| R        | ANNUAL      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                         |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                   |
|     | For      the fiscal year ended January 2, 2010                                                                                                         |
| 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.**                                                                                                          | 16     |
|       1B. |   | Unresolved      Staff Comments.                                                                                               | 22     |
|       2.  |   | Properties.                                                                                                                   | 23     |
|       3.  |   | Legal      Proceedings.                                                                                                       | 24     |
|                                    |   |                                                                                                                          |   |
| PART II                                 |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       5.  |   | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities. | 25     |
|       6.  |   | Selected      Financial Data.                                                                                                 | 25     |
|       7.  |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations.                        | 27     |
|       7A. |   | Quantitative      and Qualitative Disclosures About Market Risk.                                                              | 49     |
|       8.  |   | Financial      Statements and Supplementary Data.                                                                             | 50     |
|       9.  |   | Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure.                               | 86     |
|       9A. |   | Controls      and Procedures.                                                                                                 | 86     |
|       9B. |   | Other      Information.                                                                                                       | 89     |
|                                    |   |                                                                                                                          |   |
| PART III                                |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       10. |   | Directors,      Executive Officers and Corporate Governance.                                                                  | 89     |
|       11. |   | Executive      Compensation.                                                                                                  | 91     |
|       12. |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters.                     | 91     |
|       13. |   | Certain      Relationships and Related Transactions, and Director      Independence.                                          | 91     |
|       14. |   | Principal      Accountant Fees and Services.                                                                                  | 92     |
|                                    |   |                                                                                                                          |   |
| PART IV                                 |   |                                                                                                                          |   |
|   Item                        |   |                                                                                                                          |   |
|       15. |   | Exhibits      and Financial Statement Schedules.                                                                              | 92     |
|                                    |   | Signatures.                                                                                                                   | 93     |

| * | 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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PART I

Item 1. Business.

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

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

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

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

| ·   | plan      to continue to innovate by providing high quality fully integrated digital      solutions and services. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

----

| a.   | Commercial      printers. Printers need to increase their production capacity,      level of productivity and output quality 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. 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 250 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 250) on their toner devices, and runs of 20,000 or more on their      conventional offset presses.  Larger print shops, however, can      be more profitable producing a run of 250 to 20,000 on a Presstek’s      DI®.      Presstek believes that larger printers will increasingly look at DI®      presses to fill this production gap in their equipment      portfolio. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 250 copies, a      higher level of quality, or a substrate (coated stock, thick stock,      plastics, etc.) that cannot be effectively produced on a toner-based      device. They are also combining digital toner devices and DI®      presses into one workflow to create certain print jobs more profitably.      For example, they may produce a high quality four-color direct mail piece      on the DI®      press, then add a personalized message or pURL (personal URL) using their      toner device. The result is a high-quality personalized piece affordably      produced. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | In-plant print shops      that operate within corporations, colleges and universities and government      agencies. 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 52DI-UV, 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 applications for the larger print      shop. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | Growth of CTP      consumables. It is estimated that the worldwide digital offset      printing plate market in fiscal 2008 was $3.9 billion. This market is      expected to grow by as much as 36% to $5.3 billion by 2012 based on      research from Vantage Strategic Marketing. Presstek plans to further      penetrate this large consumables market by 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 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, EAME, and Asia Pacific, to      establish proper distribution by region and to help develop solutions that      fit each market’s specificrequirements. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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| A1                                                                  | a      printing term referring to a standard paper size capable of printing eight      8.5” x 11” pages on a sheet of paper                                                                                                                         |
|---------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                |                                                                                                                                                                                                                                                            |
| A2                                                                  | a      printing term referring to a standard paper size capable of printing four      8.5” x 11” pages on a sheet of paper                                                                                                                          |
|                                                                |                                                                                                                                                                                                                                                            |
| A3/B3                                                               | a      printing term referring to a standard paper size capable of printing two      8.5” x 11” pages on a sheet of paper                                                                                                                           |
|                                                                |                                                                                                                                                                                                                                                            |
| Ablation                                                            | a      controlled detachment/vaporization caused by a thermal event, this process      is used during the imaging of Presstek’s PEARL and Anthem®      Pro consumables                                                                               |
|                                                                |                                                                                                                                                                                                                                                            |
| Bindery                                                             | operations      done after printing 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                                                                                                                                     |
|                                                                |                                                                                                                                                                                                                                                            |
| PEARL                                                               | the      name associated with Presstek’s first generation laser imaging      technologies and related products and consumables                                                                                                                            |
|                                                                |                                                                                                                                                                                                                                                            |
| ProFire®      and ProFire®      Excelimaging      systems | the      Presstek components required to convert a conventional printing press into      a direct imaging press, including laser diode arrays, computers,      electronics                                                                                      |
|                                                                |                                                                                                                                                                                                                                                            |

