| R        | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                                         |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                         |
|     | For the fiscal year ended January 1, 2011                                                                                                    |
| 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.**                                                                                                     |   |   | 19 |   |
|     | 1B.    |   | Unresolved Staff Comments.                                                                                          |   |   | 26 |   |
|     | 2.     |   | Properties.                                                                                                         |   |   | 27 |   |
|     | 3.     |   | Legal Proceedings.                                                                                                  |   |   | 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.                               |   |   | 84 |   |
|     | 9A.    |   | Controls and Procedures.                                                                                            |   |   | 84 |   |
|     | 9B.    |   | Other Information.                                                                                                  |   |   | 86 |   |
|     |   |   |                                                                                                                |   |   |   |   |
| PART III |   |   |                                                                                                                |   |   |   |
| Item     |   |   |                                                                                                                |   |   |   |
|     | 10.    |   | Directors, Executive Officers and Corporate Governance.                                                             |   |   | 86 |   |
|     | 11.    |   | Executive Compensation.                                                                                             |   |   | 87 |   |
|     | 12.    |   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.                     |   |   | 87 |   |
|     | 13.    |   | Certain Relationships and Related Transactions, and Director Independence.                                          |   |   | 87 |   |
|     | 14.    |   | Principal Accountant Fees and Services.                                                                             |   |   | 88 |   |
|     |   |   |                                                                                                                |   |   |   |   |
| PART IV  |   |   |                                                                                                                |   |   |   |
| Item     |   |   |                                                                                                                |   |   |   |
|     | 15.    |   | Exhibits and Financial Statement Schedules.                                                                         |   |   | 88 |   |
|     |   |   | Signatures.                                                                                                         |   |   | 89 |   |

| * | 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.

| ·   | 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. |
|--------------------|---------------------------------------------------------------------------------------------------------|

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| ·   | 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. |
|--------------------|-----------------------------------------------------------------------------------------------------|

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| ·   | Digital Printing, which includes DI® digital offset presses, digital toner presses, inkjet printers, consumables and workflow; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | EAMER (Europe, Africa, Middle East Region); |
|--------------------|---------------------------------------------|

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

| ·   | APAC (Asia Pacific). |
|--------------------|----------------------|

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| a.   | Commercial printers. Printers need to improve their response time, increase their production capacity, improve efficiency and provide high quality output while improving profitability. Many commercial printers, particularly small and mid size printers (generally those with less than 20 employees) have demonstrated success with our digital offset products, with success being defined as improved productivity, improved profitability and business growth. These printers are often acquiring their first four-color offset press when they acquire a Presstek product. However, Presstek is also enhancing and growing its product offerings to provide similar benefits to larger printers.  DI® presses are engineered to produce print runs between 500 and 20,000 images at a very high quality with a very low cost per page. Since market demands are shifting to require an increasing number of jobs with run lengths in this range, it is leaving a gap in the production portfolio of many larger commercial print shops. They can efficiently produce very short-runs (less than 500) on their toner devices, and runs of 20,000 or more on their conventional offset presses.  We believe that larger print shops can be more profitable producing a run of 500 to 20,000 on a Presstek’s DI®. Presstek believes that larger printers will increasingly look at DI® presses to fill this production gap in their equipment portfolio. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| b.   | Digital printers and copy shops. These 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 500 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 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. These print shops are attracted to the ease-of-use, compact footprint and environmentally responsible nature of our solutions. It is becoming increasingly important that these shops be self-sustaining. The productivity, efficiency and versatility of Presstek solutions helps in-plants reach this goal. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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® press, a 52DI® to a 52DI®-AC or a 75DI® press, a semi-automated CTP system to a fully automated solution, or add Latitude, a PDF workflow solution). |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Growth up-market to larger print shops. As print buyers request more jobs in the 500 to 20,000 run length range 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 DI® press is a good solution for these shops, because it allows them to bridge the production gap between the high-end of toner devices (~500) and the low-end of conventional offset presses (~20,000). DI® presses also use offset ink and print on standard paper (as well as many other substrates) so output is easily matched to the production of larger presses. The DI® press may also open up new opportunities for the larger print shop. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Growth of CTP consumables. It is estimated that the worldwide digital offset printing plate market in fiscal 2010 was $3.9 billion. This market is expected to grow by as much as 15% to $4.5 billion by 2014 based on research from Vantage Strategic Marketing. Presstek plans to further penetrate this large consumables market by aggressively marketing its expanding range of CTP plates. These plates will work on both Presstek and third party imaging devices. Aurora Pro and Aeon are examples of “open platform” products that fit 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, EAMER, and APAC, to establish proper distribution by region and to help develop solutions that fit each market’s specific requirements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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----

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| A1                       | a printing term referring to a standard paper size capable of holding eight 8.5” x 11” pages on a sheet of paper                                                                                                                |
|--------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                                                                                                        |
| A2                       | a printing term referring to a standard paper size capable of holding four 8.5” x 11” pages on a sheet of paper                                                                                                                 |
|                     |                                                                                                                                                                                                                                        |
| A3/B3                    | a printing term referring to a standard paper size capable of holding two 8.5” x 11” pages on a sheet of paper                                                                                                                  |
|                     |                                                                                                                                                                                                                                        |
| B2 press                 | A printing term commonly used in Europe to describe a press format capable of printing B2 size paper. A B2 sheet of paper is 500mm × 707mm (19.7” × 27.8”)                                                            |
|                     |                                                                                                                                                                                                                                        |
| 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 an image. 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                                                                                                                                  |
|                     |                                                                                                                                                                                                                                        |
| DI®                 | Presstek’s registered trademark for direct-to-press 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                                                                                                                           |
|                     |                                                                                                                                                                                                                                        |
| Makeready                | all activities required to transition from the end of one print job to the first sellable sheet of a second print job                                                                                                                       |
|                     |                                                                                                                                                                                                                                        |
| Moiré patterns      | undesirable pattern in halftones and screen tints made by improperly aligned screens                                                                                                                                                        |
|                     |                                                                                                                                                                                                                                        |
| Open platform CTP Plates | CTP plates that work on a range of platesetters from various manufacturers, allowing access to a broader market segment                                                                                                                     |
|                     |                                                                                                                                                                                                                                        |

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| 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 and electronics |

| 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 |
|                       |                                                                                                                                                                                                                                         |
| 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                                                                                                                                            |
|                       |                                                                                                                                                                                                                                         |
| 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 dampening system                                                                                                                         |

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Risk Factors

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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 slowdown. |
|--------------------|-----------------------------------------|

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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 economic conditions; |
|--------------------|------------------------------------------------------|

| ·   | 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

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Item 2. 

|  Location                   |  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 |
|                             |                                                                                                              |   |                         |    |                              |   |
| 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 |

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Item 3. 

----

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

|                              |   | High   |   |   | Low    |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
| Fiscal year ended January 1, 2011 |   |   |   |   |   |   |
| First quarter                     |   | $      | 5.09   |   |   | $      | 2.15 |   |
| Second quarter                    |   | $      | 5.19   |   |   | $      | 2.35 |   |
| Third quarter                     |   | $      | 3.41   |   |   | $      | 1.55 |   |
| Fourth quarter                    |   | $      | 2.33   |   |   | $      | 1.73 |   |
|                              |   |   |   |   |   |   |   |   |
| Fiscal year ended January 2, 2010 |   | High   |   |   | Low    |   |
| First quarter                     |   | $      | 3.56   |   |   | $      | 1.38 |   |
| Second quarter                    |   | $      | 2.39   |   |   | $      | 1.10 |   |
| Third quarter                     |   | $      | 2.42   |   |   | $      | 1.17 |   |
| Fourth quarter                    |   | $      | 2.61   |   |   | $      | 1.64 |   |

Item 6. 

