®      and ProFire®      Excelimaging      systems | the      Presstek components required to convert a conventional printing press into      a direct imaging press, including laser diode arrays, computers,      electronics                                                                                      |
|                                                                |                                                                                                                                                                                                                                                            |

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| Platemaking                     | the      process of applying a printable image to a printing  plate                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Prepress                        | graphic      arts operations and methodologies that occur prior to the printing      process; typically these include photography, scanning, image assembly,      color correction, exposure of image carriers (film and/or plate), proofing      and processing                                                                                                                                                                                                                                                               |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Ryobi      3404DI               | an      A3 format size four-color sheet-fed press, incorporating Presstek’s dual      plate cylinder concept and PearlDry®      Plus spooled plates, a joint development effort between Ryobi and      Presstek                                                                                                                                                                                                                                                                                                     |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Semiconductor      laser diode  | a      high-powered, infrared imaging technology employed in the DI®      imaging systems                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Short-run      markets/printing | a      graphic arts classification used to denote an emerging growth market for      lower print quantities. InfoTrends, Inc. has examined the market to better      understand which run lengths are increasing and which are decreasing. The      findings: run lengths above 10,000 sheets are clearly in decline. Run      lengths between 5,000 and 9,999 are essentially stable with a slight      increase. Run lengths below 5,000 show significant increases, especially      in the range of 500 – 999 sheets. |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Thermal                         | a      method of digitally exposing a material via the heat generated from a      laser beam                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Vacuum      deposition process  | a      technology to accurately, uniformly coat substrates in a controlled      environment                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Waterless                       | a      lithographic printing method that uses dry offset printing plates and inks      and does not require a dampeningsystem                                                                                                                                                                                                                                                                                                                                                                                                  |

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Item 1A. RiskFactors.

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| ·   | a      long and unpredictable sales cycle; |
|--------------------|--------------------------------------------|

| ·   | changes      in demand for our products and consumables, including seasonal      differences; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | changes      in the mix of our products and consumables;and |
|--------------------|-------------------------------------------------------------|

| ·   | the      continued global economic downturn. |
|--------------------|----------------------------------------------|

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| ·   | actual      or anticipated variations in our quarterly operating    results; |
|--------------------|------------------------------------------------------------------------------|

| ·   | significant      announcements by us or other industry  participants; |
|--------------------|-----------------------------------------------------------------------|

| ·   | changes      in national or regional economicconditions; |
|--------------------|----------------------------------------------------------|

| ·   | changes      in securities analysts’ estimates for us, our competitors or our industry,      or our failure to meet analysts’ expectations;  and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | general      market conditions. |
|--------------------|---------------------------------|

Item 1B. Unresolved StaffComments.

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Item 2

|  Location(1)                     |   |  Functions                                                                                                             |   | Square      footage (approximate) |   | Ownership      status/lease      expiration                                         |
|---------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|-------------------------------------------------------------------------------------|
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| Hudson,      NH                       |   | Manufacturing,      research and development, marketing, demonstration activities,      administrative and customer support |   | 165,000                           |   | Owned                                                                               |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| South      Hadley, MA (two buildings) |   | Manufacturing,      research and development, administrative support                                                        |   | 100,000                           |   | Owned                                                                               |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| Tucson,      AZ(2)                    |   | Manufacturing,      research and development, administrative support                                                        |   | 40,000                            |   | Lease      expires in July 2018                                                     |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| Greenwich,      CT                    |   | Corporate      headquarters, executive offices                                                                              |   | 11,500                            |   | Lease      expires in May 2013                                                      |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| Des      Plaines, IL                  |   | Distribution      center                                                                                                    |   | 127,000                           |   | Lease      expires in February 2013                                                 |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |
| Heathrow,      United Kingdom         |   | European      headquarters, sales, service                                                                                  |   | 20,000                            |   | Lease      expires in November 2020, with an option to cancel in November      2010 |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                |

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Item 3

Item 4

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| Item 5. Market for Registrant’s Common      Equity, Related Stockholder Matters and Issuer Purchasers of Equity      Securities. |
|----------------------------------------------------------------------------------------------------------------------------------------|

|                                     |   | High   |   |   | Low    |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Fiscal      year ended January 3, 2009   |   |   |   |   |   |   |
| First      quarter                       |   | $      | 5.12   |   |   | $      | 4.28 |   |
| Second      quarter                      |   | $      | 6.57   |   |   | $      | 4.00 |   |
| Third      quarter                       |   | $      | 6.28   |   |   | $      | 4.48 |   |
| Fourth      quarter                      |   | $      | 5.64   |   |   | $      | 1.18 |   |
|                                     |   |   |   |   |   |   |   |   |
| Fiscal      year ended December 29, 2007 |   |   |   |   |   |   |   |   |
| First      quarter                       |   | $      | 6.53   |   |   | $      | 5.47 |   |
| Second      quarter                      |   | $      | 8.38   |   |   | $      | 5.88 |   |
| Third      quarter                       |   | $      | 8.70   |   |   | $      | 6.14 |   |
| Fourth      quarter                      |   | $      | 7.50   |   |   | $      | 4.60 |   |

Item 6

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| (in      thousands, except per-share data)                                                                                                            |   |                   |    |   |              |   |    |              |   |   |              |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|-------------------|--------|--------|-------------------|--------|--------|
|                                                                                                                                                  |   | Fiscal      year ended |    |
|                                                                                                                                                  |   | January      3,        |    |   | December      29, |   |    | December      30, |   |   | December      31, |   |   | January      1, |   |
|                                                                                                                                                  |   | 2009                   |    |   | 2007              |   |    | 2006              |   |   | 2005              |   |   | 2005      (1) |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |
| Revenue                                                                                                                                               |   | $                      | 193,252 |   |              | $      | 246,573 |              |   | $      | 258,936           |   |   | $ | 255,344 |   |   | $ | 118,576 |   |
| Cost      of revenue                                                                                                                                  |   |                   | 124,511 |   |              |   | 177,346 |              |   |   | 181,799           |   |   |   | 172,208 |   |   |   | 74,054 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                                                                     |   |                   | 68,741  |   |              |   | 69,227  |              |   |   | 77,137            |   |   |   | 83,136 |   |   |   | 44,522 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                                                                               |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|   Research      and development                                                                                                             |   |                   | 5,144   |   |              |   | 4,969   |              |   |   | 5,320             |   |   |   | 6,452 |   |   |   | 5,903 |   |
|   Sales,      marketing and customer support                                                                                                |   |                   | 29,937  |   |              |   | 39,194  |              |   |   | 39,451            |   |   |   | 39,808 |   |   |   | 17,136 |   |
|   General      and administrative                                                                                                           |   |                   | 25,496  |   |              |   | 33,172  |              |   |   | 18,879            |   |   |   | 20,135 |   |   |   | 11,491 |   |
|   Amortization      of intangible assets                                                                                                    |   |                   | 1,084   |   |              |   | 2,168   |              |   |   | 2,697             |   |   |   | 2,388 |   |   |   | 1,261 |   |
|   Restructuring      and special charges (credits)                                                                                          |   |                   | 2,108   |   |              |   | 2,714   |              |   |   | 5,481             |   |   |   | 874 |   |   |   | (392 | ) |
|     Total      operating expenses                                                                                                 |   |                   | 63,769  |   |              |   | 82,217  |              |   |   | 71,828            |   |   |   | 69,657 |   |   |   | 35,399 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                                                                          |   |                   | 4,972   |   |              |   | (12,990 | )                 |   |   | 5,309             |   |   |   | 13,479 |   |   |   | 9,123 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Other      income (expense), net                                                                                                                      |   |                   | 938     |   |              |   | (1,254  | )                 |   |   | (984              | )      |   |   | (1,345 | ) |   |   | (872 | ) |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                                                         |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |
|   before      income taxes                                                                                                                  |   |                   | 5,910   |   |              |   | (14,244 | )                 |   |   | 4,325             |   |   |   | 12,134 |   |   |   | 8,251 |   |
| Provision      (benefit) for income taxes                                                                                                             |   |                   | 2,780   |   |              |   | (3,889  | )                 |   |   | (9,891            | )      |   |   | 2,727 |   |   |   | 1,382 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                                                         |   |                   | 3,130   |   |              |   | (10,355 | )                 |   |   | 14,216            |   |   |   | 9,407 |   |   |   | 6,869 |   |
| Income      (loss) from discontinued operations, net of income tax                                                                                    |   |                   | (2,606  | )      |              |   | (1,849  | )                 |   |   | (4,472            | )      |   |   | (3,321 | ) |   |   | (3,004 | ) |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                                                                |   | $                      | 524     |   |              | $      | (12,204 | )                 |   | $      | 9,744             |   |   | $ | 6,086 |   |   | $ | 3,865 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - basic                                                                                                                |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|   Income      (loss) from continuing operations                                                                                             |   | $                      | 0.09    |   |              | $      | (0.29   | )                 |   | $      | 0.40              |   |   | $ | 0.27 |   |   | $ | 0.20 |   |
|   Income      (loss) from discontinued operations                                                                                           |   |                   | (0.08   | )      |              |   | (0.05   | )                 |   |   | (0.13             | )      |   |   | (0.10 | ) |   |   | (0.09 | ) |
|                                                                                                                                                  |   | $                      | 0.01    |   |              | $      | (0.34   | )                 |   | $      | 0.27              |   |   | $ | 0.17 |   |   | $ | 0.11 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - diluted                                                                                                              |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|   Income      (loss) from continuing operations                                                                                             |   | $                      | 0.09    |   |              | $      | (0.29   | )                 |   | $      | 0.40              |   |   | $ | 0.26 |   |   | $ | 0.19 |   |
|   Income      (loss) from discontinued operations                                                                                           |   |                   | (0.08   | )      |              |   | (0.05   | )                 |   |   | (0.13             | )      |   |   | (0.09 | ) |   |   | (0.08 | ) |
|                                                                                                                                                  |   | $                      | 0.01    |   |              | $      | (0.34   | )                 |   | $      | 0.27              |   |   | $ | 0.17 |   |   | $ | 0.11 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                                                              |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |
|   Basic                                                                                                                                     |   |                   | 36,596  |   |              |   | 36,199  |              |   |   | 35,565            |   |   |   | 35,153 |   |   |   | 34,558 |   |
|   Diluted                                                                                                                                   |   |                   | 36,605  |   |              |   | 36,199  |              |   |   | 35,856            |   |   |   | 35,572 |   |   |   | 35,357 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   | As      of             |    |
|                                                                                                                                                  |   | January      3,        |    |   | December      29, |   |    | December      30, |   |   | December      31, |   |   | January      1, |   |
|                                                                                                                                                  |   | 2009                   |    |   | 2007              |   |    | 2006              |   |   | 2005              |   |   | 2005      (1) |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| Working      capital                                                                                                                                  |   | $                      | 35,199  |   |              | $      | 35,337  |              |   | $      | 43,151            |   |   | $ | 37,558 |   |   | $ | 37,179 |   |
| Total      assets                                                                                                                                     |   | $                      | 157,513 |   |              | $      | 192,827 |              |   | $      | 198,014           |   |   | $ | 181,487 |   |   | $ | 171,318 |   |
| Total      debt and capital lease obligations                                                                                                         |   | $                      | 16,489  |   |              | $      | 35,535  |              |   | $      | 37,572            |   |   | $ | 35,643 |   |   | $ | 41,822 |   |
| Stockholders'      equity                                                                                                                             |   | $                      | 102,531 |   |              | $      | 106,892 |              |   | $      | 111,237           |   |   | $ | 98,633 |   |   | $ | 89,402 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
| (1) Amounts      include results of operations of ABD International, Inc. (which acquired      certain assets and assumed certain liabilities of |   |
| The      A.B. Dick Company on November 5, 2004) and Precision Lithograining Corp.      (acquired July 30, 2004) for the periods subsequent            |   |
|       to      their respective acquisitions.                                                                            |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |              |   |   |   |   |   |   |   |   |   |