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| Platemaking                     | the      process of applying a printable image to a printing  plate                                                                                                                                                                                              |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                            |                                                                                                                                                                                                                                                             |
| Prepress                        | graphic      arts operations and methodologies that occur prior to the printing      process; typically these include photography, scanning, image assembly,      color correction, exposure of image carriers (film and/or plate), proofing      and processing |
|                            |                                                                                                                                                                                                                                                             |
| Ryobi      3404DI               | an      A3 format size four-color sheet-fed press, incorporating Presstek’s dual      plate cylinder concept and PearlDry®      Plus spooled plates, a joint development effort between Ryobi and      Presstek                                       |
|                            |                                                                                                                                                                                                                                                             |
| Semiconductor      laser diode  | a      high-powered, infrared imaging technology employed in the DI®      imaging systems                                                                                                                                                                   |
|                            |                                                                                                                                                                                                                                                             |
| Short-run      markets/printing | a      graphic arts classification used to denote an emerging growth market for      lower print quantities                                                                                                                                                      |
|                            |                                                                                                                                                                                                                                                             |
| Thermal                         | a      method of digitally exposing a material via the heat generated from a      laser beam                                                                                                                                                                     |
|                            |                                                                                                                                                                                                                                                             |
| Vacuum      deposition process  | a      technology to accurately, uniformly coat substrates in a controlled      environment                                                                                                                                                                      |
|                            |                                                                                                                                                                                                                                                             |
| Waterless                       | a      lithographic printing method that uses dry offset printing plates and inks      and does not require a dampeningsystem                                                                                                                                    |

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Item 1A. RiskFactors.

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

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

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

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

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

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

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

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

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

Item 1B. Unresolved StaffComments.

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Item 2. Properties

|  Location(1)                     |   |  Functions                                                                                                             |   | Square      footage (approximate) |   | Ownership      status/lease      expiration                                                 |
|---------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|---------------------------------------------------------------------------------------------|
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Hudson,      NH                       |   | Manufacturing,      research and development, marketing, demonstration activities,      administrative and customer support |   | 165,000                           |   | Owned                                                                                       |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| South      Hadley, MA (two buildings) |   | Manufacturing,      research and development, administrative support                                                        |   | 100,000                           |   | Owned                                                                                       |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Tucson,      AZ(2)                    |   | Manufacturing,      research and development, administrative support                                                        |   | 40,000                            |   | Lease      expires in July 2018                                                             |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Greenwich,      CT                    |   | Corporate      headquarters, executive offices                                                                              |   | 11,500                            |   | Lease      expires in May 2013                                                              |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Des      Plaines, IL                  |   | Distribution      center                                                                                                    |   | 127,000                           |   | Lease      expires in February 2013                                                         |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Heathrow,      United Kingdom         |   | European      headquarters, sales, service                                                                                  |   | 20,000                            |   | Lease      expires in November 2020, with an option to cancel in November      2010         |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |
| Rungis,      France                   |   | Presstek      France SAS headquarters                                                                                       |   | 600                               |   | Lease      expires in May 2010 with automatic renewal, terminated with 3 months      notice |
|                                  |   |                                                                                                                        |   |                              |   |                                                                                        |

----

Item 3. LegalProceedings.

----

PART II

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

|                                   |   | High   |   |   | Low    |   |
|----------------------------------------|--------|--------|--------|--------|--------|--------|
| Fiscal      year ended January 2, 2010 |   |   |   |   |   |   |
| First      quarter                     |   | $      | 3.56   |   |   | $      | 1.38 |   |
| Second      quarter                    |   | $      | 2.39   |   |   | $      | 1.10 |   |
| Third      quarter                     |   | $      | 2.42   |   |   | $      | 1.17 |   |
| Fourth      quarter                    |   | $      | 2.61   |   |   | $      | 1.64 |   |
|                                   |   |   |   |   |   |   |   |   |
| Fiscal      year ended January 3, 2009 |   | High   |   |   | Low    |   |
| First      quarter                     |   | $      | 5.12   |   |   | $      | 4.28 |   |
| Second      quarter                    |   | $      | 6.57   |   |   | $      | 4.00 |   |
| Third      quarter                     |   | $      | 6.28   |   |   | $      | 4.48 |   |
| Fourth      quarter                    |   | $      | 5.64   |   |   | $      | 1.18 |   |

Item 6. SelectedFinancial Data.