----

| (in thousands, except per-share data)                   |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |
|---------------------------------------------------------|--------|-------------------|--------------------------------------|--------|------------|--------|------------------------------|------------|--------|--------|------------------------------|--------|--------|--------------|------------------------|
|                                                    |   | Fiscal year ended |
|                                                    |   | January 1,        |                                 |   | January 2, |   |                         | January 3, |   |   | December 29,                 |   |   | December 30, |                   |
|                                                    |   | 2011              |                                 |   | 2010       |   |                         | 2009       |   |   | 2007                         |   |   | 2006         |                   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |
| Revenue                                                 |   | $                 | 128,577                              |   |       | $      | 134,458                      |       |   | $      | 193,252                      |   |   | $            | 246,573                |   |   | $ | 258,936 |   |
| Cost of revenue                                         |   |              | 86,679                               |   |       |   | 92,266                       |       |   |   | 124,511                      |   |   |         | 177,346                |   |   |   | 181,799 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Gross profit                                            |   |              | 41,898                               |   |       |   | 42,192                       |       |   |   | 68,741                       |   |   |         | 69,227                 |   |   |   | 77,137 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Operating expenses                                      |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|   Research and development                    |   |              | 4,305                                |   |       |   | 4,975                        |       |   |   | 5,144                        |   |   |         | 4,969                  |   |   |   | 5,320 |   |
|   Sales, marketing and customer support       |   |              | 21,562                               |   |       |   | 24,967                       |       |   |   | 29,937                       |   |   |         | 39,194                 |   |   |   | 39,451 |   |
|   General and administrative                  |   |              | 21,468                               |   |       |   | 21,912                       |       |   |   | 25,496                       |   |   |         | 33,172                 |   |   |   | 18,879 |   |
|   Amortization of intangible assets           |   |              | 805                                  |   |       |   | 926                          |       |   |   | 1,084                        |   |   |         | 2,168                  |   |   |   | 2,697 |   |
|   Restructuring and special charges (credits) |   |              | 564                                  |   |       |   | 1,684                        |       |   |   | 2,108                        |   |   |         | 2,714                  |   |   |   | 5,481 |   |
|   Goodwill impairment                         |   |              | -                                    |   |       |   | 19,114                       |       |   |   | -                            |   |   |         | -                      |   |   |   | - |   |
|     Total operating expenses        |   |              | 48,704                               |   |       |   | 73,578                       |       |   |   | 63,769                       |   |   |         | 82,217                 |   |   |   | 71,828 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Operating income (loss)                                 |   |              | (6,806                               | )      |       |   | (31,386                      | )          |   |   | 4,972                        |   |   |         | (12,990                | ) |   |   | 5,309 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Other income (expense), net                             |   |              | (1,244                               | )      |       |   | (1,389                       | )          |   |   | 938                          |   |   |         | (1,254                 | ) |   |   | (984 | ) |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Income (loss) from continuing operations                |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|   before income taxes                         |   |              | (8,050                               | )      |       |   | (32,775                      | )          |   |   | 5,910                        |   |   |         | (14,244                | ) |   |   | 4,325 |   |
| Provision (benefit) for income taxes                    |   |              | 2,503                                |   |       |   | 16,334                       |       |   |   | 2,780                        |   |   |         | (3,889                 | ) |   |   | (9,891 | ) |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Income (loss) from continuing operations                |   |              | (10,553                              | )      |       |   | (49,109                      | )          |   |   | 3,130                        |   |   |         | (10,355                | ) |   |   | 14,216 |   |
| Loss from discontinued operations, net of income tax    |   |              | (70                                  | )      |       |   | (740                         | )          |   |   | (2,606                       | )      |   |         | (1,849                 | ) |   |   | (4,472 | ) |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Net income (loss)                                       |   | $                 | (10,623                              | )      |       | $      | (49,849                      | )          |   | $      | 524                          |   |   | $            | (12,204                | ) |   | $ | 9,744 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Earnings (loss) per share - basic                       |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|   Income (loss) from continuing operations    |   | $                 | (0.29                                | )      |       | $      | (1.34                        | )          |   | $      | 0.09                         |   |   | $            | (0.29                  | ) |   | $ | 0.40 |   |
|   Loss from discontinued operations           |   |              | (0.00                                | )      |       |   | (0.02                        | )          |   |   | (0.08                        | )      |   |         | (0.05                  | ) |   |   | (0.13 | ) |
|                                                    |   | $                 | (0.29                                | )      |       | $      | (1.36                        | )          |   | $      | 0.01                         |   |   | $            | (0.34                  | ) |   | $ | 0.27 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Earnings (loss) per share - diluted                     |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|   Income (loss) from continuing operations    |   | $                 | (0.29                                | )      |       | $      | (1.34                        | )          |   | $      | 0.09                         |   |   | $            | (0.29                  | ) |   | $ | 0.40 |   |
|   Loss from discontinued operations           |   |              | (0.00                                | )      |       |   | (0.02                        | )          |   |   | (0.08                        | )      |   |         | (0.05                  | ) |   |   | (0.13 | ) |
|                                                    |   | $                 | (0.29                                | )      |       | $      | (1.36                        | )          |   | $      | 0.01                         |   |   | $            | (0.34                  | ) |   | $ | 0.27 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Weighted average shares outstanding                     |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|   Basic                                       |   |              | 36,898                               |   |       |   | 36,744                       |       |   |   | 36,596                       |   |   |         | 36,199                 |   |   |   | 35,565 |   |
|   Diluted                                     |   |              | 36,898                               |   |       |   | 36,744                       |       |   |   | 36,605                       |   |   |         | 36,199                 |   |   |   | 35,856 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
|                                                    |   | As of             |
|                                                    |   | January 1,        |                                 |   | January 2, |   |                         | January 3, |   |   | December 29,                 |   |   | December 30, |                   |
|                                                    |   |              |   2011      |   |       |   | 2010     |       |   |   | 2009     |   |   |         | 2007    |   |   |   | 2006     |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |
| Working capital (this excludes discontinued operations) |   | $                 | 22,312                               |   |       | $      | 19,324                       |       |   | $      | 34,670                       |   |   | $            | 35,337                 |   |   | $ | 43,151 |   |
| Total assets                                            |   | $                 | 80,525                               |   |       | $      | 104,535                      |       |   | $      | 157,513                      |   |   | $            | 192,827                |   |   | $ | 198,014 |   |
| Total debt and capital lease obligations                |   | $                 | 10,252                               |   |       | $      | 17,910                       |       |   | $      | 16,489                       |   |   | $            | 35,535                 |   |   | $ | 37,572 |   |
| Stockholders' equity                                    |   | $                 | 49,178                               |   |       | $      | 56,848                       |       |   | $      | 102,531                      |   |   | $            | 106,892                |   |   | $ | 111,237 |   |
|                                                    |   |              |                                 |   |       |   |                         |       |   |   |                         |   |   |         |                   |   |   |   |   |   |

----

Item 7.

| · | provide advanced digital print solutions through the development, manufacture, and sourcing of digital laser imaging equipment and advanced technology chemistry-free and chemistry-based 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; and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | 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.                                                                                                                                                         |

----

----

----

|                                                               |   | 2010   |    |   | 2009   |   |    | 2008   |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                               |   |   |    |   |   |   |    |   |   |
| Net Income (Loss) from Continuing Operations                       |   | $      | (10,553 | )      |   | $      | (49,109 | )      |   | $ | 3,130 |   |
|   Add Back:                                              |   |   |    |   |   |   |    |   |   |   |   |   |
|     Interest expense, net                      |   |   | 1,049   |   |   |   | 1,116   |   |   |   | 835 |   |
|     Provision for income taxes                 |   |   | 2,503   |   |   |   | 16,334  |   |   |   | 2,780 |   |
|     Depreciation and amortization              |   |   | 4,841   |   |   |   | 4,733   |   |   |   | 5,603 |   |
|     Non-cash portion of equity compensation(1) |   |   | 3,662   |   |   |   | 1,702   |   |   |   | 1,803 |   |
|     Impairment and other non-cash charges(2)   |   |   | 1,935   |   |   |   | 21,938  |   |   |   | - |   |
|     Restructuring and other charges            |   |   | 564     |   |   |   | 1,684   |   |   |   | 2,108 |   |
|   Adjusted EBITDA                                        |   | $      | 4,001   |   |   | $      | ( 1,602 | )      |   | $ | 16,259 |   |

|   | (1) includes charges for bonus plan payable in Presstek stock and stock-based compensation |
|--------|-------------------------------------------------------------------------------------------------|

|   | (2) includes a customer bad debt charge in 2010 and goodwill write-off and inventory charge in 2009 |
|--------|-----------------------------------------------------------------------------------------------------|

----

|                                                                                 |   | Fiscal year ended |    |
|--------------------------------------------------------------------------------------|--------|-------------------|---------|
|                                                                                 |   | January 1, 2011   |    |   | January 2, 2010 |   |   | January 3, 2009 |   |
|                                                                                 |   |              |    |   | % ofrevenue |   |   |   |   |   | % ofrevenue |   |   |   |   |   | % ofrevenue |   |
| Revenue                                                                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equipment                                                                |   | $                 | 21,413  |   |   |   | 16.7 |   |   | $ | 19,646 |   |   |   | 14.6 |   |   | $ | 52,716 |   |   |   | 27.2 |   |
|   Consumables                                                              |   |              | 82,300  |   |   |   | 64.0 |   |   |   | 85,741 |   |   |   | 63.8 |   |   |   | 106,027 |   |   |   | 54.9 |   |
|   Service and parts                                                        |   |              | 24,864  |   |   |   | 19.3 |   |   |   | 29,071 |   |   |   | 21.6 |   |   |   | 34,509 |   |   |   | 17.9 |   |
|           Total revenue            |   |              | 128,577 |   |   |   | 100.0 |   |   |   | 134,458 |   |   |   | 100.0 |   |   |   | 193,252 |   |   |   | 100.0 |   |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenue                                                                      |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equipment                                                                |   |              | 21,924  |   |   |   | 17.1 |   |   |   | 23,916 |   |   |   | 17.8 |   |   |   | 45,818 |   |   |   | 23.7 |   |
|   Consumables                                                              |   |              | 44,920  |   |   |   | 34.9 |   |   |   | 46,765 |   |   |   | 34.8 |   |   |   | 53,270 |   |   |   | 27.5 |   |
|   Service and parts                                                        |   |              | 19,835  |   |   |   | 15.4 |   |   |   | 21,585 |   |   |   | 16.0 |   |   |   | 25,423 |   |   |   | 13.2 |   |
|           Total cost of revenue    |   |              | 86,679  |   |   |   | 67.4 |   |   |   | 92,266 |   |   |   | 68.6 |   |   |   | 124,511 |   |   |   | 64.4 |   |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                         |   |              | 41,898  |   |   |   | 32.6 |   |   |   | 42,192 |   |   |   | 31.4 |   |   |   | 68,741 |   |   |   | 35.6 |   |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research and development                                                 |   |              | 4,305   |   |   |   | 3.3 |   |   |   | 4,975 |   |   |   | 3.7 |   |   |   | 5,144 |   |   |   | 2.6 |   |
|   Sales, marketing and customer support                                    |   |              | 21,562  |   |   |   | 16.8 |   |   |   | 24,967 |   |   |   | 18.6 |   |   |   | 29,937 |   |   |   | 15.5 |   |
|   General and administrative                                               |   |              | 21,468  |   |   |   | 16.7 |   |   |   | 21,912 |   |   |   | 16.3 |   |   |   | 25,496 |   |   |   | 13.2 |   |
|   Amortization of intangible assets                                        |   |              | 805     |   |   |   | 0.6 |   |   |   | 926 |   |   |   | 0.7 |   |   |   | 1,084 |   |   |   | 0.6 |   |
|   Restructuring and other charges                                          |   |              | 564     |   |   |   | 0.4 |   |   |   | 1,684 |   |   |   | 1.3 |   |   |   | 2,108 |   |   |   | 1.1 |   |
|   Goodwill impairment                                                      |   |              | -       |   |   |   | - |   |   |   | 19,114 |   |   |   | 14.2 |   |   |   | - |   |   |   | - |   |
|           Total operating expenses |   |              | 48,704  |   |   |   | 37.9 |   |   |   | 73,578 |   |   |   | 54.8 |   |   |   | 63,769 |   |   |   | 33.0 |   |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                              |   |              | (6,806  | ) |   |   | (5.3 | ) |   |   | (31,386 | ) |   |   | (23.4 | ) |   |   | 4,972 |   |   |   | 2.6 |   |
| Interest and other income (expense), net                                             |   |              | (1,244  | ) |   |   | (1.0 | ) |   |   | (1,389 | ) |   |   | (1.0 | ) |   |   |  938 |   |   |   | 0.5 |   |
|    Income (loss) from continuing operations before income taxes       |   |              | (8,050  | ) |   |   | (6.3 | ) |   |   | (32,775 | ) |   |   | (24.4 | ) |   |   | 5,910 |   |   |   | 3.1 |   |
| Provision (benefit) for income taxes                                                 |   |              | 2,503   |   |   |   | 1.9 |   |   |   | 16,334 |   |   |   | 12.1 |   |   |   | 2,780 |   |   |   | 1.4 |   |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                             |   |              | (10,553 | ) |   |   | (8.2 | ) |   |   | (49,109 | ) |   |   | (36.5 | ) |   |   | 3,130 |   |   |   |  1.6 |   |
| Loss from discontinued operations, net of income taxes                               |   |              | (70     | ) |   |   | (0.1 | ) |   |   |  (740 | ) |   |   | (0.6 | ) |   |   | (2,606 | ) |   |   | (1.3 | ) |
|                                                                                 |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                    |   | $                 | (10,623 | ) |   |   | (8.3 | ) |   | $ | (49,849 | ) |   |   | (37.1 | ) |   | $ | 524 |   |   |   | 0.3 |   |