----

Item 7

| ·   | provide      advanced digital print solutions through the development and manufacture      of digital laser imaging equipment and advanced technology chemistry-free      printing plates, which we call consumables, for commercial and in-plant      print providers targeting the growing market for high quality, fast      turnaround short-run color printing; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | are      a leading sales and services company delivering Presstek digital solutions      and solutions from other manufacturing partners through our direct sales      and service force and through distribution partners    worldwide;                                                                                                                             |
| ·   | manufacture      semiconductor solid state laser diodes for Presstek imaging applications      and for use in external applications; and                                                                                                                                                                                                                             |
| ·   | manufacture      and distribute printing plates for conventional print      applications.                                                                                                                                                                                                                                                                            |

----

| ·   | Presstek is primarily      engaged in the development, manufacture, sale and servicing of our      business solutions using patented digital imaging systems and patented      printing plate technologies. We also provide traditional, analog systems      and related equipment and supplies for the graphic arts and printing      industries. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Lasertel manufactures      and develops high-powered laser diodes and related laser products for      Presstek and for sale to externalcustomers.                                                                                                                                                                                                  |

----

----

----

|                                                                                      |   | Fiscal      year ended |            |
|-------------------------------------------------------------------------------------------|--------|------------------------|-----------------|
|                                                                                      |   | January      3, 2009   |            |   | December      29, 2007 |   |   | December      30, 2006 |   |
|                                                                                      |   |                   |            |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |
| Revenue                                                                                   |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                                                       |   | $                      | 158,743         |   |   |   | 82.1 |   |   | $ | 207,605 |   |   |   | 84.2 |   |   | $ | 213,966 |   |   |   | 82.6 |   |
|   Service      and parts                                                        |   |                   | 34,509          |   |   |   | 17.9 |   |   |   | 38,968 |   |   |   | 15.8 |   |   |   | 44,970 |   |   |   | 17.4 |   |
|           Total      revenue            |   |                   | 193,252         |   |   |   | 100.0 |   |   |   | 246,573 |   |   |   | 100.0 |   |   |   | 258,936 |   |   |   | 100.0 |   |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                                                       |   |                   | 99,088          |   |   |   | 51.2 |   |   |   | 145,724 |   |   |   | 59.1 |   |   |   | 149,333 |   |   |   | 57.7 |   |
|   Service      and parts                                                        |   |                   | 25,423          |   |   |   | 13.2 |   |   |   | 31,622 |   |   |   | 12.8 |   |   |   | 32,466 |   |   |   | 12.5 |   |
|           Total      cost of revenue    |   |                   | 124,511         |   |   |   | 64.4 |   |   |   | 177,346 |   |   |   | 71.9 |   |   |   | 181,799 |   |   |   | 70.2 |   |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                         |   |                   | 68,741          |   |   |   | 35.6 |   |   |   | 69,227 |   |   |   | 28.1 |   |   |   | 77,137 |   |   |   | 29.8 |   |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                   |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research      and development                                                 |   |                   | 5,144           |   |   |   | 2.6 |   |   |   | 4,969 |   |   |   | 2.0 |   |   |   | 5,320 |   |   |   | 2.1 |   |
|   Sales,      marketing and customer support                                    |   |                   | 29,937          |   |   |   | 15.5 |   |   |   | 39,194 |   |   |   | 15.9 |   |   |   | 39,451 |   |   |   | 15.2 |   |
|   General      and administrative                                               |   |                   | 25,496          |   |   |   | 13.2 |   |   |   | 33,172 |   |   |   | 13.4 |   |   |   | 18,879 |   |   |   | 7.3 |   |
|   Amortization      of intangible assets                                        |   |                   | 1,084           |   |   |   | 0.6 |   |   |   | 2,168 |   |   |   | 0.9 |   |   |   | 2,697 |   |   |   | 1.0 |   |
|   Restructuring      and other charges                                          |   |                   | 2,108           |   |   |   | 1.1 |   |   |   | 2,714 |   |   |   | 1.1 |   |   |   | 5,481 |   |   |   | 2.1 |   |
|           Total      operating expenses |   |                   | 63,769          |   |   |   | 33.0 |   |   |   | 82,217 |   |   |   | 33.3 |   |   |   | 71,828 |   |   |   | 27.7 |   |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                              |   |                   | 4,972           |   |   |   | 2.6 |   |   |   | (12,990 | ) |   |   | (5.3 | ) |   |   | 5,309 |   |   |   | 2.1 |   |
| Interest      and other income (expense), net                                             |   |                   |   938 |   |   |   | 0.5 |   |   |   | (1,254 | ) |   |   | (0.5 | ) |   |   | (984 | ) |   |   | (0.4 | ) |
|    Income      (loss) from continuing operations before income taxes       |   |                   | 5,910           |   |   |   | 3.1 |   |   |   | (14,244 | ) |   |   | (5.8 | ) |   |   | 4,325 |   |   |   | 1.7 |   |
| Provision      (benefit) for income taxes                                                 |   |                   |  2,780     |   |   |   | 1.4 |   |   |   | (3,889 | ) |   |   | (1.6 | ) |   |   | (9,891 | ) |   |   | (3.8 | ) |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                             |   |                   | 3,130           |   |   |   |  1.6 |   |   |   | (10,355 | ) |   |   | (4.2 | ) |   |   | 14,216 |   |   |   | 5.5 |   |
| Loss      from discontinued operations, net of income taxes                               |   |                   | (2,606          | ) |   |   | (1.3 | ) |   |   | (1,849 | ) |   |   | (0.7 | ) |   |   | (4,472 | ) |   |   | (1.7 | ) |
|                                                                                      |   |                   |            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                    |   | $                      | 524             |   |   |   | 0.3 |   |   | $ | (12,204 | ) |   |   | (4.9 | ) |   | $ | 9,744 |   |   |   | 3.8 |   |

----

----

----

----

----

----

----

|                                                                                                                                |   | January      3, 2009 |     |   | December      29, 2007 |   |     | December      30, 2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|----------|--------|------------------------|--------|----------|------------------------|--------|
| Revenue                                                                                                                             |   | $                    | --       |   |                   | $      | 196      |                   |   | $ | 10,816 |   |
| Income      (Loss) before income taxes                                                                                              |   |                 | 93       |   |                   |   | (108     | )                      |   |   | (2,267 | ) |
|   Provision      (benefit) for income taxes                                                                               |   |                 | --       |   |                   |   | (54      | )                      |   |   | (771 | ) |
| Income      (Loss) from discontinued operations                                                                                     |   |                 | 93       |   |                   |   | (54      | )                      |   |   | (1,496 | ) |
| Loss      from disposal of discontinued operations, net of tax benefit      of  $915 for the year ended December 30, 2006 |   |                 |  -- |   |                   |   |  -- |                   |   |   | (1,777 | ) |
| Net      Income (Loss) from discontinued operations                                                                                 |   | $                    | 93       |   |                   | $      | (54      | )                      |   | $ | (3,273 | ) |
|     Loss      per diluted share                                                                                 |   | $                    | (0.00    | )      |                   | $      | (0.00    | )                      |   | $ | (0.09 | ) |

----

|                                                  |   | January      3, 2009 |   |   | December      29, 2007 |   |   | December      30, 2006 |   |
|-------------------------------------------------------|--------|----------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Revenue                                               |   | $                    | 8,686  |   |                   | $      | 8,270  |                   |   | $ | 6,758 |   |
| Loss      before income taxes                         |   |                 | (4,336 | )      |                   |   | (2,924 | )                      |   |   | (1,951 | ) |
|   Provision      (benefit) for income taxes |   |                 | (1,637 | )      |                   |   | (1,129 | )                      |   |   | (752 | ) |
| Net      loss from discontinued operations            |   | $                    | (2,699 | )      |                   | $      | (1,795 | )                      |   | $ | (1,199 | ) |
|     Loss      per diluted share   |   | $                    | (0.08  | )      |                   | $      | (0.05  | )                      |   | $ | (0.03 | ) |

----

----

|                                           |   |   |   |   | Payments      due by period |   |
|------------------------------------------------|--------|--------|--------|--------|-----------------------------|--------|
|                                           |   | Total  |   |   | Less      than one year     |   |   | One      to three years |   |   | Three      to five years |   |   | Five      or more years |   |
|                                           |   |   |   |   |                        |   |   |   |   |   |   |   |   |   |   |
| Senior      Secured Credit Facilities          |   | $      | 16,489 |   |                        | $      | 16,489 |   |   | $ | -- |   |   | $ | -- |   |   | $ | -- |   |
| Purchase      Commitments                      |   |   | 6,228  |   |                        |   | 4,137 |   |   |   | 2,091 |   |   |   | -- |   |   |   | -- |   |
| Royalty      obligation                        |   |   | 5,104  |   |                        |   | 766 |   |   |   | 1,488 |   |   |   | 1,161 |   |   |   | 1,689 |   |
| Operating      leases                          |   |   | 12,307 |   |                        |   | 2,684 |   |   |   | 3,982 |   |   |   | 2,780 |   |   |   | 2,861 |   |
|                                           |   |   |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total      contractual obligations |   | $      | 40,128 |   |                        | $      | 24,076 |   |   | $ | 7,561 |   |   | $ | 3,941 |   |   | $ | 4,550 |   |

----

----

----

| Trade      names            |   |   | 2 –      3  |   | years |
|-----------------------------|--------|--------|-------------------|--------|-------|
| Customer      relationships |   |   | 2 –      10 |   | years |
| Software      licenses      |   |   | 3                 |   | years |
| Non-compete      covenants  |   |   | 5                 |   | years |

----

----

----

Item 7A

----

Item 8

|                                                                                                                                                                                         | Page   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                         |   |
| Report      of Independent Registered Public Accounting Firm                                                                                                                                 | 53     |
| Consolidated      Balance Sheets as of January 3, 2009 and December 29, 2007                                                                                                                 | 54     |
| Consolidated      Statements of Operations for the fiscal years ended January 3, 2009,      December 29, 2007 and December 30, 2006                                                          | 55     |
| Consolidated      Statements of Changes in Stockholders’ Equity and Comprehensive Income for      the fiscal years ended January 3, 2009, December 29, 2007 and December 30,      2006 | 56     |
| Consolidated      Statements of Cash Flows for the fiscal years ended January 3, 2009,      December 29, 2007 and December 30, 2006                                                          | 57     |
| Notes      to Consolidated Financial Statements                                                                                                                                              | 58     |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |
|                                                                                                                                                                                         |   |