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| (in      thousands, except per-share data)                   |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |
|--------------------------------------------------------------|--------|------------------------|---------|--------|-----------------|--------|---------|-------------------|--------|--------|-------------------|--------|--------|-------------------|---------|
|                                                         |   | Fiscal      year ended |    |
|                                                         |   | January      2,        |    |   | January      3, |   |    | December      29, |   |   | December      30, |   |   | December      31, |    |
|                                                         |   | 2010                   |    |   | 2009            |   |    | 2007              |   |   | 2006              |   |   | 2005              |    |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |
| Revenue                                                      |   | $                      | 134,458 |   |            | $      | 193,252 |              |   | $      | 246,573           |   |   | $                 | 258,936 |   |   | $ | 255,344 |   |
| Cost      of revenue                                         |   |                   | 92,266  |   |            |   | 124,511 |              |   |   | 177,346           |   |   |              | 181,799 |   |   |   | 172,208 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Gross      profit                                            |   |                   | 42,192  |   |            |   | 68,741  |              |   |   | 69,227            |   |   |              | 77,137  |   |   |   | 83,136 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Operating      expenses                                      |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|   Research      and development                    |   |                   | 4,975   |   |            |   | 5,144   |              |   |   | 4,969             |   |   |              | 5,320   |   |   |   | 6,452 |   |
|   Sales,      marketing and customer support       |   |                   | 24,967  |   |            |   | 29,937  |              |   |   | 39,194            |   |   |              | 39,451  |   |   |   | 39,808 |   |
|   General      and administrative                  |   |                   | 21,912  |   |            |   | 25,496  |              |   |   | 33,172            |   |   |              | 18,879  |   |   |   | 20,135 |   |
|   Amortization      of intangible assets           |   |                   | 926     |   |            |   | 1,084   |              |   |   | 2,168             |   |   |              | 2,697   |   |   |   | 2,388 |   |
|   Restructuring      and special charges (credits) |   |                   | 1,684   |   |            |   | 2,108   |              |   |   | 2,714             |   |   |              | 5,481   |   |   |   | 874 |   |
|   Goodwill      impairment                         |   |                   | 19,114  |   |            |   | -       |              |   |   | -                 |   |   |              | -       |   |   |   | - |   |
|     Total      operating expenses        |   |                   | 73,578  |   |            |   | 63,769  |              |   |   | 82,217            |   |   |              | 71,828  |   |   |   | 69,657 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Operating      income (loss)                                 |   |                   | (31,386 | )      |            |   | 4,972   |              |   |   | (12,990           | )      |   |              | 5,309   |   |   |   | 13,479 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Other      income (expense), net                             |   |                   | (1,389  | )      |            |   | 938     |              |   |   | (1,254            | )      |   |              | (984    | ) |   |   | (1,345 | ) |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Income      (loss) from continuing operations                |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|   before      income taxes                         |   |                   | (32,775 | )      |            |   | 5,910   |              |   |   | (14,244           | )      |   |              | 4,325   |   |   |   | 12,134 |   |
| Provision      (benefit) for income taxes                    |   |                   | 16,334  |   |            |   | 2,780   |              |   |   | (3,889            | )      |   |              | (9,891  | ) |   |   | 2,727 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Income      (loss) from continuing operations                |   |                   | (49,109 | )      |            |   | 3,130   |              |   |   | (10,355           | )      |   |              | 14,216  |   |   |   | 9,407 |   |