----

----

----

----

----

----

----

|                                             |   | January 1, 2011 |   |   | January 2, 2010 |   |    | January 3, 2009 |   |
|--------------------------------------------------|--------|-----------------|--------|--------|-----------------|--------|---------|-----------------|--------|
| Revenue                                          |   | $               | 1,394  |   |            | $      | 13,488  |            |   | $ | 8,686 |   |
| Profit (loss) before other charges               |   |            | (555   | )      |            |   | 1,621   |            |   |   | (4,336 | ) |
|   Impairment charge                    |   |            | -      |   |            |   | (1,428  | )               |   |   | - |   |
|   Transaction costs related to sale    |   |            | -      |   |            |   | (933    | )               |   |   | - |   |
|   Gain on disposition                  |   |            | 485    |   |            |   | -       |            |   |   | - |   |
| Loss before income taxes                         |   |            | (70    | )      |            |   | (740    | )               |   |   | (4,336 | ) |
|   Provision (benefit) for income taxes |   |            | -      |   |            |   |  - |            |   |   | (1,637 | ) |
| Net loss from discontinued operations            |   | $               | (70    | )      |            | $      | (740    | )               |   | $ | (2,699 | ) |
|     Loss per diluted share   |   | $               | 0.00   |   |            | $      | (0.02   | )               |   | $ | (0.08 | ) |

| Cash and cash equivalents            |   | $      | 585    |   |
|--------------------------------------|--------|--------|--------|--------|
| Receivables, net                     |   |   | 2,938  |   |
| Inventories                          |   |   | 3,774  |   |
| Other current assets                 |   |   | 212    |   |
| Property, plant & equipment, net |   |   | 4,377  |   |
| Intangible assets, net               |   |   | 696    |   |
| Other noncurrent assets              |   |   | 42     |   |
|    Total assets       |   | $      | 12,624 |   |
|                                 |   |   |   |   |
| Accounts payable                     |   | $      | 729    |   |
| Accrued expenses                     |   |   | 459    |   |
| Deferred gain                        |   |   | 4,015  |   |
|  Total Liabilities              |   | $      | 5,203  |   |

----

----

|                                      |   |   |   |   | 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          |   | $      | 10,252 |   |                   | $      | 10,252 |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Purchase commitments                      |   |   | 1,469  |   |                   |   | 1,469 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Operating leases                          |   |   | 4,853  |   |                   |   | 1,832 |   |   |   | 2,470 |   |   |   | 551 |   |   |   | - |   |
|                                      |   |   |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total contractual obligations |   | $      | 16,574 |   |                   | $      | 13,553 |   |   | $ | 2,470 |   |   | $ | 551 |   |   | $ | - |   |

----

----

----

----

----

----

----

Item 7A.

----

Item 8. 

|                                                                                                                                                                      | Page   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                      |   |
| Report of Independent Registered Public Accounting Firm                                                                                                                   | 53     |
| Consolidated Balance Sheets as of January 1, 2011 and January 2, 2010                                                                                                     | 54     |
| Consolidated Statements of Operations for the fiscal years ended January 1, 2011, January 2, 2010 and January 3, 2009                                                     | 55     |
| Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the fiscal years ended January 1, 2011, January 2, 2010 and January 3, 2009 | 56     |
| Consolidated Statements of Cash Flows for the fiscal years ended January 1, 2011, January 2, 2010 and January 3, 2009                                                     | 57     |
| Notes to Consolidated Financial Statements                                                                                                                                | 58     |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |
|                                                                                                                                                                      |   |