----

Report of Independent RegisteredPublic Accounting Firm

----

| ITEM      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          |   |            |    |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|
|                                                                                              |   |            |    |   |   |   |
| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |   |
| CONSOLIDATED BALANCE SHEETS                                                                       |   |
| (in      thousands, except share data)                                                            |   |
|                                                                                              |   |            |    |   |   |   |
|                                                                                              |   | January      3, |    |   | December      29, |   |
|                                                                                              |   | 2009            |    |   | 2007 |   |
|                                                                                              |   |            |    |   |   |   |
| ASSETS                                                                                            |   |            |    |   |   |   |
| Current      assets                                                                               |   |            |    |   |   |   |
| Cash      and cash equivalents                                                                    |   | $               | 4,738   |   |   | $ | 12,558 |   |
| Accounts      receivable, net                                                                     |   |            | 30,757  |   |   |   | 41,094 |   |
| Inventories                                                                                       |   |            | 37,607  |   |   |   | 45,010 |   |
| Assets      of discontinued operations                                                            |   |            | 13,332  |   |   |   | 16,689 |   |
| Deferred      income taxes                                                                        |   |            | 7,066   |   |   |   | 6,740 |   |
| Other      current assets                                                                         |   |            | 4,095   |   |   |   | 4,594 |   |
| Total      current assets                                                                         |   |            | 97,595  |   |   |   | 126,685 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Property,      plant and equipment, net                                                           |   |            | 25,530  |   |   |   | 29,049 |   |
| Intangible      assets, net                                                                       |   |            | 4,174   |   |   |   | 5,209 |   |
| Goodwill                                                                                          |   |            | 19,114  |   |   |   | 19,891 |   |
| Deferred      income taxes                                                                        |   |            | 10,494  |   |   |   | 11,124 |   |
| Other      noncurrent assets                                                                      |   |            | 606     |   |   |   | 869 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Total      assets                                                                                 |   | $               | 157,513 |   |   | $ | 192,827 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                         |   |            |    |   |   |   |   |   |
| Current      liabilities                                                                          |   |            |    |   |   |   |   |   |
| Current      portion of long-term debt and capital lease obligation                               |   | $               | 4,074   |   |   | $ | 7,035 |   |
| Line      of credit                                                                               |   |            | 12,415  |   |   |   | 20,000 |   |
| Accounts      payable                                                                             |   |            | 12,031  |   |   |   | 17,312 |   |
| Accrued      expenses                                                                             |   |            | 13,244  |   |   |   | 23,212 |   |
| Deferred      revenue                                                                             |   |            | 7,300   |   |   |   | 7,100 |   |
| Liabilities      of discontinued operations                                                       |   |            | 5,748   |   |   |   | 2,776 |   |
| Total      current liabilities                                                                    |   |            | 54,812  |   |   |   | 77,435 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Long-term      debt and capital lease obligation, less current portion                            |   |            | -       |   |   |   | 8,500 |   |
| Other      long-term liabilities                                                                  |   |            | 170     |   |   |   | - |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Total      liabilities                                                                            |   |            | 54,982  |   |   |   | 85,935 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Commitments      and contingencies (See Note 19)                                                  |   |            |    |   |   |   |   |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Stockholders'      equity                                                                         |   |            |    |   |   |   |   |   |
| Preferred      stock, $0.01 par value, 1,000,000 shares authorized, no shares      issued         |   |            | -       |   |   |   | - |   |
| Common      stock, $0.01 par value, 75,000,000 shares authorized, 36,637,181      and             |   |
| 36,565,474      shares issued and outstanding at January 3, 2009 and                              |   |            |    |   |   |
| December      29, 2007, respectively                                                              |   |            | 366     |   |   |   | 366 |   |
| Additional      paid-in capital                                                                   |   |            | 117,985 |   |   |   | 115,884 |   |
| Accumulated      other comprehensive income (loss)                                                |   |            | (5,954  | )      |   |   | 1,032 |   |
| Accumulated      deficit                                                                          |   |            | (9,866  | )      |   |   | (10,390 | ) |
| Total      stockholders' equity                                                                   |   |            | 102,531 |   |   |   | 106,892 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| Total      liabilities and stockholders' equity                                                   |   | $               | 157,513 |   |   | $ | 192,827 |   |
|                                                                                              |   |            |    |   |   |   |   |   |
|                                                                                              |   |            |    |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements. |   |
|                                                                                              |   |            |    |   |   |   |   |   |

----

| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |   |
|---------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF OPERATIONS                                                             |   |
| (in      thousands, except per-share data)                                                        |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |
|                                                                                              |   | Fiscal      year ended |   |
|                                                                                              |   | January      3, |   |   | December      29, |   |   | December      30, |   |
|                                                                                              |   | 2009 |   |   | 2007 |   |   | 2006 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                           |   |   |   |   |   |   |   |   |   |
| Product                                                                                           |   | $ | 158,743 |   |   | $ | 207,605 |   |   | $ | 213,966 |   |
| Service      and parts                                                                            |   |   | 34,509 |   |   |   | 38,968 |   |   |   | 44,970 |   |
| Total      revenue                                                                                |   |   | 193,252 |   |   |   | 246,573 |   |   |   | 258,936 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                                                                           |   |   | 99,088 |   |   |   | 145,724 |   |   |   | 149,333 |   |
| Service      and parts                                                                            |   |   | 25,423 |   |   |   | 31,622 |   |   |   | 32,466 |   |
| Total      cost of revenue                                                                        |   |   | 124,511 |   |   |   | 177,346 |   |   |   | 181,799 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                 |   |   | 68,741 |   |   |   | 69,227 |   |   |   | 77,137 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Research      and development                                                                     |   |   | 5,144 |   |   |   | 4,969 |   |   |   | 5,320 |   |
| Sales,      marketing and customer support                                                        |   |   | 29,937 |   |   |   | 39,194 |   |   |   | 39,451 |   |
| General      and administrative                                                                   |   |   | 25,496 |   |   |   | 33,172 |   |   |   | 18,879 |   |
| Amortization      of intangible assets                                                            |   |   | 1,084 |   |   |   | 2,168 |   |   |   | 2,697 |   |
| Restructuring      and other charges                                                              |   |   | 2,108 |   |   |   | 2,714 |   |   |   | 5,481 |   |
| Total      operating expenses                                                                     |   |   | 63,769 |   |   |   | 82,217 |   |   |   | 71,828 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                      |   |   | 4,972 |   |   |   | (12,990 | ) |   |   | 5,309 |   |
| Interest      and other income (expense), net                                                     |   |   | 938 |   |   |   | (1,254 | ) |   |   | (984 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before income taxes                                 |   |   | 5,910 |   |   |   | (14,244 | ) |   |   | 4,325 |   |
| Provision      (benefit) for income taxes                                                         |   |   | 2,780 |   |   |   | (3,889 | ) |   |   | (9,891 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   |   | 3,130 |   |   |   | (10,355 | ) |   |   | 14,216 |   |
| Loss      from discontinued operations, net of income taxes                                       |   |   | (2,606 | ) |   |   | (1,849 | ) |   |   | (4,472 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                            |   | $ | 524 |   |   | $ | (12,204 | ) |   | $ | 9,744 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - basic                                                     |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   | $ | 0.09 |   |   | $ | (0.29 | ) |   | $ | 0.40 |   |
| Loss      from discontinued operations                                                            |   |   | (0.08 | ) |   |   | (0.05 | ) |   |   | (0.13 | ) |
|                                                                                              |   | $ | 0.01 |   |   | $ | (0.34 | ) |   | $ | 0.27 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - diluted                                                   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   | $ | 0.09 |   |   | $ | (0.29 | ) |   | $ | 0.40 |   |
| Loss      from discontinued operations                                                            |   |   | (0.08 | ) |   |   | (0.05 | ) |   |   | (0.13 | ) |
|                                                                                              |   | $ | 0.01 |   |   | $ | (0.34 | ) |   | $ | 0.27 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                                  |   |   | 36,596 |   |   |   | 36,199 |   |   |   | 35,565 |   |
| Dilutive      effect of stock options                                                             |   |   | 9 |   |   |   | - |   |   |   | 291 |   |
| Weighed      average shares outstanding - diluted                                                 |   |   | 36,605 |   |   |   | 36,199 |   |   |   | 35,856 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements. |   |

----

| PRESSTEK,      INC. AND SUBSIDIARIES                            |   |
|-----------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'      EQUITY |   |
| AND      COMPREHENSIVE INCOME                                   |   |
| (in      thousands)                                             |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   | Retained |   |   |   |   |
|                                                            |   |   |   |   |   |   |   | Additional |   |   | other |   |   | earnings |   |   |   |   |
|                                                            |   | Common      stock |   |   | paid-in |   |   | comprehensive |   |            (accumulated |   |
|                                                            |   | Shares |   |   | Par      value |   |   | capital |   |   | income      (loss) |   |   | deficit) |   |   | Total |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2005                               |   |   | 35,366 |   |   |   | 354 |   |   |   | 106,268 |   |   |   | (59 | ) |   |   | (7,930 | ) |   | $ | 98,633 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                   |   |   | 296 |   |   |   | 3 |   |   |   | 2,127 |   |   |   | - |   |   |   | - |   |   |   | 2,130 |   |
| Foreign      currency translation adjustments                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 356 |   |   |   | - |   |   |   | 356 |   |
| Share      based compensation under SFAS No. 123(R)             |   |   | - |   |   |   | - |   |   |   | 374 |   |   |   | - |   |   |   | - |   |   |   | 374 |   |
| Net      income (loss)                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9,744 |   |   |   | 9,744 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 30, 2006                               |   |   | 35,662 |   |   |   | 357 |   |   |   | 108,769 |   |   |   | 297 |   |   |   | 1,814 |   |   |   | 111,237 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                   |   |   | 903 |   |   |   | 9 |   |   |   | 3,126 |   |   |   | - |   |   |   | - |   |   |   | 3,135 |   |
| Foreign      currency translation adjustments                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 735 |   |   |   | - |   |   |   | 735 |   |
| Share      based compensation under SFAS No. 123(R)             |   |   | - |   |   |   | - |   |   |   | 3,989 |   |   |   | - |   |   |   | - |   |   |   | 3,989 |   |
| Net      income (loss)                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12,204 | ) |   |   | (12,204 | ) |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 29, 2007                               |   |   | 36,565 |   |   |   | 366 |   |   |   | 115,884 |   |   |   | 1,032 |   |   |   | (10,390 | ) |   |   | 106,892 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                   |   |   | 72 |   |   |   | - |   |   |   | 298 |   |   |   | - |   |   |   | - |   |   |   | 298 |   |
| Foreign      currency translation adjustments                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,986 | ) |   |   | - |   |   |   | (6,986 | ) |
| Share      based compensation under SFAS No. 123(R)             |   |   | - |   |   |   | - |   |   |   | 1,803 |   |   |   | - |   |   |   | - |   |   |   | 1,803 |   |
| Net      income (loss)                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 524 |   |   |   | 524 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at January 3, 2009                                 |   |   | 36,637 |   |   | $ | 366 |   |   | $ | 117,985 |   |   | $ | (5,954 | ) |   | $ | (9,866 | ) |   | $ | 102,531 |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss) is calculated as follows:      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   | Fiscal      year ended |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   | January      3, |   |   | December      29, |   |            December      30, |   |   |   |   |   |
|                                                            |   |   |   |   |   | 2009 |   |   | 2007 |   |   | 2006 |   |   |   |   |   |   |   |   |   |
|                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                          |   |   |   |   |   | $ | 524 |   |   | $ | (12,204 | ) |   | $ | 9,744 |   |   |   |   |   |   |   |   |   |
| Adjustments      to accumulated other comprehensive income      |   |   | (6,986 | ) |   |   | 735 |   |   |   | 356 |   |   |   |   |   |   |   |   |   |
|   Comprehensive      income (loss)                    |   |   |   |   |   | $ | (6,462 | ) |   | $ | (11,469 | ) |   | $ | 10,100 |   |   |   |   |   |   |   |   |   |