| Loss      from discontinued operations, net of income tax    |   |                   | (740    | )      |            |   | (2,606  | )                 |   |   | (1,849            | )      |   |              | (4,472  | ) |   |   | (3,321 | ) |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Net      income (loss)                                       |   | $                      | (49,849 | )      |            | $      | 524     |              |   | $      | (12,204           | )      |   | $                 | 9,744   |   |   | $ | 6,086 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Earnings      (loss) per share - basic                       |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|   Income      (loss) from continuing operations    |   | $                      | (1.34   | )      |            | $      | 0.09    |              |   | $      | (0.29             | )      |   | $                 | 0.40    |   |   | $ | 0.27 |   |
|   Income      (loss) from discontinued operations  |   |                   | (0.02   | )      |            |   | (0.08   | )                 |   |   | (0.05             | )      |   |              | (0.13   | ) |   |   | (0.10 | ) |
|                                                         |   | $                      | (1.36   | )      |            | $      | 0.01    |              |   | $      | (0.34             | )      |   | $                 | 0.27    |   |   | $ | 0.17 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Earnings      (loss) per share - diluted                     |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|   Income      (loss) from continuing operations    |   | $                      | (1.34   | )      |            | $      | 0.09    |              |   | $      | (0.29             | )      |   | $                 | 0.40    |   |   | $ | 0.26 |   |
|   Income      (loss) from discontinued operations  |   |                   | (0.02   | )      |            |   | (0.08   | )                 |   |   | (0.05             | )      |   |              | (0.13   | ) |   |   | (0.09 | ) |
|                                                         |   | $                      | (1.36   | )      |            | $      | 0.01    |              |   | $      | (0.34             | )      |   | $                 | 0.27    |   |   | $ | 0.17 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Weighted      average shares outstanding                     |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|   Basic                                            |   |                   | 36,744  |   |            |   | 36,596  |              |   |   | 36,199            |   |   |              | 35,565  |   |   |   | 35,153 |   |
|   Diluted                                          |   |                   | 36,744  |   |            |   | 36,605  |              |   |   | 36,199            |   |   |              | 35,856  |   |   |   | 35,572 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
|                                                         |   | As      of             |    |
|                                                         |   | January      2,        |    |   | January      3, |   |    | December      29, |   |   | December      30, |   |   | December      31, |    |
|                                                         |   |                   | 2010    |   |            |   | 2009    |              |   |   | 2007              |   |   |              | 2006    |   |   |   | 2005 |   |
|                                                         |   |                   |    |   |            |   |    |              |   |   |              |   |   |              |    |   |   |   |   |   |
| Working      capital (this excludes discontinued operations) |   | $                      | 19,324  |   |            | $      | 34,670  |              |   | $      | 35,337            |   |   | $                 | 43,151  |   |   | $ | 37,558 |   |
| Total      assets                                            |   | $                      | 104,535 |   |            | $      | 157,513 |              |   | $      | 192,827           |   |   | $                 | 198,014 |   |   | $ | 181,487 |   |
| Total      debt and capital lease obligations                |   | $                      | 17,910  |   |            | $      | 16,489  |              |   | $      | 35,535            |   |   | $                 | 37,572  |   |   | $ | 35,643 |   |
| Stockholders'      equity                                    |   | $                      | 56,848  |   |            | $      | 102,531 |              |   | $      | 106,892           |   |   | $                 | 111,237 |   |   | $ | 98,633 |   |