----

Report of Independent Registered Public Accounting Firm

----

| ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                     |   |       |    |   |       |   |
|-----------------------------------------------------------------------------------------|--------|------------|---------|--------|------------|--------|
|                                                                                    |   |       |    |   |       |   |
| PRESSTEK, INC. AND SUBSIDIARIES                                                         |   |
| CONSOLIDATED BALANCE SHEETS                                                             |   |
| (in thousands, except share data)                                                       |   |
|                                                                                    |   |       |    |   |       |   |
|                                                                                    |   | January 1, |    |   | January 2, |   |
|                                                                                    |   | 2011       |    |   | 2010       |   |
|                                                                                    |   |       |    |   |       |   |
| ASSETS                                                                                  |   |       |    |   |       |   |
| Current assets                                                                          |   |       |    |   |       |   |
| Cash and cash equivalents                                                               |   | $          | 4,165   |   |       | $      | 5,843 |   |
| Accounts receivable, net                                                                |   |       | 18,647  |   |       |   | 22,605 |   |
| Inventories                                                                             |   |       | 29,143  |   |       |   | 30,378 |   |
| Assets of discontinued operations                                                       |   |       | -       |   |       |   | 12,624 |   |
| Deferred income taxes                                                                   |   |       | -       |   |       |   | 243 |   |
| Other current assets                                                                    |   |       | 1,609   |   |       |   | 2,598 |   |
| Total current assets                                                                    |   |       | 53,564  |   |       |   | 74,291 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Property, plant and equipment, net                                                      |   |       | 21,156  |   |       |   | 24,307 |   |
| Intangible assets, net                                                                  |   |       | 4,748   |   |       |   | 4,316 |   |
| Deferred income taxes                                                                   |   |       | -       |   |       |   | 1,140 |   |
| Other noncurrent assets                                                                 |   |       | 1,057   |   |       |   | 481 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Total assets                                                                            |   | $          | 80,525  |   |       | $      | 104,535 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                    |   |       |    |   |       |   |   |   |
| Current liabilities                                                                     |   |       |    |   |       |   |   |   |
| Line of credit                                                                          |   | $          | 10,252  |   |       | $      | 17,910 |   |
| Accounts payable                                                                        |   |       | 9,733   |   |       |   | 9,887 |   |
| Accrued expenses                                                                        |   |       | 6,624   |   |       |   | 8,049 |   |
| Deferred revenue                                                                        |   |       | 4,643   |   |       |   | 6,497 |   |
| Liabilities of discontinued operations                                                  |   |       | -       |   |       |   | 5,203 |   |
| Total current liabilities                                                               |   |       | 31,252  |   |       |   | 47,546 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Other long-term liabilities                                                             |   |       | 95      |   |       |   | 141 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Total liabilities                                                                       |   |       | 31,347  |   |       |   | 47,687 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Commitments and contingencies (See Note 18)                                             |   |       |    |   |       |   |   |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| 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, 36,942,166 and             |   |       |    |   |       |   |   |   |
| 36,854,802 shares issued and outstanding at January 1, 2011 and                         |   |       |    |   |       |   |   |   |
| January 2, 2010, respectively                                                           |   |       | 369     |   |       |   | 368 |   |
| Additional paid-in capital                                                              |   |       | 122,664 |   |       |   | 120,005 |   |
| Accumulated other comprehensive income (loss)                                           |   |       | (3,517  | )      |       |   | (3,810 | ) |
| Accumulated deficit                                                                     |   |       | (70,338 | )      |       |   | (59,715 | ) |
| Total stockholders' equity                                                              |   |       | 49,178  |   |       |   | 56,848 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| Total liabilities and stockholders' equity                                              |   | $          | 80,525  |   |       | $      | 104,535 |   |
|                                                                                    |   |       |    |   |       |   |   |   |
|                                                                                    |   |       |    |   |       |   |   |   |
| 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 1, |   |   | January 2, |   |   | January 3, |   |
|                                                                                    |   | 2011 |   |   | 2010 |   |   | 2009 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                 |   |   |   |   |   |   |   |   |   |
| Equipment                                                                               |   | $ | 21,413 |   |   | $ | 19,646 |   |   | $ | 52,716 |   |
| Consumables                                                                             |   |   | 82,300 |   |   |   | 85,741 |   |   |   | 106,027 |   |
| Service and parts                                                                       |   |   | 24,864 |   |   |   | 29,071 |   |   |   | 34,509 |   |
| Total revenue                                                                           |   |   | 128,577 |   |   |   | 134,458 |   |   |   | 193,252 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of revenue                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Equipment                                                                               |   |   | 21,924 |   |   |   | 23,916 |   |   |   | 45,818 |   |
| Consumables                                                                             |   |   | 44,920 |   |   |   | 46,765 |   |   |   | 53,270 |   |
| Service and parts                                                                       |   |   | 19,835 |   |   |   | 21,585 |   |   |   | 25,423 |   |
| Total cost of revenue                                                                   |   |   | 86,679 |   |   |   | 92,266 |   |   |   | 124,511 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross profit                                                                            |   |   | 41,898 |   |   |   | 42,192 |   |   |   | 68,741 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                                                                |   |   | 4,305 |   |   |   | 4,975 |   |   |   | 5,144 |   |
| Sales, marketing and customer support                                                   |   |   | 21,562 |   |   |   | 24,967 |   |   |   | 29,937 |   |
| General and administrative                                                              |   |   | 21,468 |   |   |   | 21,912 |   |   |   | 25,496 |   |
| Amortization of intangible assets                                                       |   |   | 805 |   |   |   | 926 |   |   |   | 1,084 |   |
| Restructuring and other charges                                                         |   |   | 564 |   |   |   | 1,684 |   |   |   | 2,108 |   |
| Goodwill impairment                                                                     |   |   | - |   |   |   | 19,114 |   |   |   | - |   |
| Total operating expenses                                                                |   |   | 48,704 |   |   |   | 73,578 |   |   |   | 63,769 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss)                                                                 |   |   | (6,806 | ) |   |   | (31,386 | ) |   |   | 4,972 |   |
| Interest and other income (expense), net                                                |   |   | (1,244 | ) |   |   | (1,389 | ) |   |   | 938 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations before income taxes                            |   |   | (8,050 | ) |   |   | (32,775 | ) |   |   | 5,910 |   |
| Provision for income taxes                                                              |   |   | 2,503 |   |   |   | 16,334 |   |   |   | 2,780 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                                |   |   | (10,553 | ) |   |   | (49,109 | ) |   |   | 3,130 |   |
| Loss from discontinued operations, net of income taxes                                  |   |   | (70 | ) |   |   | (740 | ) |   |   | (2,606 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                       |   | $ | (10,623 | ) |   | $ | (49,849 | ) |   | $ | 524 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per common share - basic                                                |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                                |   | $ | (0.29 | ) |   | $ | (1.34 | ) |   | $ | 0.09 |   |
| Loss from discontinued operations                                                       |   |   | (0.00 | ) |   |   | (0.02 | ) |   |   | (0.08 | ) |
|                                                                                    |   | $ | (0.29 | ) |   | $ | (1.36 | ) |   | $ | 0.01 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per common share - diluted                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations                                                |   | $ | (0.29 | ) |   | $ | (1.34 | ) |   | $ | 0.09 |   |
| Loss from discontinued operations                                                       |   |   | (0.00 | ) |   |   | (0.02 | ) |   |   | (0.08 | ) |
|                                                                                    |   | $ | (0.29 | ) |   | $ | (1.36 | ) |   | $ | 0.01 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding - basic                                             |   |   | 36,898 |   |   |   | 36,744 |   |   |   | 36,596 |   |
| Dilutive effect of stock options                                                        |   |   | - |   |   |   | - |   |   |   | 9 |   |
| Weighed average shares outstanding - diluted                                            |   |   | 36,898 |   |   |   | 36,744 |   |   |   | 36,605 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 (LOSS)                                                         |   |
| (in thousands)                                                                          |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   | Accumulated |   |   | Retained |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   | Additional |   |   | other |   |   | earnings |   |   |   |   |
|                                                                                    |   | Common stock |   |   | paid-in |   |   | comprehensive |   |   | (accumulated |   |   |   |   |
|                                                                                    |   | Shares |   |   | Par value |   |   | capital |   |   | income (loss) |   |   | deficit) |   |   | Total |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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                                                                |   |   | - |   |   |   | - |   |   |   | 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 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock                                                                |   |   | 218 |   |   |   | 2 |   |   |   | 318 |   |   |   | - |   |   |   | - |   |   |   | 320 |   |
| Foreign currency translation adjustments                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,144 |   |   |   | - |   |   |   | 2,144 |   |
| Share based compensation                                                                |   |   | - |   |   |   | - |   |   |   | 1,702 |   |   |   | - |   |   |   | - |   |   |   | 1,702 |   |
| Net income (loss)                                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (49,849 | ) |   |   | (49,849 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at January 2, 2010                                                              |   |   | 36,855 |   |   |   | 368 |   |   |   | 120,005 |   |   |   | (3,810 | ) |   |   | (59,715 | ) |   |   | 56,848 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock                                                                |   |   | 87 |   |   |   | 1 |   |   |   | 183 |   |   |   | - |   |   |   | - |   |   |   | 184 |   |
| Foreign currency translation adjustments                                                |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 293 |   |   |   | - |   |   |   | 293 |   |
| Share based compensation                                                                |   |   | - |   |   |   | - |   |   |   | 2,476 |   |   |   | - |   |   |   | - |   |   |   | 2,476 |   |
| Net income (loss)                                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (10,623 | ) |   |   | (10,623 | ) |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at January 1, 2011                                                              |   |   | 36,942 |   |   | $ | 369 |   |   | $ | 122,664 |   |   | $ | (3,517 | ) |   | $ | (70,338 | ) |   | $ | 49,178 |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive income (loss) is calculated as follows:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   | Fiscal year ended |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   | January 1, |   |   | January 2, |   |   | January 3, |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   | 2011 |   |   |   | 2010 |   |   |   | 2009 |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                       |   |   |   |   |   | $ | (10,623 | ) |   | $ | (49,849 | ) |   | $ | 524 |   |   |   |   |   |   |   |   |   |
| Adjustments to accumulated other comprehensive income                                   |   |   |   |   |   |   | 293 |   |   |   | 2,144 |   |   |   | (6,986 | ) |   |   |   |   |   |   |   |   |
|   Comprehensive loss                                                          |   |   |   |   |   | $ | (10,330 | ) |   | $ | (47,705 | ) |   | $ | (6,462 | ) |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these consolidated financial statements. |
|                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| PRESSTEK, INC. AND SUBSIDIARIES                                                                        |   |
|--------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                  |   |
| (in thousands)                                                                                         |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   | Fiscal year ended |   |
|                                                                                                   |   | January 1, |   |   | January 2, |   |   | January 3, |   |
|                                                                                                   |   | 2011 |   |   | 2010 |   |   | 2009 |   |
| Operating activities                                                                                   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                                                                      |   | $ | (10,623 | ) |   | $ | (49,849 | ) |   | $ | 524 |   |
| Add loss from discontinued operations                                                                  |   |   | 70 |   |   |   | 740 |   |   |   | 2,606 |   |
| Income (loss) from continuing operations                                                               |   |   | (10,553 | ) |   |   | (49,109 | ) |   |   | 3,130 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities                |   |   |   |   |   |   |   |   |   |   |   |   |
| from continuing operations:                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                           |   |   | 4,036 |   |   |   | 3,807 |   |   |   | 4,519 |   |
| Amortization of intangible assets                                                                      |   |   | 805 |   |   |   | 926 |   |   |   | 1,084 |   |
| Deferred income taxes                                                                                  |   |   | 2,228 |   |   |   | 16,177 |   |   |   | 1,081 |   |
| Impairment                                                                                             |   |   | - |   |   |   | 19,114 |   |   |   | 422 |   |
| Provision for warranty costs                                                                           |   |   | 98 |   |   |   | (384 | ) |   |   | 40 |   |
| Provision for accounts receivable allowances                                                           |   |   | 2,637 |   |   |   | 2,685 |   |   |   | 1,915 |   |
| Stock compensation expense                                                                             |   |   | 2,476 |   |   |   | 1,702 |   |   |   | 1,803 |   |
| Accrual for stock-based bonus plan                                                                     |   |   | 1,186 |   |   |   |   |   |   |   |   |   |
| Loss on disposal of assets                                                                             |   |   | - |   |   |   | 80 |   |   |   | 127 |   |
| Changes in operating assets and liabilities, net of effects from business acquisitions and divestures: |   |   |   |   |   |   |   |   |   |
| Accounts receivable                                                                                    |   |   | 1,452 |   |   |   | 4,564 |   |   |   | 8,556 |   |
| Inventories                                                                                            |   |   | (319 | ) |   |   | 6,621 |   |   |   | 7,049 |   |
| Other current assets                                                                                   |   |   | 919 |   |   |   | (55 | ) |   |   | 546 |   |
| Other noncurrent assets                                                                                |   |   | 335 |   |   |   | (3 | ) |   |   | (219 | ) |
| Accounts payable                                                                                       |   |   | (112 | ) |   |   | (2,083 | ) |   |   | (5,336 | ) |
| Accrued expenses                                                                                       |   |   | (2,757 | ) |   |   | (3,065 | ) |   |   | (9,774 | ) |
| Deferred revenue                                                                                       |   |   | (1,831 | ) |   |   | (758 | ) |   |   | 219 |   |
| Net cash provided by operating activities from continuing operations                                   |   |   | 600 |   |   |   | 219 |   |   |   | 15,162 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing activities                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase of property, plant and equipment                                                              |   |   | (843 | ) |   |   | (724 | ) |   |   | (1,777 | ) |
| Investment in patents and other intangible assets                                                      |   |   | (1,237 | ) |   |   | (1,068 | ) |   |   | (146 | ) |
| Net cash used in investing activities from continuing operations                                       |   |   | (2,080 | ) |   |   | (1,792 | ) |   |   | (1,923 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing activities                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net proceeds from issuance of common stock                                                             |   |   | 184 |   |   |   | 320 |   |   |   | 298 |   |
| Repayments of term loan and capital lease                                                              |   |   | - |   |   |   | (4,074 | ) |   |   | (11,461 | ) |
| Payments of loan origination costs                                                                     |   |   | (973 | ) |   |   | - |   |   |   | - |   |
| Net borrowings (repayments) under line of credit agreement                                             |   |   | (7,658 | ) |   |   | 5,495 |   |   |   | (7,585 | ) |
| Net cash (used in) provided by financing activities from continuing operations                         |   |   | (8,447 | ) |   |   | 1,741 |   |   |   | (18,748 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash provided by (used in) discontinued operations                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating activities                                                                                   |   |   | 1,452 |   |   |   | (1,731 | ) |   |   | (3,514 | ) |
| Investing activities                                                                                   |   |   | 7,372 |   |   |   | (339 | ) |   |   | 7,240 |   |
| Net cash provided by (used in) discontinued operations                                                 |   |   | 8,824 |   |   |   | (2,070 | ) |   |   | 3,726 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                           |   |   | (575 | ) |   |   | 3,007 |   |   |   | (6,037 | ) |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                   |   |   | (1,678 | ) |   |   | 1,105 |   |   |   | (7,820 | ) |
| Cash and cash equivalents, beginning of year                                                           |   |   | 5,843 |   |   |   | 4,738 |   |   |   | 12,558 |   |
| Cash and cash equivalents, end of year                                                                 |   | $ | 4,165 |   |   | $ | 5,843 |   |   | $ | 4,738 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental disclosure of cash flow information                                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for interest                                                                                 |   | $ | 858 |   |   | $ | 1,094 |   |   | $ | 1,605 |   |
| Net cash paid (received) for income taxes                                                              |   | $ | (412 | ) |   | $ | 49 |   |   | $ | 727 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 |