----

| PRESSTEK,      INC. AND SUBSIDIARIES                                                                             |   |
|------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                            |   |
| (in      thousands)                                                                                              |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   | Fiscal      year ended |   |
|                                                                                                             |   | January      3, |   | December      29, |   | December      30, |   |
|                                                                                                             |   | 2009 |   |   | 2007 |   |   | 2006 |   |
| Operating      activities                                                                                        |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                           |   | $ | 524 |   |   | $ | (12,204 | ) |   | $ | 9,744 |   |
| Add      loss from discontinued operations                                                                       |   |   | 2,606 |   |   |   | 1,849 |   |   |   | 4,472 |   |
| Income      (loss) from continuing operations                                                                    |   |   | 3,130 |   |   |   | (10,355 | ) |   |   | 14,216 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities:               |   |   |   |   |   |
| Depreciation                                                                                                     |   |   | 4,519 |   |   |   | 5,564 |   |   |   | 5,618 |   |
| Amortization      of intangible assets                                                                           |   |   | 1,084 |   |   |   | 2,168 |   |   |   | 2,670 |   |
| Restructuring      and other charges                                                                             |   |   | 1,686 |   |   |   | 2,714 |   |   |   | 5,481 |   |
| Writedown      of asset to net realizable value                                                                  |   |   | 422 |   |   |   | - |   |   |   | - |   |
| Provision      for warranty costs                                                                                |   |   | 40 |   |   |   | 3,517 |   |   |   | 3,400 |   |
| Provision      for accounts receivable allowances                                                                |   |   | 1,915 |   |   |   | 1,671 |   |   |   | 188 |   |
| Stock      compensation expense                                                                                  |   |   | 1,803 |   |   |   | 3,989 |   |   |   | 374 |   |
| Deferred      income taxes                                                                                       |   |   | 1,081 |   |   |   | (6,187 | ) |   |   | (11,677 | ) |
| Loss      on disposal of assets                                                                                  |   |   | 127 |   |   |   | 572 |   |   |   | 72 |   |
| Changes      in operating assets and liabilities, net of effects from business      acquisitions and divestures: |   |
| Accounts      receivable                                                                                         |   |   | 8,556 |   |   |   | 6,841 |   |   |   | (8,864 | ) |
| Inventories                                                                                                      |   |   | 7,049 |   |   |   | (2,082 | ) |   |   | 3,155 |   |
| Other      current assets                                                                                        |   |   | 546 |   |   |   | (2,137 | ) |   |   | (1,367 | ) |
| Other      noncurrent assets                                                                                     |   |   | (219 | ) |   |   | 98 |   |   |   | 39 |   |
| Accounts      payable                                                                                            |   |   | (5,336 | ) |   |   | (8,736 | ) |   |   | 9,220 |   |
| Accrued      expenses                                                                                            |   |   | (11,460 | ) |   |   | 7,364 |   |   |   | (6,076 | ) |
| Deferred      revenue                                                                                            |   |   | 219 |   |   |   | (816 | ) |   |   | (694 | ) |
| Net      cash provided by operating activities                                                                   |   |   | 15,162 |   |   |   | 4,185 |   |   |   | 15,755 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing      activities                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase      of property, plant and equipment                                                                   |   |   | (1,777 | ) |   |   | (2,514 | ) |   |   | (3,391 | ) |
| Business      acquisitions, net of cash acquired                                                                 |   |   | - |   |   |   | (119 | ) |   |   | (832 | ) |
| Investment      in patents and other intangible assets                                                           |   |   | (146 | ) |   |   | (204 | ) |   |   | (2,791 | ) |
| Net      cash used in investing activities                                                                       |   |   | (1,923 | ) |   |   | (2,837 | ) |   |   | (7,014 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing      activities                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      proceeds from issuance of common stock                                                                  |   |   | 298 |   |   |   | 3,135 |   |   |   | 2,130 |   |
| Repayments      of term loan and capital lease                                                                   |   |   | (11,461 | ) |   |   | (7,037 | ) |   |   | (7,035 | ) |
| Net      borrowings (repayments) under line of credit agreement                                                  |   |   | (7,585 | ) |   |   | 5,000 |   |   |   | 8,964 |   |
| Net      cash provided by (used in) financing activities                                                         |   |   | (18,748 | ) |   |   | 1,098 |   |   |   | 4,059 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      provided by (used in) discontinued operations                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      activities                                                                                        |   |   | (3,514 | ) |   |   | 273 |   |   |   | (7,282 | ) |
| Investing      activities                                                                                        |   |   | 7,240 |   |   |   | (532 | ) |   |   | (1,038 | ) |
| Financing      activities                                                                                        |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      cash provided by (used in) discontinued operations                                                      |   |   | 3,726 |   |   |   | (259 | ) |   |   | (8,320 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents                                                |   |   | (6,037 | ) |   |   | 824 |   |   |   | (427 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                                        |   |   | (7,820 | ) |   |   | 3,011 |   |   |   | 4,053 |   |
| Cash      and cash equivalents, beginning of year                                                                |   |   | 12,558 |   |   |   | 9,547 |   |   |   | 5,494 |   |
| Cash      and cash equivalents, end of year                                                                      |   | $ | 4,738 |   |   | $ | 12,558 |   |   | $ | 9,547 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      paid for interest                                                                                      |   | $ | 1,605 |   |   | $ | 3,106 |   |   | $ | 2,364 |   |
| Cash      paid for income taxes                                                                                  |   | $ | 727 |   |   | $ | 236 |   |   | $ | 1,252 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

----

----

| Buildings      and improvements     |   |   | 25      – 30 |   | years |
|-------------------------------------|--------|--------|--------------------|--------|-------|
| Production      equipment and other |   |   | 5 –      10  |   | years |
| Office      furniture and equipment |   |   | 3 –      7   |   | years |
| Software                            |   |   | 5                  |   | years |

----

| Trade      names            |   |   | 2 –      3  |   | years |
|-----------------------------|--------|--------|-------------------|--------|-------|
| Customer      relationships |   |   | 2 –      10 |   | years |
| Software      licenses      |   |   | 3                 |   | years |
| Non-compete      covenants  |   |   | 5                 |   | years |

----

----

----

|                                                                                                                                         |   | January      3, 2009 |     |   | December      29, 2007 |   |     | December      30, 2006 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|----------|--------|------------------------|--------|----------|------------------------|--------|
| Revenue                                                                                                                                      |   | $                         | --       |   |                   | $      | 196      |                   |   | $ | 10,816 |   |
| Income      (Loss) before income taxes                                                                                                       |   |                      | 93       |   |                   |   | (108     | )                      |   |   | (2,267 | ) |
|   Provision      (benefit) for income taxes                                                                                        |   |                      | --       |   |                   |   | (54      | )                      |   |   | (771 | ) |
| Income      (Loss) from discontinued operations                                                                                              |   |                      | 93       |   |                   |   | (54      | )                      |   |   | (1,496 | ) |
| Income      (Loss) from disposal of discontinued operations, net of tax benefit      of  $915 for the year ended December 30, 2006 |   |                      |  -- |   |                   |   |  -- |                   |   |   | (1,777 | ) |
| Net      Income (Loss) from discontinued operations                                                                                          |   | $                         | 93       |   |                   | $      | (54      | )                      |   | $ | (3,273 | ) |
|     Loss      per diluted share                                                                                          |   | $                         | (0.00    | )      |                   | $      | (0.00    | )                      |   | $ | (0.09 | ) |

----

|                                       |   | January      3, 2009 |   |   | December      29, 2007 |   |
|--------------------------------------------|--------|---------------------------|--------|--------|------------------------|--------|
|                                       |   |                      |   |   |                   |   |
| Receivables,      net                      |   | $                         | 2      |   |                   | $      | 15 |   |
| Inventories,      net                      |   |                      | --     |   |                   |   | -- |   |
|   Total      current assets      |   | $                         | 2      |   |                   | $      | 15 |   |
|                                       |   |                      |   |   |                   |   |   |   |
| Accounts      payable                      |   | $                         | 29     |   |                   | $      | 189 |   |
| Accrued      expenses                      |   |                      | 17     |   |                   |   | 699 |   |
|   Total      current liabilities |   | $                         | 46     |   |                   | $      | 888 |   |

|                                                  |   | January      3,2009 |   |   | December      29, 2007 |   |   | December      30, 2006 |   |
|-------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|------------------------|--------|
| Revenue                                               |   | $                   | 8,686  |   |                   | $      | 8,270  |                   |   | $ | 6,758 |   |
| Loss      before income taxes                         |   |                | (4,336 | )      |                   |   | (2,924 | )                      |   |   | (1,951 | ) |
|   Provision      (benefit) for income taxes |   |                | (1,637 | )      |                   |   | (1,129 | )                      |   |   | (752 | ) |
| Net      loss from discontinued operations            |   | $                   | (2,699 | )      |                   | $      | (1,795 | )                      |   | $ | (1,199 | ) |
|     Loss      per diluted share   |   | $                   | (0.08  | )      |                   | $      | (0.05  | )                      |   | $ | (0.03 | ) |

----

|                                             |   | January      3,2009 |   |   | December      29, 2007 |   |
|--------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|
|                                             |   |                |   |   |                   |   |
| Cash      and cash equivalents                   |   | $                   | 369    |   |                   | $      | 691 |   |
| Receivables,      net                            |   |                | 2,187  |   |                   |   | 1,785 |   |
| Inventories                                      |   |                | 4,478  |   |                   |   | 4,074 |   |
| Other      current assets                        |   |                | 134    |   |                   |   | 72 |   |
| Property,      plant & equipment, net        |   |                | 5,263  |   |                   |   | 8,974 |   |
| Intangible      assets, net                      |   |                | 899    |   |                   |   | 1,078 |   |
|    Total      assets              |   | $                   | 13,330 |   |                   | $      | 16,674 |   |
|                                             |   |                |   |   |                   |   |   |   |
| Accounts      payable                            |   | $                   | 884    |   |                   | $      | 1,291 |   |
| Accrued      expenses                            |   |                | 448    |   |                   |   | 501 |   |
| Deferred      revenue                            |   |                | --     |   |                   |   | 96 |   |
| Deferred      gain on sale-leaseback transaction |   |                | 4,370  |   |                   |   | -- |   |
|  Total      Liabilities                     |   | $                   | 5,702  |   |                   | $      | 1,888 |   |

|                     |   | January      3,2009 |   |   | December      29,2007 |   |
|--------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                     |   |                |   |   |                  |   |
| Accounts      receivable |   | $                   | 33,233 |   |                  | $      | 43,632 |   |
| Less      allowances     |   |                | (2,476 | )      |                  |   | (2,538 | ) |
|                     |   | $                   | 30,757 |   |                  | $      | 41,094 |   |

|                                |   | Fiscal2008 |   |   | Fiscal2007 |   |   | Fiscal2006 |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of period |   | $          | 2,538  |   |       | $      | 2,712  |       |   | $ | 3,215 |   |
| Charged      to costs and expenses  |   |       | 1,915  |   |       |   | 1,671  |       |   |   | 188 |   |
| Deductions      and write-offs      |   |       | (1,977 | )      |       |   | (1,845 | )          |   |   |  (691 | ) |
| Balance      at end of period       |   | $          | 2,476  |   |       | $      | 2,538  |       |   | $ | 2,712 |   |

----

|                 |   | January      3,2009 |   |   | December      29,2007 |   |
|----------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                 |   |                |   |   |                  |   |
| Raw      materials   |   | $                   | 2,946  |   |                  | $      | 3,660 |   |
| Work      in process |   |                | 4,950  |   |                  |   | 4,939 |   |
| Finished      goods  |   |                | 29,711 |   |                  |   | 36,411 |   |
|                 |   | $                   | 37,607 |   |                  | $      | 45,010 |   |

|                                                           |   | January      3,2009 |    |   | December      29,2007 |   |
|----------------------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|
|                                                           |   |                |    |   |                  |   |
| Land      and improvements                                     |   | $                   | 1,301   |   |                  | $      | 1,363 |   |
| Buildings      and leasehold improvements                      |   |                | 22,016  |   |                  |   | 22,695 |   |
| Production      and other equipment                            |   |                | 42,363  |   |                  |   | 42,204 |   |
| Office      furniture and equipment                            |   |                | 9,402   |   |                  |   | 7,098 |   |
| Construction      in process                                   |   |                | 1,098   |   |                  |   | 2,355 |   |
|   Total      property, plant and equipment, at cost  |   |                | 76,180  |   |                  |   | 75,715 |   |
| Accumulated      depreciation and amortization                 |   |                | (50,650 | )      |                  |   | (46,666 | ) |
|     Net      property, plant and equipment |   | $                   | 25,530  |   |                  | $      | 29,049 |   |

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Balance      at December 30, 2006                                  |   | $      | 20,280 |   |
| Purchase      accounting adjustments for prior period acquisitions |   |   | (389   | ) |
| Impairment      adjustments                                        |   |   | --     |   |
| Balance      at December 29, 2007                                  |   | $      | 19,891 |   |
| Purchase      accounting adjustments for prior period acquisitions |   |   | (777   | ) |
| Impairment      adjustments                                        |   |   | --     |   |
| Balance      at January 3, 2009                                    |   | $      | 19,114 |   |

----

|                                   |   | January      3, 2009 |   |   | December      29, 2007  |   |
|----------------------------------------|--------|----------------------|--------|--------|-------------------------|--------|
|                                   |   | Cost                 |   |   | Accumulatedamortization |   |   | Cost |   |   | Accumulatedamortization |   |
|                                   |   |                 |   |   |                    |   |   |   |   |   |   |   |
| Patents      and intellectual property |   | $                    | 9,390  |   |                    | $      | 7,739 |   |   | $ | 9,360 |   |   | $ | 7,323 |   |
| Trade      names                       |   |                 | 2,360  |   |                    |   | 2,360 |   |   |   | 2,360 |   |   |   | 2,360 |   |
| Customer      relationships            |   |                 | 4,452  |   |                    |   | 2,366 |   |   |   | 4,452 |   |   |   | 1,855 |   |
| Software      licenses                 |   |                 | 450    |   |                    |   | 450 |   |   |   | 450 |   |   |   | 450 |   |
| License      agreements                |   |                 | 750    |   |                    |   | 368 |   |   |   | 750 |   |   |   | 296 |   |
| Non-compete      covenants             |   |                 | 100    |   |                    |   | 100 |   |   |   | 100 |   |   |   | 100 |   |
| Loan      origination fees             |   |                 | 332    |   |                    |   | 277 |   |   |   | 332 |   |   |   | 211 |   |
|                                   |   | $                    | 17,834 |   |                    | $      | 13,660 |   |   | $ | 17,804 |   |   | $ | 12,595 |   |

| Fiscal      2009 |   | $      | 1,035 |   |
|------------------|--------|--------|-------|--------|
| Fiscal      2010 |   |   | 906   |   |
| Fiscal      2011 |   |   | 702   |   |
| Fiscal      2012 |   |   | 405   |   |
| Fiscal      2013 |   |   | 386   |   |
| Thereafter       |   |   | 317   |   |

|                                  |   | January      3, 2009 |    |   | December      29, 2007 |   |
|---------------------------------------|--------|----------------------|---------|--------|------------------------|--------|
|                                  |   |                 |    |   |                   |   |
| Term      loan                        |   | $                    | 4,074   |   |                   | $      | 15,500 |   |
| Line      of credit                   |   |                 | 12,415  |   |                   |   | 20,000 |   |
| Capital      lease                    |   |                 | --      |   |                   |   | 35 |   |
|                                  |   |                 | 16,489  |   |                   |   | 35,535 |   |
|   Less      current portion |   |                 | (16,489 | )      |                   |   | (27,035 | ) |
|                                  |   |                 |    |   |                   |   |   |   |
| Long-term      debt                   |   | $                    | --      |   |                   | $      | 8,500 |   |

----

| 2009 |   | $      | 16,489 |   |
|------|--------|--------|--------|--------|
| 2010 |   |   | --     |   |

----

|                                         |   | January      3,2009 |   |   | December      29,2007 |   |
|----------------------------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                                         |   |                |   |   |                  |   |
| Accrued      payroll and employee benefits   |   | $                   | 4,068  |   |                  | $      | 5,478 |   |
| Accrued      warranty                        |   |                | 2,102  |   |                  |   | 3,534 |   |
| Accrued      restructuring and other charges |   |                | 799    |   |                  |   | 1,592 |   |
| Accrued      royalties                       |   |                | 232    |   |                  |   | 432 |   |
| Accrued      income taxes                    |   |                | 282    |   |                  |   | 569 |   |
| Accrued      legal                           |   |                | 2,394  |   |                  |   | 5,815 |   |
| Accrued      professional fees               |   |                | 1,122  |   |                  |   | 2,545 |   |
| Other                                        |   |                | 2,245  |   |                  |   | 3,247 |   |
|                                         |   | $                   | 13,244 |   |                  | $      | 23,212 |   |

|                                           |   | Fiscal2008 |   |   | Fiscal2007 |   |   | Fiscal2006 |   |
|------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                           |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of year              |   | $          | 3,534  |   |       | $      | 1,729  |       |   | $ | 1,481 |   |
| Accruals      for warranties                   |   |       | 40     |   |       |   | 3,517  |       |   |   | 3,400 |   |
| Utilization      of accrual for warranty costs |   |       | (1,472 | )      |       |   | (1,712 | )          |   |   | (3,152 | ) |
| Balance      at end of year                    |   | $          | 2,102  |   |       | $      | 3,534  |       |   | $ | 1,729 |   |

----

|                          |   | January      3,2009 |   |   | December      29,2007 |   |
|-------------------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                          |   |                |   |   |                  |   |
| Deferred      service revenue |   | $                   | 6,507  |   |                  | $      | 6,718 |   |
| Deferred      product revenue |   |                | 793    |   |                  |   | 382 |   |
|                          |   | $                   | 7,300  |   |                  | $      | 7,100 |   |

|                                                                                     |   | January      3,2009 |   |   | December      29,2007 |   |   | December      30,2006 |   |
|------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                                                                     |   |                |   |   |                  |   |   |                  |   |
| Asset      impairment – goodwill                                                   |   | $                   | --     |   |                  | $      | --     |                  |   | $ | 2,809 |   |
| Impairment      of intangible assets - patent defense costs                              |   |                | --     |   |                  |   | --     |                  |   |   | 2,297 |   |
| Impairment      of other assets                                                          |   |                | --     |   |                  |   | --     |                  |   |   | 260 |   |
| Severance      and fringe benefits                                                       |   |                | 691    |   |                  |   | 1,210  |                  |   |   | 115 |   |
| Executive      contractual obligations                                                   |   |                | 536    |   |                  |   | 1,466  |                  |   |   | -- |   |
| Other      exit costs                                                                    |   |                | 881    |   |                  |   | 38     |                  |   |   | -- |   |
|        Total      net restructuring and other charges |   | $                   | 2,108  |   |                  | $      | 2,714  |                  |   | $ | 5,481 |   |

----

|                                   |   | Fiscal      2008 Activity    |   |
|----------------------------------------|--------|------------------------------|--------|
|                                   |   | BalanceDecember      29,2007 |   |   | Charged      toExpense |   |   |  Reversals |   |   |  Utilization |   |   | BalanceJanuary      3,2009 |   |
|                                   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Executive      contractual obligations |   | $                            | 904    |   |   | $ | 536 |   |   | $ | -- |   |   |   | (978 | ) |   |   | 462 |   |
| Severance      and fringe benefits     |   |                         | 688    |   |   |   | 691 |   |   |   | -- |   |   |   | (1,042 | ) |   |   | 337 |   |
| Other      exit costs                  |   |                         | --     |   |   |   | 881 |   |   |   | -- |   |   |   | (881 | ) |   |   | -- |   |
|                                   |   | $                            | 1,592  |   |   | $ | 2,108 |   |   | $ | -- |   |   | $ | (2,901 | ) |   | $ | 799 |   |

|                                   |   | Fiscal      2007 Activity    |   |
|----------------------------------------|--------|------------------------------|--------|
|                                   |   | BalanceDecember      30,2006 |   |   | Charged      toExpense |   |   |  Reversals |   |   |  Utilization |   |   | BalanceDecember      29,2007 |   |
|                                   |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Executive      contractual obligations |   | $                            | --     |   |   | $ | 1,466 |   |   | $ | -- |   |   |   | (562 | ) |   |   | 904 |   |
| Severance      and fringe benefits     |   |                         | 233    |   |   |   | 1,210 |   |   |   | -- |   |   |   | (755 | ) |   |   | 688 |   |
| Other      exit costs                  |   |                         | --     |   |   |   | 38 |   |   |   | -- |   |   |   | (38 | ) |   |   | -- |   |
|                                   |   | $                            | 233    |   |   | $ | 2,714 |   |   | $ | -- |   |   | $ | (1,355 | ) |   | $ | 1,592 |   |

|                               |   | Fiscal      2006 Activity    |   |
|------------------------------------|--------|------------------------------|--------|
|                               |   | BalanceDecember      31,2005 |   |   | Charged      toExpense |   |   |  Reversals |   |   |  Utilization |   |   | BalanceDecember      30,2006 |   |
|                               |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Severance      and fringe benefits |   |                         | 482    |   |   |   | 324 |   |   |   | ( 390 | ) |   |   | (183 | ) |   |   | 233 |   |
|                               |   | $                            | 482    |   |   | $ | 324 |   |   | $ | (390 | ) |   | $ | (183 | ) |   | $ | 233 |   |

|                             |   | Fiscal2008 |   |   | Fiscal2007 |   |   | Fiscal2006 |   |
|----------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                             |   |       |   |   |       |   |   |       |   |
| Interest      expense            |   | $          | (946   | )      |       | $      | (2,142 | )          |   | $ | (1,511 | ) |
| Interest      income             |   |       | 111    |   |       |   | 90     |       |   |   | 108 |   |
| Other      income (expense), net |   |       | 1,773  |   |       |   | 798    |       |   |   | 419 |   |
|                             |   | $          | 938    |   |       | $      | (1,254 | )          |   | $ | (984 | ) |

----

|    |   | Fiscal2008 |      |   | Fiscal2007 |   |        | Fiscal2006 |   |
|---------|--------|------------|-----------|--------|------------|--------|-------------|------------|--------|
|    |   |       |      |   |       |   |        |       |   |
| U.S.    |   | $          | 5,296     |   |       | $      | (15,899     | )          |   | $ | 5,149 |   |
| Foreign |   |       |  614 |   |       |   |  1,655 |       |   |   |  (824 | ) |
|    |   | $          | 5,910     |   |       | $      | (14,244     | )          |   | $ | 4,325 |   |

|                                      |   | Fiscal2008 |   |   | Fiscal2007 |   |   | Fiscal2006 |   |
|-------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                      |   |       |   |   |       |   |   |       |   |
| Current:                                  |   |       |   |   |       |   |   |       |   |
| Federal                                   |   | $          | (131   | )      |       | $      | 138    |       |   | $ | 129 |   |
| State                                     |   |       | 293    |   |       |   | 456    |       |   |   | 545 |   |
| Foreign                                   |   |       | (121   | )      |       |   | 507    |       |   |   | 37 |   |
|                                      |   | $          | 41     |   |       | $      | 1,101  |       |   | $ | 711 |   |
|                                      |   |       |   |   |       |   |   |       |   |   |   |   |
| Deferred:                                 |   |       |   |   |       |   |   |       |   |   |   |   |
| Federal                                   |   |       | 2,326  |   |       |   | (4,458 | )          |   |   | (9,659 | ) |
| State                                     |   |       | 128    |   |       |   | (532   | )          |   |   | (665 | ) |
| Foreign                                   |   |       | 285    |   |       |   | --     |       |   |   | (278 | ) |
|                                      |   |       | 2,739  |   |       |   | (4,990 | )          |   |   | (10,602 | ) |
| Provision      (benefit) for income taxes |   | $          | 2,780  |   |       | $      | (3,889 | )          |   | $ | (9,891 | ) |

|                                            |   | Fiscal2008 |       |   | Fiscal2007 |   |       | Fiscal2006 |   |
|-------------------------------------------------|--------|------------|------------|--------|------------|--------|------------|------------|--------|
|                                            |   |       |       |   |       |   |       |       |   |
| Federal      statutory tax rate                 |   |       | 34.00      | %      |       |   | 34.00      | %          |   |   | 34.00 | % |
| Nondeductible      Officer’s compensation |   |       | 1.90       |   |       |   | (4.61      | )          |   |   | -- |   |
| State      tax, net of federal benefit          |   |       | 4.70       |   |       |   | 0.35       |       |   |   | (1.84 | ) |
| Alternative      minimum tax                    |   |       | --         |   |       |   | --         |       |   |   | -- |   |
| Other                                           |   |       | (2.76      | )      |       |   | (2.44      | )          |   |   | (1.44 | ) |
| Change      in valuation allowance              |   |       |  9.20 |   |       |   |  0.00 |       |   |   | (259.41 | ) |
|                                            |   |       | 47.04      | %      |       |   | 27.30      | %          |   |   | (228.69 | )      % |