----

----

----

----

|                                             |   | January 1, 2011 |   |   | January 2, 2010 |   |    | January 3, 2009 |   |
|--------------------------------------------------|--------|-----------------|--------|--------|-----------------|--------|---------|-----------------|--------|
| Revenue                                          |   | $               | 1,394  |   |            | $      | 13,488  |            |   | $ | 8,686 |   |
| Profit (loss) before other charges               |   |            | (555   | )      |            |   | 1,621   |            |   |   | (4,336 | ) |
|   Impairment charge                    |   |            | -      |   |            |   | (1,428  | )               |   |   | - |   |
|   Transaction costs related to sale    |   |            | -      |   |            |   | (933    | )               |   |   | - |   |
|   Gain on disposition                  |   |            | 485    |   |            |   |  - |            |   |   | - |   |
| Loss before income taxes                         |   |            | (70    | )      |            |   | (740    | )               |   |   | (4,336 | ) |
|   Provision (benefit) for income taxes |   |            | -      |   |            |   |  - |            |   |   | (1,637 | ) |
| Net loss from discontinued operations            |   | $               | (70    | )      |            | $      | (740    | )               |   | $ | (2,699 | ) |
|     Loss per diluted share   |   | $               | 0.00   |   |            | $      | (0.02   | )               |   | $ | (0.08 | ) |

----

| Cash and cash equivalents            |   | $      | 585    |   |
|--------------------------------------|--------|--------|--------|--------|
| Receivables, net                     |   |   | 2,938  |   |
| Inventories                          |   |   | 3,774  |   |
| Other current assets                 |   |   | 212    |   |
| Property, plant & equipment, net |   |   | 4,377  |   |
| Intangible assets, net               |   |   | 696    |   |
| Other noncurrent assets              |   |   | 42     |   |
|    Total assets       |   | $      | 12,624 |   |
|                                 |   |   |   |   |
| Accounts payable                     |   | $      | 729    |   |
| Accrued expenses                     |   |   | 459    |   |
| Deferred gain                        |   |   | 4,015  |   |
|  Total Liabilities              |   | $      | 5,203  |   |

|                |   | January 1,2011 |   |   | January 2,2010 |   |
|---------------------|--------|----------------|--------|--------|----------------|--------|
|                |   |           |   |   |           |   |
| Accounts receivable |   | $              | 24,278 |   |           | $      | 26,155 |   |
| Less allowances     |   |           | (5,631 | )      |           |   | (3,550 | ) |
|                |   | $              | 18,647 |   |           | $      | 22,605 |   |

|                           |   | Fiscal2010 |   |   | Fiscal2009 |   |   | Fiscal2008 |   |
|--------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                           |   |       |   |   |       |   |   |       |   |
| Balance at beginning of period |   | $          | 3,550  |   |       | $      | 2,476  |       |   | $ | 2,538 |   |
| Charged to costs and expenses  |   |       | 2,637  |   |       |   | 2,685  |       |   |   | 1,915 |   |
| Deductions and write-offs      |   |       | (556   | )      |       |   | (1,611 | )          |   |   | (1,977 | ) |
| Balance at end of period       |   | $          | 5,631  |   |       | $      | 3,550  |       |   | $ | 2,476 |   |

|            |   | January 1,2011 |   |   | January 2,2010 |   |
|-----------------|--------|----------------|--------|--------|----------------|--------|
|            |   |           |   |   |           |   |
| Raw materials   |   | $              | 4,433  |   |           | $      | 4,485 |   |
| Work in process |   |           | 1,170  |   |           |   | 1,093 |   |
| Finished goods  |   |           | 23,540 |   |           |   | 24,800 |   |
|            |   | $              | 29,143 |   |           | $      | 30,378 |   |

----

|                                                      |   | January 1,2011 |    |   | January 2,2010 |   |
|-----------------------------------------------------------|--------|----------------|---------|--------|----------------|--------|
|                                                      |   |           |    |   |           |   |
| Land and improvements                                     |   | $              | 1,301   |   |           | $      | 1,301 |   |
| Buildings and leasehold improvements                      |   |           | 22,442  |   |           |   | 22,443 |   |
| Production and other equipment                            |   |           | 44,104  |   |           |   | 44,900 |   |
| Office furniture and equipment                            |   |           | 10,868  |   |           |   | 9,865 |   |
| Construction in process                                   |   |           | 589     |   |           |   | 571 |   |
|   Total property, plant and equipment, at cost  |   |           | 79,304  |   |           |   | 79,080 |   |
| Accumulated depreciation and amortization                 |   |           | (58,148 | )      |           |   | (54,773 | ) |
|     Net property, plant and equipment |   | $              | 21,156  |   |           | $      | 24,307 |   |

|                                                          |   |   |    |
|---------------------------------------------------------------|--------|--------|---------|
| Balance at January 3, 2009                                    |   | $      | 19,114  |   |
| Purchase accounting adjustments for prior period acquisitions |   |   | -       |   |
| Impairment adjustments                                        |   |   | (19,114 | ) |
| Balance at January 2, 2010                                    |   | $      | -       |   |
| Purchase accounting adjustments for prior period acquisitions |   |   | -       |   |
| Impairment adjustments                                        |   |   | -       |   |
| Balance at January 1, 2011                                    |   | $      | -       |   |
|                                                          |   |   |    |   |

----

|                              |   | January 1, 2011 |   |   | January 2, 2010         |   |
|-----------------------------------|--------|-----------------|--------|--------|-------------------------|--------|
|                              |   | Cost            |   |   | Accumulatedamortization |   |   | Cost |   |   | Accumulatedamortization |   |
|                              |   |            |   |   |                    |   |   |   |   |   |   |   |
| Patents and intellectual property |   | $               | 11,635 |   |                    | $      | 8,663 |   |   | $ | 10,398 |   |   | $ | 8,264 |   |
| Customer relationships            |   |            | 4,452  |   |                    |   | 2,995 |   |   |   | 4,452 |   |   |   | 2,615 |   |
| License agreements                |   |            | 750    |   |                    |   | 431 |   |   |   | 750 |   |   |   | 405 |   |
|                              |   | $               | 16,837 |   |                    | $      | 12,089 |   |   | $ | 15,600 |   |   | $ | 11,284 |   |

| Fiscal 2011 |   | $      | 796   |   |
|-------------|--------|--------|-------|--------|
| Fiscal 2012 |   |   | 689   |   |
| Fiscal 2013 |   |   | 669   |   |
| Fiscal 2014 |   |   | 597   |   |
| Fiscal 2015 |   |   | 260   |   |
| Thereafter  |   |   | 1,267 |   |

----

|           |   | January 1, 2011 |   |   | January 2, 2010 |   |
|----------------|--------|-----------------|--------|--------|-----------------|--------|
|           |   |            |   |   |            |   |
| Line of credit |   | $               | 10,252 |   |            | $      | 17,910 |   |

----

|                                    |   | January 1,2011 |   |   | January 2,2010 |   |
|-----------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                    |   |           |   |   |           |   |
| Accrued payroll and employee benefits   |   | $              | 1,561  |   |           | $      | 1,732 |   |
| Accrued warranty                        |   |           | 919    |   |           |   | 1,260 |   |
| Accrued restructuring and other charges |   |           | 225    |   |           |   | 405 |   |
| Accrual for non-cash bonus plan         |   |           | 1,186  |   |           |   | - |   |
| Accrued legal                           |   |           | 83     |   |           |   | 828 |   |
| Accrued professional fees               |   |           | 1,020  |   |           |   | 827 |   |
| Other                                   |   |           | 1,630  |   |           |   | 2,997 |   |
|                                    |   | $              | 6,624  |   |           | $      | 8,049 |   |

----

|                                      |   | Fiscal2010 |   |   | Fiscal2009 |   |   | Fiscal2008 |   |
|-------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                      |   |       |   |   |       |   |   |       |   |
| Balance at beginning of year              |   | $          | 1,260  |   |       | $      | 2,102  |       |   | $ | 3,534 |   |
| Accruals for warranties                   |   |       | 98     |   |       |   | (384   | )          |   |   | 40 |   |
| Utilization of accrual for warranty costs |   |       | (439   | )      |       |   | (458   | )          |   |   | (1,472 | ) |
| Balance at end of year                    |   | $          | 919    |   |       | $      | 1,260  |       |   | $ | 2,102 |   |

|                     |   | January 1,2011 |   |   | January 2,2010 |   |
|--------------------------|--------|----------------|--------|--------|----------------|--------|
|                     |   |           |   |   |           |   |
| Deferred service revenue |   | $              | 4,054  |   |           | $      | 5,645 |   |
| Deferred product revenue |   |           | 589    |   |           |   | 852 |   |
|                     |   | $              | 4,643  |   |           | $      | 6,497 |   |

|                                                                                |   | January 1,2011 |   |   | January 2,2010 |   |   | January 3,2009 |   |
|-------------------------------------------------------------------------------------|--------|----------------|--------|--------|----------------|--------|--------|----------------|--------|
|                                                                                |   |           |   |   |           |   |   |           |   |
| Severance and fringe benefits                                                       |   | $              | 544    |   |           | $      | 1,518  |           |   | $ | 691 |   |
| Executive contractual obligations                                                   |   |           | --     |   |           |   | --     |           |   |   | 536 |   |
| Other exit costs                                                                    |   |           | 20     |   |           |   | 166    |           |   |   | 881 |   |
|        Total net restructuring and other charges |   | $              | 564    |   |           | $      | 1,684  |           |   | $ | 2,108 |   |