----

|                                                                                                                                                        |   | January      3,2009 |        |   | December      29,2007 |   |       | December      30,2006 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|-----------------------|--------|------------|-----------------------|--------|
|                                                                                                                                                        |   |                |        |   |                  |   |       |                  |   |
| Deferred      tax assets                                                                                                                                    |   |                |        |   |                  |   |       |                  |   |
| Net      operating loss carryforwards                                                                                                                       |   | $                   | 5,745       |   |                  | $      | 7,439      |                  |   | $ | 5,751 |   |
| Tax      credits                                                                                                                                            |   |                | 4,073       |   |                  |   | 3,875      |                  |   |   | 3,757 |   |
| Warranty      provisions, litigation and other accruals                                                                                                     |   |                | 8,450       |   |                  |   | 6,940      |                  |   |   | 4,162 |   |
| Accumulated      depreciation and amortization                                                                                                              |   |                |  2,507 |   |                  |   |  712  |                  |   |   | -- |   |
| Gross      deferred tax assets                                                                                                                              |   |                | 20,775      |   |                  |   | 18,966     |                  |   |   | 13,670 |   |
|            Valuation      allowance                                                                  |   |                | (795        | )      |                  |   |  (250 | )                     |   |   | (261 | ) |
|                    Total      deferred tax assets            |   |                | 19,980      |   |                  |   | 18,716     |                  |   |   | 13,409 |   |
|                                                                                                                                                        |   |                |        |   |                  |   |       |                  |   |   |   |   |
| Deferred      tax liabilities                                                                                                                               |   |                |        |   |                  |   |       |                  |   |   |   |   |
| Amortizable      and depreciable assets                                                                                                                     |   |                | (2,420      | )      |                  |   | (852       | )                     |   |   | (136 | ) |
| Accumulated      depreciation and amortization                                                                                                              |   |                | --          |   |                  |   | --         |                  |   |   | (1,596 | ) |
|                     Total      deferred tax liabilities |   |                | (2,420      | )      |                  |   | (852       | )                     |   |   | (1,732 | ) |
|                                                                                                                                                        |   |                |        |   |                  |   |       |                  |   |   |   |   |
|      Net      deferred tax assets (liabilities)                                                                                    |   | $                   | 17,560      |   |                  | $      | 17,864     |                  |   | $ | 11,677 |   |

----

| Balance      at December 29, 2007                  |   | $      | 1,800 |   |
|----------------------------------------------------|--------|--------|-------|--------|
| Increases      related to prior year tax positions |   |   | --    |   |
| Decreases      related to prior year tax positions |   |   | (579  | )      |
| Balance      at January 3, 2009                    |   | $      | 1,221 |   |

----

----

|                                  |   |             |   |   |             |   |   |             |   |
|---------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
| Stock      purchase right assumptions |   | Fiscal      2008 |   |   | Fiscal      2007 |   |   | Fiscal      2006 |   |
|                                  |   |             |   |   |             |   |   |             |   |
| Risk-free      interest rate          |   |             | 0.84   | %      |             |   | 4.03   | %                |   |   | 4.74 | % |
| Volatility                            |   |             | 95.79  | %      |             |   | 51.77  | %                |   |   | 52.05 | % |
| Expected      life (in years)         |   |             | 0.25   |   |             |   | 0.25   |             |   |   | 0.25 |   |
| Dividend      yield                   |   |             | --     |   |             |   | --     |             |   |   | -- |   |

|                          |   |             |   |   |             |   |   |             |   |
|-------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
| Stock      option assumptions |   | Fiscal      2008 |   |   | Fiscal      2007 |   |   | Fiscal      2006 |   |
|                          |   |             |   |   |             |   |   |             |   |
| Risk-free      interest rate  |   |             | 2.28   | %      |             |   | 4.25   | %                |   |   | 5.05 | % |
| Volatility                    |   |             | 60.63  | %      |             |   | 60.97  | %                |   |   | 57.16 | % |
| Expected      life (in years) |   |             | 5.67   |   |             |   | 5.56   |             |   |   | 4.51 |   |
| Dividend      yield           |   |             | --     |   |             |   | --     |             |   |   | -- |   |

|                          |   | Fiscal      2007 |   |
|-------------------------------|--------|------------------|--------|
|                          |   |             |   |
| Risk-free      interest rate  |   |             | 4.9    | % |
| Volatility                    |   |             | 50.0   | % |
| Expected      life (in years) |   |             | 1.0    |   |
| Dividend      yield           |   |             | --     |   |

----

|                          |   | Fiscal      2007 |   |
|-------------------------------|--------|------------------|--------|
|                          |   |             |   |
| Risk-free      interest rate  |   |             | 4.3    | % |
| Volatility                    |   |             | 48.0   | % |
| Expected      life (in years) |   |             | 4.1    |   |
| Dividend      yield           |   |             | --     |   |

|                                |   | Twelve      months ended |   |
|-------------------------------------|--------|--------------------------|--------|
|  Stock option plan             |   | January      3,2009      |   |   | December      29, 2007 |   |   | December      30, 2006 |   |
|                                |   |                     |   |   |   |   |   |   |   |
| 2008      Plan                      |   | $                        | 319    |   |   | $ | -- |   |   | $ | -- |   |
| 2003      Plan                      |   |                     | 718    |   |   |   | 1,379 |   |   |   | 268 |   |
| 1998      Plan                      |   |                     | 171    |   |   |   | 7 |   |   |   | -- |   |
| ESPP                                |   |                     | 79     |   |   |   | 71 |   |   |   | 106 |   |
| Restricted      Stock               |   |                     | --     |   |   |   | 1,500 |   |   |   | -- |   |
| Non-plan,      non-qualified        |   |                     | 516    |   |   |   | 1,032 |   |   |   | -- |   |
|                                |   |                     |   |   |   |   |   |   |   |   |   |   |
|      Total |   | $                        | 1,803  |   |   | $ | 3,989 |   |   | $ | 374 |   |

----

|                                  |   |   Shares |           |   | Weighted      averageexercise      price |   | Weighted      average remaining contractual term |   Aggregate      intrinsic value |
|---------------------------------------|--------|--------------------|----------------|--------|------------------------------------------|--------|--------------------------------------------------|--------------------------------------------|
|                                  |   |               |           |   |                                     |   |                                             |                                       |
| Outstanding      at December 31, 2005 |   |               | 3,101,475      |   |                                     | $      | 8.86                                             |                                       |   |   |
| Granted                               |   |               | 143,333        |   |                                     | $      | 9.12                                             |                                       |   |   |
| Exercised                             |   |               | (246,883       | )      |                                     | $      | 6.82                                             |                                       |   |   |
| Canceled/expired                      |   |               | (41,575        | )      |                                     | $      | 11.30                                            |                                       |   |   |
| Outstanding      at December 30, 2006 |   |               | 2,956,350      |   |                                     | $      | 9.01                                             |                                       |   |   |
| Granted                               |   |               | 2,203,333      |   |                                     | $      | 5.40                                             |                                       |   |   |
| Exercised                             |   |               | (836,950       | )      |                                     | $      | 3.36                                             |                                       |   |   |
| Canceled/expired                      |   |               |  (506,166 | )      |                                     | $      | 8.29                                             |                                       |   |   |
| Outstanding      at December 29, 2007 |   |               | 3,816,567      |   |                                     | $      | 8.26                                             |                                       |   |   |
| Granted                               |   |               | 1,019,609      |   |                                     | $      | 5.14                                             |                                       |   |   |
| Exercised                             |   |               | (2,500         | )      |                                     | $      | 3.60                                             |                                       |   |   |
| Canceled/expired                      |   |               | (489,588       | )      |                                     | $      | 11.10                                            |                                       |   |   |
| Outstanding      at January 3, 2009   |   |               | 4,344,088      |   |                                     | $      | 7.24                                             |                                       | 6.59      years |  $      0.006 million |
| Exercisable      at January 3, 2009   |   |               | 2,693,920      |   |                                     | $      | 8.21                                             |                                       | 5.33      years | $0.006  million |

|                           |   |   | Outstanding  |   |   | Exercisable                                                      |   |
|--------------------------------|--------|--------|--------------|--------|--------|------------------------------------------------------------------|--------|
|  Range of exercise prices |   |   |  Shares |   |   | Weighted      averageremaining      contractuallife      (years) |   |   | Weighted      average exercise price |   |   |   Shares |   |   | Weightedaverageexercise      price |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 4.96 |   |   |   | 221,967 |   |   |   | 7.55 |   |   |   | 3.85 |   |   |   | 80,967 |   |   |   | 4.04 |   |
| $                              | 4.97   |   |         |   | -      |                                                             |   | $ | 9.92 |   |   |   | 3,685,371 |   |   |   | 6.94 |   |   |   | 6.70 |   |   |   | 2,176,203 |   |   |   | 7.30 |   |
| $                              | 9.93   |   |         |   | -      |                                                             |   | $ | 14.88 |   |   |   | 233,750 |   |   |   | 5.08 |   |   |   | 11.28 |   |   |   | 233,750 |   |   |   | 11.28 |   |
| $                              | 14.89  |   |         |   | -      |                                                             |   | $ | 19.85 |   |   |   | 203,000 |   |   |   | 0.82 |   |   |   | 16.12 |   |   |   | 203,000 |   |   |   | 16.12 |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 19.85 |   |   |   | 4,344,088 |   |   |   | 6.59 |   |   | $ | 7.24 |   |   |   | 2,693,920 |   |   | $ | 8.21 |   |

----

|                                              |   | January      3,2009 |    |   | December      29,2007 |   |
|---------------------------------------------------|--------|---------------------|---------|--------|-----------------------|--------|
|                                              |   |                |    |   |                  |   |
| Presstek                                          |   | $                   | 144,183 |   |                  | $      | 176,153 |   |
| Lasertel      (assets of discontinued operations) |   |                | 13,330  |   |                  |   | 16,674 |   |
|                                              |   | $                   | 157,513 |   |                  | $      | 192,827 |   |

|                |   | Fiscal2008 |    |   | Fiscal2007 |   |    | Fiscal2006 |   |
|---------------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|                |   |       |    |   |       |   |    |       |   |
| United      States  |   | $          | 123,484 |   |       | $      | 150,703 |       |   | $ | 170,160 |   |
| United      Kingdom |   |       | 20,732  |   |       |   | 27,426  |       |   |   | 28,706 |   |
| Canada              |   |       | 9,010   |   |       |   | 15,410  |       |   |   | 14,699 |   |
| Germany             |   |       | 8,398   |   |       |   | 6,187   |       |   |   | 8,645 |   |
| Japan               |   |       | 2,810   |   |       |   | 5,451   |       |   |   | 5,845 |   |
| All      other      |   |       | 28,818  |   |       |   | 41,396  |       |   |   | 30,881 |   |
|                |   | $          | 193,252 |   |       | $      | 246,573 |       |   | $ | 258,936 |   |

|                |   | January      3,2009 |   |   | December      29,2007 |   |
|---------------------|--------|---------------------|--------|--------|-----------------------|--------|
|                |   |                |   |   |                  |   |
| United      States  |   | $                   | 58,580 |   |                  | $      | 65,170 |   |
| United      Kingdom |   |                | 602    |   |                  |   | 752 |   |
| Canada              |   |                | 736    |   |                  |   | 220 |   |
|                |   | $                   | 59,918 |   |                  | $      | 66,142 |   |

----

| Fiscal      2009 |   | $      | 2,684 |   |
|------------------|--------|--------|-------|--------|
| Fiscal      2010 |   |   | 2,162 |   |
| Fiscal      2011 |   |   | 1,820 |   |
| Fiscal      2012 |   |   | 1,828 |   |
| Fiscal      2013 |   |   | 953   |   |
| Thereafter       |   |   | 2,860 |   |

----

----

----

|                                                                                    |   | First         Quarter |   |   | Second          Quarter |   |   | ThirdQuarter      (2) |   |   |  FourthQuarter       (3)      (4) |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------------------|--------|--------|---------------------------------------------|--------|--------|-----------------------|--------|--------|---------------------------------------------|--------|
|                                                                                    |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |
| Fiscal      2008                                                                        |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |
| Revenue                                                                                 |   | $                                    | 50,794 |   |                                        | $      | 51,606 |                  |   | $      | 48,534                                      |   |   | $ | 42,318 |   |
| Gross      profit                                                                       |   | $                                    | 18,400 |   |                                        | $      | 17,465 |                  |   | $      | 16,849                                      |   |   | $ | 16,027 |   |
|   Income      (loss) from continuing operations                               |   |                                 | 887    |   |                                        |   | 1,003  |                  |   |   | 626                                         |   |   |   | 614 |   |
|   Income      (loss) from discontinued operations                             |   |                                 | (669   | )      |                                        |   | (436   | )                     |   |   |  (431                                  | )      |   |   | (1,070 | ) |
| Net      income (loss)                                                                  |   | $                                    | 218    |   |                                        | $      | 567    |                  |   | $      | 195                                         |   |   | $ | (456 | ) |
|   Earnings      (loss) per share from continuing operations – basic     |   |                                 | 0.03   |   |                                        |   | 0.03   |                  |   |   | 0.02                                        |   |   |   | 0.02 |   |
|   Earnings      (loss) per share from discontinued operations – basic   |   |                                 | (0.02  | )      |                                        |   | (0.01  | )                     |   |   | (0.01                                       | )      |   |   | (0.03 | ) |
| Earnings      (loss) per share – basic (1)                                        |   | $                                    | 0.01   |   |                                        | $      | 0.02   |                  |   | $      | 0.01                                        |   |   | $ | (0.01 | ) |
|                                                                                    |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |   |   |   |   |
|   Earnings      (loss) per share from continuing operations – diluted   |   |                                 | 0.03   |   |                                        |   | 0.03   |                  |   |   | 0.02                                        |   |   |   | 0.02 |   |
|   Earnings      (loss) per share from discontinued operations – diluted |   |                                 | (0.02  | )      |                                        |   | (0.01  | )                     |   |   | (0.01                                       | )      |   |   | (0.03 | ) |
| Earnings      (loss) per share – diluted (1)                                      |   | $                                    | 0.01   |   |                                        | $      | 0.02   |                  |   | $      | 0.01                                        |   |   | $ | (0.01 | ) |
|                                                                                    |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |   |   |   |   |
| Fiscal      2007                                                                        |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |   |   |   |   |
| Revenue                                                                                 |   | $                                    | 63,463 |   |                                        | $      | 66,565 |                  |   | $      | 57,662                                      |   |   | $ | 58,883 |   |
| Gross      profit                                                                       |   | $                                    | 17,854 |   |                                        | $      | 17,464 |                  |   | $      | 15,108                                      |   |   | $ | 18,801 |   |
|   Income      (loss) from continuing operations                               |   |                                 | (640   | )      |                                        |   | (4,867 | )                     |   |   | (2,684                                      | )      |   |   | (2,164 | ) |
|   Income      (loss) from discontinued operations                             |   |                                 | (338   | )      |                                        |   | 37     |                  |   |   | (932                                        | )      |   |   | (616 | ) |
| Net      income (loss)                                                                  |   | $                                    | (978   | )      |                                        | $      | (4,830 | )                     |   | $      | (3,616                                      | )      |   | $ | (2,780 | ) |
|   Earnings      (loss) per share from continuing operations – basic     |   |                                 | (0.02  | )      |                                        |   | (0.13  | )                     |   |   | (0.07                                       | )      |   |   | (0.06 | ) |
|   Earnings      (loss) per share from discontinued operations – basic   |   |                                 | (0.01  | )      |                                        |   | 0.00   |                  |   |   | (0.03                                       | )      |   |   | (0.02 | ) |
| Earnings      (loss) per share – basic (1)                                        |   | $                                    | (0.03  | )      |                                        | $      | (0.13  | )                     |   | $      | (0.10                                       | )      |   | $ | (0.08 | ) |
|                                                                                    |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |   |   |   |   |
|   Earnings      (loss) per share from continuing operations – diluted   |   |                                 | (0.02  | )      |                                        |   | (0.13  | )                     |   |   | (0.07                                       | )      |   |   | (0.06 | ) |
|   Earnings      (loss) per share from discontinued operations – diluted |   |                                 | (0.01  | )      |                                        |   | 0.00   |                  |   |   | (0.03                                       | )      |   |   | (0.02 | ) |
| Earnings      (loss) per share – diluted (1)                                      |   | $                                    | (0.03  | )      |                                        | $      | (0.13  | )                     |   | $      | (0.10                                       | )      |   | $ | (0.08 | ) |
|                                                                                    |   |                                 |   |   |                                        |   |   |                  |   |   |                                        |   |   |   |   |   |

|   | (1)  Income      (loss) per share is computed independently for each of the quarters      presented; accordingly, the sum of the quarterly income (loss) per share      may not equal the total computed for theyear. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2)  In      the third quarter of fiscal 2007, the Company identified revenue      transactions totaling $1.5 million that were incorrectly recorded in prior      periods. A determination was made that these errors were not material to      prior periods or the current period and a correction was made by reducing      revenue by $1.5 million and reducing gross profit by $0.2 million in the      third quarter. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3)  In      the fourth quarter of fiscal 2007, the Company recorded $2.5 million of      legal expenses relating to pending and threatened    litigation. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4)  In      the fourth quarter of fiscal 2007, the Company recorded approximately $1.7      million of accounting fees related primarily to the fiscal 2007 audit and      European review. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| PRESSTEK,      INC. AND SUBSIDIARIES                                                                                                                                                                                |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| SCHEDULE      II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES                                                                                                                                                   |   |
|                             FROM CONTINUING      OPERATIONS             |   |   |   |   |   |   |   |
|                                 (in      thousands) |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                |   |   |   |   | Additions |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                |   | Balance      at |   |   | Charged      to |   |   | Deductions |   |   | Balance      at |   |
|                                                                                                                                                                                                                |   | beginning |   |   | costs      and |   |   | and |   |   | end |   |
|                                                                                                                                                                                                                |   | of      period |   |   | expenses |   |   | write-offs |   |   | of      period |   |
|                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance      for losses on accounts receivable                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|    Fiscal      year                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                                                                                                                                                                                                |   | $ | 2,538 |   |   | $ | 1,915 |   |   | $ | (1,977 | ) |   | $ | 2,476 |   |
| 2007                                                                                                                                                                                                                |   | $ | 2,712 |   |   | $ | 1,671 |   |   | $ | (1,845 | ) |   | $ | 2,538 |   |
| 2006                                                                                                                                                                                                                |   | $ | 3,215 |   |   | $ | 188 |   |   | $ | (691 | ) |   | $ | 2,712 |   |
|                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves      for excess and obsolete inventory                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Fiscal      year                                                                                                                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008                                                                                                                                                                                                                |   | $ | 13,530 |   |   | $ | 437 |   |   | $ | (4,901 | ) |   | $ | 9,066 |   |
| 2007                                                                                                                                                                                                                |   | $ | 13,868 |   |   | $ | 5,255 |   |   | $ | (5,593 | ) |   | $ | 13,530 |   |
| 2006                                                                                                                                                                                                                |   | $ | 16,391 |   |   | $ | 786 |   |   | $ | (3,309 | ) |   | $ | 13,868 |   |
|                                                                                                                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)      Purchase accounting adjustments                                                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Item 9

Item 9A

| (a) | Evaluation      of Disclosure Controls andProcedures |
|-----|------------------------------------------------------|

----

| ·   | The      Company improved the accounting resources by hiring a new Vice President      and Corporate Controller, Assistant Controller, European Finance Director,      and Cost Accounting Manager. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company has implemented a process designed to ensure the timely analysis      and documentation of all significant or non-routine accounting      transactions by qualified accounting personnel. In addition, the analysis      and related documentation must be reviewed and approved by senior      management. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      new Director of Tax was appointed in January 2009, and will focus on      building a   knowledgeable tax department in the Greenwich,      Connecticut office. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Effective      March 17, 2009, the Company established a Financial Resources Steering      Committee to develop and implement a corrective action plan to complete      remediation of the material weakness.  The Steering Committee is      headed by the Chief Financial Officer, Vice President and Corporate      Controller, and the Vice President of Human  Resources. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A      new Financial Reporting Manager will be appointed to oversee accounting      for significant or non-routine transactions and to prepare SEC      filings. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Assistant Controller, under the direction of the Chief Financial Officer      and Vice President and Corporate Controller, has commenced a process to      recruit and train new accounting personnel for the accounting functions      being transferred to the Greenwich, Connecticut  office. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | The      Company’s revenue recognition process was strengthened  to      include: |
|--------------------|---------------------------------------------------------------------------------------------------|

| o   | Enhanced      documentation requirements to support revenue transactions and their      related accounting treatment; |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| o   | Requirements      for additional senior financial and legal management approvals on      departures from standard terms and conditions on sales and service      agreements; and |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| o   | Clarification      of revenue recognition treatment on distributor equipment      transactions. |
|---------------|-------------------------------------------------------------------------------------------------|

| ·   | Additional      training regarding revenue recognition practices was provided to all sales      personnel worldwide. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | Internal      controls at our European operation have been strengthened and reinforced      through additional training and supervision, the addition of a full-time      European revenue analyst, and requirements for additional credit      approvals. In addition, certain personnel changes and realignment of work      responsibilities have beenimplemented. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue      recognition processes have been restructured to increase sales and      accounting personnel participation earlier in the sales process and to      improve communication of key terms and conditions in equipment      transactions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Review      and monitoring controls over equipment transactions involving foreign      operations have been enhanced to include a timely review of the terms of      transactions by corporate accountingpersonnel. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Additional      training of Company personnel has been performed to ensure that key      account reconciliations are performed, documented, reviewed and approved      as part of the monthly financial closing  process. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company improved the accounting resources by hiring a new Vice President      and Corporate Controller, Assistant Controller, and European Finance      Director. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Review      and monitoring controls over key account reconciliations have been      enhanced to include detailed reviews of monthly reconciliations and      supporting documentation by Senior Corporate Finance      personnel. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Management      review controls have been enhanced to ensure that all journal entries are      reviewed and approved with appropriate supporting      documentation. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | An      independent review, by appropriate management personnel, is performed and      documented in a detailed manner to ensure that these complex calculations      are performed accurately. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company has enhanced the spreadsheet controls over the mathematical      accuracy of spreadsheets for these inventory account      calculations. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company improved the accounting resources by hiring a new Vice President      and Corporate Controller, Assistant Controller, European Finance Director,      and Cost Accounting Manager. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

Item 9B

|                   |         |                                                                      |         |                        |
|------------------------|--------------|---------------------------------------------------------------------------|--------------|-----------------------------|
| Executive      Officer |    | Position                                                                  |    | Age      at January 3, 2009 |
| Jeffrey      Jacobson  |    | Chairman,      President and Chief Executive Officer                      |    | 49                          |
|                   |         |                                                                      |
| Jeffrey      A. Cook   |    | Executive      Vice President and Chief Financial Officer                 |    | 54                          |
|                   |         |                                                                      |
| Mark      J. Levin     |    | President,      Americas Region                                           |    | 52                          |
|                   |         |                                                                      |
| Kathleen      McHugh   |    | Vice      President and Chief Marketing Officer                           |    | 50                          |
|                   |         |                                                                      |
| Wayne      L. Parker   |    | Vice      President, Corporate Controller and Chief Accounting    Officer |    | 51                          |
|                   |         |                                                                      |
| James      R. Van Horn |    | Vice      President, General Counsel and Secretary                        |    | 52                          |

----

Item 11.ExecutiveCompensation.