----

|                          |   | Fiscal 2010 Activity  |   |
|-------------------------------|--------|-----------------------|--------|
|                          |   | BalanceJanuary 2,2010 |   |   | Charged toExpense |   |   | Utilization |   |   | BalanceJanuary 1,2011 |   |
|                          |   |                  |   |   |   |   |   |   |   |   |   |   |
| Severance and fringe benefits |   | $                     | 405    |   |   | $ | 544 |   |   | $ | (724 | ) |   | $ | 225 |   |
| Other exit costs              |   |                  | -      |   |   |   | 20 |   |   |   |  (20 | ) |   |   | - |   |
|                          |   | $                     | 405    |   |   | $ | 564 |   |   | $ | (744 | ) |   | $ | 225 |   |

|                              |   | Fiscal 2009 Activity  |   |
|-----------------------------------|--------|-----------------------|--------|
|                              |   | BalanceJanuary 3,2009 |   |   | Charged toExpense |   |   | Utilization |   |   | BalanceJanuary 2,2010 |   |
|                              |   |                  |   |   |   |   |   |   |   |   |   |   |
| Executive contractual obligations |   | $                     | 462    |   |   | $ | - |   |   | $ | (462 | ) |   | $ | - |   |
| Severance and fringe benefits     |   |                  | 337    |   |   |   | 1,518 |   |   |   | (1,450 | ) |   |   | 405 |   |
| Other exit costs                  |   |                  | -      |   |   |   | 166 |   |   |   | (166 | ) |   |   |  - |   |
|                              |   | $                     | 799    |   |   | $ | 1,684 |   |   | $ | (2,078 | ) |   | $ | 405 |   |

|                              |   | Fiscal 2008 Activity    |   |
|-----------------------------------|--------|-------------------------|--------|
|                              |   | BalanceDecember 29,2007 |   |   | Charged toExpense |   |   | 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 |   |

----

|                        |   | Fiscal2010 |   |   | Fiscal2009 |   |   | Fiscal2008 |   |
|-----------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                        |   |       |   |   |       |   |   |       |   |
| Interest expense            |   | $          | (1,066 | )      |       | $      | (1,163 | )          |   | $ | (946 | ) |
| Interest income             |   |       | 17     |   |       |   | 47     |       |   |   | 111 |   |
| Other income (expense), net |   |       | (195   | )      |       |   | (273   | )          |   |   | 1,773 |   |
|                        |   | $          | (1,244 | )      |       | $      | (1,389 | )          |   | $ | 938 |   |

|          |   | Fiscal2010 |               |   | Fiscal2009 |   |               | Fiscal2008 |   |
|---------------|--------|------------|--------------------|--------|------------|--------|--------------------|------------|--------|
|          |   |       |               |   |       |   |               |       |   |
| U.S.          |   | $          | (6,656             | )      |       | $      | (29,578            | )          |   | $ | 5,296 |   |
|  Foreign |   |       |   (1,394 | )      |       |   |   (3,197 | )          |   |   |   614 |   |
|          |   | $          | (8,050             | )      |       | $      | (32,775            | )          |   | $ | 5,910 |   |

|                       |   | Fiscal2010 |        |   | Fiscal2009 |   |       | Fiscal2008 |   |
|----------------------------|--------|------------|-------------|--------|------------|--------|------------|------------|--------|
|                       |   |       |        |   |       |   |       |       |   |
| Current:                   |   |       |        |   |       |   |       |       |   |
| Federal                    |   | $          | -           |   |       | $      | -          |       |   | $ | (131 | ) |
| State                      |   |       | 144         |   |       |   | (232       | )          |   |   | 293 |   |
| Foreign                    |   |       | 82          |   |       |   | (21        | )          |   |   |  (121 | ) |
|                       |   | $          | 226         |   |       | $      | (253       | )          |   | $ | 41 |   |
|                       |   |       |        |   |       |   |       |       |   |   |   |   |
| Deferred:                  |   |       |        |   |       |   |       |       |   |   |   |   |
| Federal                    |   |       | 43          |   |       |   | 15,777     |       |   |   | 2,326 |   |
| State                      |   |       | -           |   |       |   | 1,419      |       |   |   | 128 |   |
| Foreign                    |   |       |  2,234 |   |       |   |  (609 | )          |   |   | 285 |   |
|                       |   |       | 2,277       |   |       |   | 16,587     |       |   |   | 2,739 |   |
| Provision for income taxes |   | $          | 2,503       |   |       | $      | 16,334     |       |   | $ | 2,780 |   |

----

|                                       |   | Fiscal2010 |   |   | Fiscal2009 |   |         | Fiscal2008 |   |
|--------------------------------------------|--------|------------|--------|--------|------------|--------|--------------|------------|--------|
|                                       |   |       |   |   |       |   |         |       |   |
| Federal statutory tax rate                 |   |       | 34.00  | %      |       |   | 34.00        | %          |   |   | 34.00 | % |
| Nondeductible Officer’s compensation |   |       | (1.84  | )      |       |   | (0.29        | )          |   |   | 1.90 |   |
| State tax, net of federal benefit          |   |       | 1.75   |   |       |   | 4.10         |       |   |   | 4.70 |   |
| Other                                      |   |       | (1.67  | )      |       |   | (1.68        | )          |   |   | (2.76 | ) |
| Change in valuation allowance              |   |       | (63.33 | )      |       |   |  (85.98 | )          |   |   | 9.20 |   |
|                                       |   |       | (31.09 | %)     |       |   | (49.84       | %)         |   |   | 47.04 | % |

|                                                                                                                                                   |   | January 1,2011 |        |   | January 2,2010 |   |        | January 3,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|-------------|--------|----------------|--------|-------------|----------------|--------|
|                                                                                                                                                   |   |           |        |   |           |   |        |           |   |
| Deferred tax assets                                                                                                                                    |   |           |        |   |           |   |        |           |   |
| Net operating loss carryforwards                                                                                                                       |   | $              | 16,706      |   |           | $      | 11,426      |           |   | $ | 5,745 |   |
| Tax credits                                                                                                                                            |   |           | 3,857       |   |           |   | 4,185       |           |   |   | 4,073 |   |
| Warranty provisions, litigation and other                                                                                                              |   |           | 6,481       |   |           |   | 7,295       |           |   |   | 8,450 |   |
|      Goodwill                                                                                                                 |   |           | 5,099       |   |           |   | 5,632       |           |   |   | - |   |
|      Accumulated depreciation and amortization                                                                                |   |           |  1,491 |   |           |   |  2,822 |           |   |   | 2,507 |   |
| Gross deferred tax assets                                                                                                                              |   |           | 33,634      |   |           |   | 31,360      |           |   |   | 20,775 |   |
|            Valuation allowance                                                                  |   |           | (32,549     | )      |           |   | (28,973     | )              |   |   | (795 | ) |
|                    Total deferred tax assets            |   |           | 1,085       |   |           |   | 2,387       |           |   |   | 19,980 |   |
|                                                                                                                                                   |   |           |        |   |           |   |        |           |   |   |   |   |
| Deferred tax liabilities                                                                                                                               |   |           |        |   |           |   |        |           |   |   |   |   |
| Amortizable and depreciable assets                                                                                                                     |   |           | (1,085      | )      |           |   | (1,004      | )              |   |   | (2,420 | ) |
| Accumulated depreciation and amortization                                                                                                              |   |           | -           |   |           |   | -           |           |   |   | - |   |
|                     Total deferred tax liabilities |   |           | (1,085      | )      |           |   | (1,004      | )              |   |   | (2,420 | ) |
|                                                                                                                                                   |   |           |        |   |           |   |        |           |   |   |   |   |
|      Net deferred tax assets                                                                                                  |   | $              | -           |   |           | $      | 1,383       |           |   | $ | 17,560 |   |

----

| Balance at December 30, 2006                  |   | $      | 1,800 |   |
|-----------------------------------------------|--------|--------|-------|--------|
| Increases related to prior year tax positions |   |   | 400   |   |
| Decreases related to prior year tax positions |   |   | (400  | )      |
| Balance at December 29, 2007                  |   | $      | 1,800 |   |
| Decreases related to prior year tax positions |   |   | (579  | )      |
| Balance at January 3, 2009                    |   | $      | 1,221 |   |
| Decreases related to prior year tax positions |   |   | (184  | )      |
| Balance at January 2, 2010                    |   | $      | 1,037 |   |
| Decreases related to prior year tax positions |   |   | (167  | )      |
| Balance at January 1, 2011                    |   | $      | 870   |   |

----

----

|                             |   |        |   |   |        |   |   |        |   |
|----------------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| Stock purchase right assumptions |   | Fiscal 2010 |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
|                             |   |        |   |   |        |   |   |        |   |
| Risk-free interest rate          |   |        | 0.15   | %      |        |   | 0.00   | %           |   |   | 0.84 | % |
| Volatility                       |   |        | 66.33  | %      |        |   | 110.75 | %           |   |   | 95.79 | % |
| Expected life (in years)         |   |        | 0.25   |   |        |   | 0.25   |        |   |   | 0.25 |   |
| Dividend yield                   |   |        | -      |   |        |   | -      |        |   |   | - |   |

|                     |   |        |   |   |        |   |   |        |   |
|--------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| Stock option assumptions |   | Fiscal 2010 |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
|                     |   |        |   |   |        |   |   |        |   |
| Risk-free interest rate  |   |        | 1.92   | %      |        |   | 2.65   | %           |   |   | 2.28 | % |
| Volatility               |   |        | 77.02  | %      |        |   | 71.00  | %           |   |   | 60.63 | % |
| Expected life (in years) |   |        | 5.83   |   |        |   | 5.67   |        |   |   | 5.67 |   |
| Dividend yield           |   |        | -      |   |        |   | -      |        |   |   | - |   |

----

|                                |   | Fiscal Year ended    |   |
|-------------------------------------|--------|----------------------|--------|
|  Stock option plan             |   | January 1, 2011 |   |   | January 2, 2010 |   |   | January 3,2009 |   |
|                                |   |                 |   |   |   |   |   |   |   |
| 2008 Plan                           |   | $                    | 1,286  |   |   | $ | 758 |   |   | $ | 319 |   |
| 2003 Plan                           |   |                 | 643    |   |   |   | 401 |   |   |   | 718 |   |
| 1998 Plan                           |   |                 | 2      |   |   |   | (6 | ) |   |   | 171 |   |
| ESPP                                |   |                 | 29     |   |   |   | 33 |   |   |   | 79 |   |
| Non-plan, non-qualified             |   |                 | 516    |   |   |   | 516 |   |   |   | 516 |   |
|      Total |   | $                    | 2,476  |   |   | $ | 1,702 |   |   | $ | 1,803 |   |

|                                           |   |  Shares |       |   | Weighted averageexercise price |   | Weighted average remaining contractual term |   Aggregate intrinsic value |
|------------------------------------------------|--------|--------------|------------|--------|--------------------------------|--------|---------------------------------------------|---------------------------------------|
|                                           |   |         |       |   |                           |   |                                        |                                  |
| 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                                        |                                  |   |   |
| Granted                                        |   |         | 266,115    |   |                           | $      | 2.03                                        |                                  |   |   |
| Exercised                                      |   |         | -          |   |                           | $      | -                                           |                                  |   |   |
| Canceled/expired                               |   |         | (316,462   | )      |                           | $      | 9.20                                        |                                  |   |   |
| Outstanding at January 2, 2010                 |   |         | 4,293,741  |   |                           | $      | 6.77                                        |                                  |   |   |
|      Granted          |   |         | 2,208,392  |   |                           | $      | 2.39                                        |                                  |   |   |
|      Exercised        |   |         | (4,502     | )      |                           | $      | 3.38                                        |                                  |   |   |
|      Canceled/expired |   |         | (1,138,075 | )      |                           | $      | 7.32                                        |                                  |   |   |
| Outstanding at January 1, 2011                 |   |         | 5,359,556  |   |                           | $      | 4.87                                        |                                  | 6.27 years | $ 0.2 million |
| Exercisable at January 1, 2011                 |   |         | 3,644,975  |   |                           | $      | 5.88                                        |                                  | 5.09 years | $ 0.1 million |

----

|                           |   |   | Outstanding  |   |   | Exercisable                                       |   |
|--------------------------------|--------|--------|--------------|--------|--------|---------------------------------------------------|--------|
|  Range of exercise prices |   |   |  Shares |   |   | Weighted averageremaining contractuallife (years) |   |   | Weighted average exercise price |   |   |   Shares |   |   | Weightedaverageexercise price |   |
| $                              | 0.00   |   |         |   | -      |                                              |   | $ | 4.96 |   |   |   | 2,518,505 |   |   |   | 8.05 |   |   |   | 2.43 |   |   |   | 956,009 |   |   |   | 2.37 |   |
| $                              | 4.97   |   |         |   | -      |                                              |   | $ | 9.92 |   |   |   | 2,683,301 |   |   |   | 4.80 |   |   |   | 6.79 |   |   |   | 2,531,216 |   |   |   | 6.86 |   |
| $                              | 9.93   |   |         |   | -      |                                              |   | $ | 14.88 |   |   |   | 157,750 |   |   |   | 2.81 |   |   |   | 11.34 |   |   |   | 157,750 |   |   |   | 11.34 |   |
| $                              | 0.00   |   |         |   | -      |                                              |   | $ | 14.88 |   |   |   | 5,359,556 |   |   |   | 6.27 |   |   | $ | 4.87 |   |   |   | 3,644,975 |   |   | $ | 5.88 |   |

|                                         |   | January 1,2011 |   |   | January 2,2010 |   |
|----------------------------------------------|--------|----------------|--------|--------|----------------|--------|
|                                         |   |           |   |   |           |   |
| Presstek                                     |   | $              | 80,525 |   |           | $      | 90,438 |   |
| Lasertel (assets of discontinued operations) |   |           | -      |   |           |   | 14,097 |   |
|                                         |   | $              | 80,525 |   |           | $      | 104,535 |   |

----

|           |   | Fiscal2010 |    |   | Fiscal2009 |   |    | Fiscal2008 |   |
|----------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|           |   |       |    |   |       |   |    |       |   |
| United States  |   | $          | 83,616  |   |       | $      | 88,971  |       |   | $ | 123,484 |   |
| United Kingdom |   |       | 14,026  |   |       |   | 15,564  |       |   |   | 20,732 |   |
| All other      |   |       | 30,935  |   |       |   | 29,923  |       |   |   | 49,036 |   |
|           |   | $          | 128,577 |   |       | $      | 134,458 |       |   | $ | 193,252 |   |

|           |   | January 1,2011 |   |   | January 2,2010 |   |
|----------------|--------|----------------|--------|--------|----------------|--------|
|           |   |           |   |   |           |   |
| United States  |   | $              | 26,026 |   |           | $      | 27,296 |   |
| United Kingdom |   |           | 510    |   |           |   | 1,620 |   |
| Canada         |   |           | 425    |   |           |   | 1,328 |   |
|           |   | $              | 26,961 |   |           | $      | 30,244 |   |

|        |   | Non-Cancelable Obligations |   |
|-------------|--------|---------------------------------|--------|
| Fiscal 2011 |   | $                               | 1,832  |   |
| Fiscal 2012 |   |                            | 1,741  |   |
| Fiscal 2013 |   |                            | 729    |   |
| Fiscal 2014 |   |                            | 315    |   |
| Fiscal 2015 |   |                            | 236    |   |
| Thereafter  |   |                            | -      |   |

----

----

|                                                                               |   | FirstQuarter |   |   | SecondQuarter |   |        | ThirdQuarter |   |   | FourthQuarter |   |
|------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------|--------|-------------|--------------|--------|--------|---------------|--------|
|                                                                               |   |         |   |   |          |   |        |         |   |   |          |   |
| Fiscal 2010                                                                        |   |         |   |   |          |   |        |         |   |   |          |   |
| Revenue                                                                            |   | $            | 34,491 |   |          | $      | 31,607      |         |   | $      | 31,414        |   |   | $ | 31,065 |   |
| Gross profit                                                                       |   | $            | 11,393 |   |          | $      | 10,296      |         |   | $      | 10,306        |   |   | $ | 9,903 |   |
|   Income (loss) from continuing operations                               |   |         | (544   | )      |          |   | (1,845      | )            |   |   | (1,496        | )      |   |   | (6,668 | ) |
|   Income (loss) from discontinued operations                             |   |         | (78    | )      |          |   | 8           |         |   |   | -             |   |   |   | - |   |
| Net loss                                                                           |   | $            | (622   | )      |          | $      | (1,837      | )            |   | $      | (1,496        | )      |   | $ | (6,668 | ) |
|   Loss per share from continuing operations – basic                |   | $            | (0.02  | )      |          | $      | (0.05       | )            |   | $      | (0.04         | )      |   | $ | (0.18 | ) |
|   Earnings (loss) per share from discontinued operations – basic   |   |         | (0.00  | )      |          |   |  (0.00 | )            |   |   | (0.00         | )      |   |   | (0.00 | ) |
| Loss per share – basic (1)                                                   |   | $            | (0.02  | )      |          | $      | (0.05       | )            |   | $      | (0.04         | )      |   | $ | (0.18 | ) |
|                                                                               |   |         |   |   |          |   |        |         |   |   |          |   |   |   |   |   |
| Loss per share from continuing operations – diluted                          |   |         | (0.02  | )      |          |   | (0.05       | )            |   |   | (0.04         | )      |   |   | (0.18 | ) |
| Earnings (loss) per share from discontinued operations – diluted             |   |         | (0.00  | )      |          |   | (0.00       | )            |   |   | (0.00         | )      |   |   | (0.00 | ) |
| Loss per share – diluted (1)                                                 |   | $            | (0.02  | )      |          | $      | (0.05       | )            |   | $      | (0.04         | )      |   | $ | (0.18 | ) |
|                                                                               |   |         |   |   |          |   |        |         |   |   |          |   |   |   |   |   |
| Fiscal 2009                                                                        |   |         |   |   |          |   |        |         |   |   |          |   |   |   |   |   |
| Revenue                                                                            |   | $            | 34,460 |   |          | $      | 33,510      |         |   | $      | 33,006        |   |   | $ | 33,482 |   |
| Gross profit                                                                       |   | $            | 12,094 |   |          | $      | 11,036      |         |   | $      | 7,700         |   |   | $ | 11,362 |   |
|   Income (loss) from continuing operations                               |   |         | (1,106 | )      |          |   | (39,869     | )            |   |   | (6,647        | )      |   |   | (1,487 | ) |
|   Income (loss) from discontinued operations                             |   |         | (85    | )      |          |   | (1,580      | )            |   |   |  706     |   |   |   | 219 |   |
| Net loss                                                                           |   | $            | (1,191 | )      |          | $      | (41,449     | )            |   | $      | (5,941        | )      |   | $ | (1,268 | ) |
|   Loss per share from continuing operations – basic                |   | $            | (0.03  | )      |          | $      | (1.09       | )            |   | $      | (0.18         | )      |   | $ | (0.04 | ) |
|   Earnings (loss) per share from discontinued operations – basic   |   |         | (0.00  | )      |          |   | (0.04       | )            |   |   | 0.02          |   |   |   | 0.01 |   |
| Loss per share – basic (1)                                                   |   | $            | (0.03  | )      |          | $      | (1.13       | )            |   | $      | (0.16         | )      |   | $ | (0.03 | ) |
|                                                                               |   |         |   |   |          |   |        |         |   |   |          |   |   |   |   |   |
|   Loss per share from continuing operations – diluted              |   |         | (0.03  | )      |          |   | (1.09       | )            |   |   | (0.18         | )      |   |   | (0.04 | ) |
|   Earnings (loss) per share from discontinued operations – diluted |   |         | (0.00  | )      |          |   | (0.04       | )            |   |   |  0.02    |   |   |   |  0.01 |   |
| Loss per share – diluted (1)                                                 |   | $            | (0.03  | )      |          | $      | (1.13       | )            |   | $      | (0.16         | )      |   | $ | (0.03 | ) |
|                                                                               |   |         |   |   |          |   |        |         |   |   |          |   |   |   |   |   |