Item 12.Security Ownership of CertainBeneficial Owners and Management and Related StockholderMatters.

Item 13.Certain Relationships and RelatedTransactions, and Director Independence.

----

Item 14

Item 15

----

| PRESSTEK,      INC.                                 |
|-----------------------------------------------------|
|                                                |
|        /s/ Jeffrey Jacobson                    |
| Jeffrey      Jacobson                               |
| Chairman,      President and Chief ExecutiveOfficer |

|        /s/ Jeffrey Jacobson          |                                                      |                |
|-------------------------------------------|-----------------------------------------------------------|---------------------|
| Jeffrey      Jacobson                     | Chairman,      President and Chief Executive Officer      | March      24, 2009 |
|                                      | (Principal      Executive Officer)                        |                |
|                                      |                                                      |                |
|        /s/ Jeffrey A. Cook           |                                                      |                |
| Jeffrey      A. Cook                      | Executive      Vice President and Chief Financial Officer | March      24, 2009 |
|                                      | (Principal      Financial Officer)                        |                |
|                                      |                                                      |                |
|        /s/ Wayne L. Parker           |                                                      |                |
| Wayne      L. Parker                      | Vice      President – Corporate Controller          | March      24, 2009 |
|                                      | (Principal      Accounting Officer)                       |                |
|                                      |                                                      |                |
|        /s/ John W. Dreyer            |                                                      |                |
| John      W. Dreyer                       | Lead      Director                                        | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Edward E. Barr            |                                                      |                |
| Edward      E. Barr                       | Director                                                  | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Daniel S. Ebenstein, Esq. |                                                      |                |
| Daniel      S. Ebenstein, Esq.            | Director                                                  | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Dr. Lawrence Howard       |                                                      |                |
| Dr.      Lawrence Howard                  | Director                                                  | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Steven N. Rappaport       |                                                      |                |
| Steven      N. Rappaport                  | Director                                                  | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Frank D. Steenburgh       |                                                      |                |
| Frank      D. Steenburgh                  | Director                                                  | March      24, 2009 |
|                                      |                                                      |                |
|                                      |                                                      |                |
|        /s/ Donald C. Waite, III      |                                                      |                |
| Donald      C. Waite, III                 | Director                                                  | March      24, 2009 |

----

| ExhibitNumber |  Description                                                                                                                                                                                                                                |   |  Reference                                                                                                                                     |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                             |   |                                                                                                                                                |
| 2.1           | (i)      Asset Purchase Agreement among Presstek, Inc., Silver Acquisitions Corp.,      Paragon Corporate Holdings, Inc., A.B. Dick Company, A.B. Dick Company of      Canada, Ltd. And Interactive Media Group, Inc., dated July 13,      2004. |   | Incorporated      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K,      filed on July 13, 2004.                       |
|          | (ii)      Amendment to Asset Purchase Agreement between the Presstek, Inc. and A.B.      Dick Company dated August 20, 2004.                                                                                                                     |   | Incorporated      by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K,      filed on November 12, 2004.                   |
|          | (iii)      Second Amendment to Asset Purchase Agreement between Presstek, Inc. and      A.B. Dick Company dated November 5, 2004.                                                                                                                |   | Incorporated      by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K,      filed on November 12, 2004.                   |
| 3.1           | Amended      and Restated Certificate of Incorporation of Presstek,Inc.                                                                                                                                                                          |   | Incorporated      by reference to Exhibit 3(i) to the Company’s Quarterly Report on Form      10-Q for the quarter ended June 29, 1996.       |
| 3.2           | By-laws      of Presstek, Inc.                                                                                                                                                                                                                   |   | Incorporated      by reference to Exhibit 3(ii) to the Company’s Annual Report on Form 10-K      for the fiscal year ended December 30, 1995. |
| 10.1**        | 1998      Stock Incentive Plan.                                                                                                                                                                                                                  |   | Incorporated      by reference to Exhibit A to the Company’s Definite Proxy Statement, filed      April 24, 1998.                             |
| 10.2**        | 2002      Employee Stock Purchase Plan of Presstek, Inc.                                                                                                                                                                                         |   | Incorporated      by reference to Exhibit 4.3 to the Company’s Registration Statement on      Form S-8, filed August 9, 2002.                 |
| 10.3**        | 2003      Stock Option and Incentive Plan of Presstek, Inc.                                                                                                                                                                                      |   | Incorporated      by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form      10-Q for the quarter ended June 28, 2003.       |
| 10.4**        | 2008      Omnibus Incentive Plan.                                                                                                                                                                                                                |   | Incorporated      by reference to Appendix A to the Company’s Definite Proxy Statement,      filed May 9, 2008.                               |
| 10.5*         | OEM      Consumables Supply Agreement by and between Presstek, Inc. and      Heidelberger Druckmaschinen, AG., dated July 1, 2003.                                                                                                               |   | Incorporated      by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003.  |
| 10.6*         | OEM      Consumables Supply Agreement by and between Presstek, Inc. and Heidelberg      U.S.A., Inc. dated July 1, 2003.                                                                                                                         |   | Incorporated      by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003.  |
| 10.7          | (i)      Credit Agreement by and among Presstek, Inc., Lasertel Inc., Citizens Bank      New Hampshire and Keybank National Association dated October 15,      2003.                                                                             |   | Incorporated      by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003.  |
|          | (ii)      Amended and Restated Credit Agreement among the Presstek, Inc., Citizens      Bank New Hampshire, KeyBank National Association and Bank North N.A. dated      November 5, 2004.                                                        |   | Incorporated      by reference to Exhibit 99.1 to the Company’s Form 8-K filed on November      12, 2004.                                     |

----

|    | (iii)      Amendment to the Amended and Restated Credit Agreement among the Presstek,      Inc., Citizens Bank New Hampshire, KeyBank National Association and Bank      North N.A. dated July 29, 2008.             |   | Incorporated      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K,      filed July 31, 2008.                         |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.8    | Security      Agreement by and between Presstek, Inc. and Citizens Bank New Hampshire      dated October 15, 2003.                                                                                                   |   | Incorporated      by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003.  |
| 10.9    | Security      Agreement by and between Lasertel, Inc. and Citizens Bank New Hampshire      dated October 15, 2003.                                                                                                   |   | Incorporated      by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003. |
| 10.10   | Security      Agreement (Intellectual Property) by and between Presstek, Inc. and      Citizens Bank New Hampshire dated October 15, 2003.                                                                           |   | Incorporated      by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003. |
| 10.11   | Security      Agreement (Intellectual Property) by and between Lasertel, Inc. and      Citizens Bank New Hampshire dated October 15, 2003.                                                                           |   | Incorporated      by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003. |
| 10.12   | Mortgage      and Security Agreement between Presstek, Inc. and Citizens Bank New      Hampshire dated October 15, 2003.                                                                                             |   | Incorporated      by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form      10-Q for the quarter ended November 12, 2003.  |
| 10.13   | Deed      of Trust, Assignment of Rents, Security Agreement and Fixture Filing by      and among Presstek, Inc., First American Title Insurance Company and      Citizens Bank New Hampshire dated October 15, 2003. |   | Incorporated      by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form      10-Q for the quarter ended September 27, 2003. |
| 10.14   | Amendment      dated July 29, 2008, to the Amended Restated Credit Agreement among      Presstek, Inc., Citizens Bank New Hampshire, KeyBank National Association      and Bank North N.A. dated November 5, 2004.   |   | Incorporated      by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K,      filed July 31, 2008.                         |
| 10.15** | Employment      Agreement by and between Presstek, Inc. and Jeffrey Cook dated February      27, 2007.                                                                                                               |   | Incorporated      by reference to Exhibit 10(u) to the Company’s Annual Report on Form 10-K      for the fiscal year ended December 30, 2007. |
| 10.16** | Nonqualified      Stock Option Agreement by and between Presstek, Inc. and Jeffrey Cook      dated February 27, 2007.                                                                                                |   | Incorporated      by reference to Exhibit 99.2 to the Company’s Current Report on Form 8-K,      filed March 2, 2007.                         |
| 10.17** | Employment      Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated May 10,      2007.                                                                                                                |   | Incorporated      by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form      10-Q for the quarter ended March 31, 2007.      |
| 10.18** | Non-Plan,      Non-qualified Stock Option Agreement by and between Presstek, Inc. and      Jeffrey Jacobson dated May 10, 2007.                                                                                      |   | Incorporated      by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form      10-Q for the quarter end March 31, 2007.        |
| 10.19** | Forms      of Stock Option Agreement under 2008 Omnibus Incentive    Plan.                                                                                                                                           |   | Filed      with this report.                                                                                                                        |
| 10.20   | (i) Purchase and Sale Agreement and Escrow      Instruction by and between Presstek, Inc. and EJC Properties, LLLP dated      April 24, 2008.                                                                        |   | Filed      with this report.                                                                                                                        |
|    | (ii) First Amendment to Purchase and Sale      Agreement and Escrow Instruction by and between Presstek, Inc. and EJC      Properties, LLLP dated June 27, 2008                                                      |   | Filed      with this report.                                                                                                                        |
| 21.1    | Subsidiaries      of the Registrant.                                                                                                                                                                                 |   | Filed      with this report.                                                                                                                        |
| 23.1    | Consent      of KPMG LLP.                                                                                                                                                                                            |   | Filed      with this report.                                                                                                                        |
| 31.1    | Certification      of Chief Executive Officer Pursuant to Section 240.13a-14 or Section      240.15d-14 of the Securities Exchange Act of 1934, as    amended.                                                       |   | Filed      with this report.                                                                                                                        |
| 31.2    | Certification      of Chief Financial Officer Pursuant to Section 240.13a-14 or Section      240.15d-14 of the Securities Exchange Act of 1934, as    amended.                                                       |   | Filed      with this report.                                                                                                                        |
| 32.1    | Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002.                                                                                    |   | Filed      with this report.                                                                                                                        |
| 32.2    | Certification      Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002.                                                                                    |   | Filed      with this report.                                                                                                                        |

| * | The      SEC has granted Presstek’s request of confidential treatment with respect      to a portion of this exhibit. |
|---|-----------------------------------------------------------------------------------------------------------------------------|

| ** | Management      contract or compensatory plan orarrangement. |
|----|--------------------------------------------------------------|

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