|   | (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 the year. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 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                                |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                         |   | $ | 3,550 |   |   | $ | 2,637 |   |   | $ | (556 | ) |   | $ | 5,631 |   |
| 2009                                                         |   | $ | 2,476 |   |   | $ | 2,685 |   |   | $ | (1,611 | ) |   | $ | 3,550 |   |
| 2008                                                         |   | $ | 2,538 |   |   | $ | 1,915 |   |   | $ | (1,977 | ) |   | $ | 2,476 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves for excess and obsolete inventory                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Fiscal year                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010                                                         |   | $ | 9,601 |   |   | $ | 1,388 |   |   | $ | (2,840 | ) |   | $ | 8,149 |   |
| 2009                                                         |   | $ | 9,066 |   |   | $ | 3,052 |   |   | $ | (2,517 | ) |   | $ | 9,601 |   |
| 2008                                                         |   | $ | 13,530 |   |   | $ | 437 |   |   | $ | (4,901 | ) |   | $ | 9,066 |   |
|                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Item 9. 

Item 9A. 

| (a) | Evaluation of Disclosure Controls and Procedures |
|-----|--------------------------------------------------|

----

----

Item 9B.

Item 10.

|              |                                                                                                                                    |   |                   |   |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
| Executive Officer | Position                                                                                                                                |   | Age at January 1, 2011 |   |
| Jeffrey Jacobson  | Chairman, President and Chief Executive Officer                                                                                         |   |                   | 51     |   |
|              |                                                                                                                                    |   |                   |   |   |
| Jeffrey A. Cook   | Executive Vice President and Chief Financial Officer                                                                                    |   |                   | 56     |   |
|              |                                                                                                                                    |   |                   |   |   |
| Guy Sasson        |                President, Europe, Africa, Middle East Region |   |                   | 44     |   |
|              |                                                                                                                                    |   |                   |   |   |
| Kathleen McHugh   | Vice President and Chief Marketing Officer                                                                                              |   |                   | 52     |   |
|              |                                                                                                                                    |   |                   |   |   |
| James R. Van Horn | Vice President, General Counsel and Secretary                                                                                           |   |                   | 54     |   |

----

Item 11.

Item 12.

Item 13.

----

Item 14.

Item 15. 

----

SIGNATURES

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

|    /s/ Jeffrey Jacobson |                                                 |           |
|-----------------------------------|------------------------------------------------------|----------------|
| Jeffrey Jacobson                  | Chairman, President and Chief Executive Officer      | March 16, 2011 |
|                              | (Principal Executive Officer)                        |           |
|                              |                                                 |           |
| /s/ Jeffrey A. Cook               |                                                 |           |
| Jeffrey A. Cook                   | Executive Vice President and Chief Financial Officer | March 16, 2011 |
|                              | (Principal Financial Officer) and Director           |           |
|                              |                                                 |           |
| /s/ Wayne L. Parker               |                                                 |           |
| Wayne L. Parker                   | Chief Accounting Officer                             | March 16, 2011 |
|                              |                                                 |           |
| /s/ Edward E. Barr                |                                                 |           |
| Edward E. Barr                    |  Lead Director                                  | March 16, 2011 |
|                              |                                                 |           |
|                              |                                                 |           |
| /s/ Daniel S. Ebenstein, Esq      |                                                 |           |
| Daniel S. Ebenstein, Esq.         | Director                                             | March 16, 2011 |
|                              |                                                 |           |
|                              |                                                 |           |
| /s/ Stanley E. Freimuth           |                                                 |           |
| Stanley E. Freimuth               | Director                                             | March 16, 2011 |
|                              |                                                 |           |
|                              |                                                 |           |
|                              |                                                 |           |
| Steven N. Rappaport               | Director                                             | March 16, 2011 |
|                              |                                                 |           |
|                              |                                                 |           |
| /s/ Donald C. Waite, III          |                                                 |           |
| Donald C. Waite, III              | Director                                             | March 16, 2011 |
|                              |                                                 |           |
|                              |                                                 |           |
|                              |                                                 |           |

----

|          |                                                                                                                                                                                                                         |   |                                                                                                                                      |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| 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.                   |
| 2.2 *         | Agreement and Plan of Merger by and Among Selex Sensors and Airborne Systems (US) Inc. Lt Acquisition Corp. Selex Sensors and Airborne Systems Limited Lasertel, Inc. and the Company dated November 20, 2009.               |   | Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on November 25, 2009.                    |
| 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***  | Amended and Restated Employment Agreement by and between Presstek, Inc. and Jeffrey Cook dated September 30, 2010.                                                                       |   | Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K/A, Amendment No.1, filed on October 5, 2010.    |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------|
| 10.8***  | 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.                           |
| 10.9***  | Amended and Restated Employment Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated September 30, 2010.                                                                   |   | Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, Amendment No.1, filed on October 5, 2010.    |
| 10.10*** | 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 ended March 31, 2007.        |
| 10.11*** | Forms of Stock Option Agreement under 2008 Omnibus Incentive Plan.                                                                                                                       |   | Incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009.     |
| 10.12    | (i) Purchase and Sale Agreement and Escrow Instruction by and between Presstek, Inc. and EJC Properties, LLLP dated April 24, 2008.                                                      |   | Incorporated by reference to Exhibit 10.20(i) to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009.  |
|     | (ii) First Amendment to Purchase and Sale Agreement and Escrow Instruction by and between Presstek, Inc. and EJC Properties, LLLP dated June 27, 2008.                                   |   | Incorporated by reference to Exhibit 10.20(ii) to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009. |
| 10.13*** | Letter Agreement between Presstek, Inc. and James R. Van Horn dated December 17, 2009.                                                                                                   |   | Incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2010.           |
| 10.14*** | Employment Agreement by and between Presstek, Inc. and James R. Van Horn dated September 30, 2010.                                                                                       |   | Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K/A, Amendment No.1, filed on October 5, 2010.    |
| 10.15*** | Form of option agreement granted under the 2003 Stock Option and Incentive Plan with Jeffrey Jacobson dated September 30, 2010.                                                     |   | Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 2010.             |
| 10.16*** | Form of option agreement granted under the 2008 Omnibus Incentive Plan with Jeffrey Jacobson dated September 30, 2010.                                                              |   | Incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 2010.             |
| 10.17    | Revolving Credit and Security Agreement dated as of March 5, 2010 by and among PNC Bank, National Association (as Lender and as Agent) and the Company.                                  |   | Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 10, 2010.                       |
| 10.18    | Canadian Guarantor Security Agreement, dated as of March 19, 2010 of Presstek Canada Corp./Corporation Presstek Canada in favor of PNC Bank, National Association (as lender and agent). |   | Incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.               |
| 10.19    | Charge Over Shares, dated March 5, 2010 between Presstek Overseas Corp. and PNC Bank, National Association in favor of PNC Bank, National Association (as lender and agent).             |   | Incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.               |

----

| 10.20 | Composite Guarantee and Debenture, dated March 5, 2010 between Presstek Europe Limited and PNC Bank, National Association in favor of PNC Bank, National Association (as lender and agent).              |   | Incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
| 10.21 | Guarantee, dated March 19, 2010 of Presstek Canada Corp./Corporation Presstek Canada in favor of PNC Bank, National Association (as lender and agent).                                                        |   | Incorporated by reference to Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
| 10.22 | Guarantor Security Agreement, dated as of March 5, 2010 between PNC Bank, National Association (as lender and agent) and Presstek Overseas Corp.                                                              |   | Incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
| 10.23 | Guaranty (Corporate), dated March 5, 2010 of ABD Canada Holdings, Inc. in favor of PNC Bank, National Association (as lender and agent).                                                                      |   | Incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
| 10.24 | Guaranty (Corporate), dated March 5, 2010 of Presstek Overseas Corp. in favor of PNC Bank, National Association (as lender and agent).                                                                        |   | Incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
| 10.25 | Guaranty (Corporate), dated March 5, 2010 of SDK Realty Corp. in favor of PNC Bank, National Association (as lender and agent).                                                                               |   | Incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.             |
| 10.26 | Guarantor Security Agreement, dated as of March 5, 2010 between PNC Bank National Association (as lender and agent) and ABD Canada Holdings, Inc.                                                             |   | Incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 10.27 | Guarantor Security Agreement, dated as of March 5, 2010 between PNC Bank, National Association (as lender and agent) and SDK Realty Corp.                                                                     |   | Incorporated by reference to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 10.28 | Pledge Agreement, dated as of March 5, 2010 between PNC Bank, National Association (as lender and agent) and Presstek, Inc.                                                                                   |   | Incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 10.29 | Pledge Agreement, dated as of March 5, 2010 between PNC Bank, National Association (as lender and agent) and Presstek Overseas Corp.                                                                          |   | Incorporated by reference to Exhibit 10.13 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 10.30 | Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Massachusetts), dated as of March 5, 2010 between SDK Realty Corp. and PNC Bank, National Association (as lender and agent). |   | Incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 10.31 | Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (New Hampshire), dated as of March 5, 2010 from Presstek, Inc. to PNC Bank, National Association (as lender and agent).       |   | Incorporated by reference to Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 3, 2010.            |
| 21.1  | Subsidiaries of the Registrant.                                                                                                                                                                               |   | Incorporated by reference to Exhibit 10.21.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2009. |
| 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 or arrangement. |
|--------|--------------------------------------------------------------|

----