----

Item 7. Management’s Discussion and Analysisof Financial Condition and Results of Operations.

| · | 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; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | 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;                                                                                                                                                                 |
| · | through      our Lasertel subsidiary, we manufacture semiconductor solid state laser      diodes for Presstek imaging applications and for use in external      applications (as previously discussed the Company sold Lasertel to SELEX      on March 5, 2010); and                                                                                                                                     |
| · | manufacture      and distribute printing plates for conventional print      applications.                                                                                                                                                                                                                                                                                                                |

----

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

----

----

----

|                                                                                      |   | Fiscal      year ended |    |
|-------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                      |   | January      2, 2010   |    |   | January      3, 2009 |   |   | December      29, 2007 |   |
|                                                                                      |   |                   |    |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |
| Revenue                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equipment                                                                     |   | $                      | 19,646  |   |   |   | 14.6 |   |   | $ | 52,716 |   |   |   | 27.2 |   |   | $ | 87,674 |   |   |   | 35.6 |   |
|   Consumables                                                                   |   |                   | 85,741  |   |   |   | 63.8 |   |   |   | 106,027 |   |   |   | 54.9 |   |   |   | 119,931 |   |   |   | 48.6 |   |
|   Service      and parts                                                        |   |                   | 29,071  |   |   |   | 21.6 |   |   |   | 34,509 |   |   |   | 17.9 |   |   |   | 38,968 |   |   |   | 15.8 |   |
|           Total      revenue            |   |                   | 134,458 |   |   |   | 100.0 |   |   |   | 193,252 |   |   |   | 100.0 |   |   |   | 246,573 |   |   |   | 100.0 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equipment                                                                     |   |                   | 23,916  |   |   |   | 17.8 |   |   |   | 45,818 |   |   |   | 23.7 |   |   |   | 80,137 |   |   |   | 32.5 |   |
|   Consumables                                                                   |   |                   | 46,765  |   |   |   | 34.8 |   |   |   | 53,270 |   |   |   | 27.5 |   |   |   | 65,587 |   |   |   | 26.6 |   |
|   Service      and parts                                                        |   |                   | 21,585  |   |   |   | 16.0 |   |   |   | 25,423 |   |   |   | 13.2 |   |   |   | 31,622 |   |   |   | 12.8 |   |
|           Total      cost of revenue    |   |                   | 92,266  |   |   |   | 68.6 |   |   |   | 124,511 |   |   |   | 64.4 |   |   |   | 177,346 |   |   |   | 71.9 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                         |   |                   | 42,192  |   |   |   | 31.4 |   |   |   | 68,741 |   |   |   | 35.6 |   |   |   | 69,227 |   |   |   | 28.1 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research      and development                                                 |   |                   | 4,975   |   |   |   | 3.7 |   |   |   | 5,144 |   |   |   | 2.6 |   |   |   | 4,969 |   |   |   | 2.0 |   |
|   Sales,      marketing and customer support                                    |   |                   | 24,967  |   |   |   | 18.6 |   |   |   | 29,937 |   |   |   | 15.5 |   |   |   | 39,194 |   |   |   | 15.9 |   |
|   General      and administrative                                               |   |                   | 21,912  |   |   |   | 16.3 |   |   |   | 25,496 |   |   |   | 13.2 |   |   |   | 33,172 |   |   |   | 13.4 |   |
|   Amortization      of intangible assets                                        |   |                   | 926     |   |   |   | 0.7 |   |   |   | 1,084 |   |   |   | 0.6 |   |   |   | 2,168 |   |   |   | 0.9 |   |
|   Restructuring      and other charges                                          |   |                   | 1,684   |   |   |   | 1.3 |   |   |   | 2,108 |   |   |   | 1.1 |   |   |   | 2,714 |   |   |   | 1.1 |   |
|   Goodwill      impairment                                                      |   |                   | 19,114  |   |   |   | 14.2 |   |   |   | - |   |   |   | - |   |   |   |  - |   |   |   | - |   |
|           Total      operating expenses |   |                   | 73,578  |   |   |   | 54.8 |   |   |   | 63,769 |   |   |   | 33.0 |   |   |   |  82,217 |   |   |   | 33.3 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                              |   |                   | (31,386 | ) |   |   | (23.4 | ) |   |   | 4,972 |   |   |   | 2.6 |   |   |   | (12,990 | ) |   |   | (5.3 | ) |
| Interest      and other income (expense), net                                             |   |                   | (1,389  | ) |   |   | (1.0 | ) |   |   |  938 |   |   |   | 0.5 |   |   |   | (1,254 | ) |   |   | (0.5 | ) |
|    Income      (loss) from continuing operations before income taxes       |   |                   | (32,775 | ) |   |   | (24.4 | ) |   |   | 5,910 |   |   |   | 3.1 |   |   |   | (14,244 | ) |   |   | (5.8 | ) |
| Provision      (benefit) for income taxes                                                 |   |                   | 16,334  |   |   |   | 12.1 |   |   |   | 2,780 |   |   |   | 1.4 |   |   |   | (3,889 | ) |   |   | (1.6 | ) |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                             |   |                   | (49,109 | ) |   |   | (36.5 | ) |   |   | 3,130 |   |   |   |  1.6 |   |   |   | (10,355 | ) |   |   | (4.2 | ) |
| Loss      from discontinued operations, net of income taxes                               |   |                   | (740    | ) |   |   | (0.6 | ) |   |   | (2,606 | ) |   |   | (1.3 | ) |   |   | (1,849 | ) |   |   | (0.7 | ) |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                    |   | $                      | (49,849 | ) |   |   | (37.1 | ) |   | $ | 524 |   |   |   | 0.3 |   |   | $ | (12,204 | ) |   |   | (4.9 | ) |

----

----

----

----

----

----

----

|                                                  |   | January      2, 2010 |     |   | January      3, 2009 |   |   | December      29, 2007 |   |
|-------------------------------------------------------|--------|----------------------|----------|--------|----------------------|--------|--------|------------------------|--------|
| Revenue                                               |   | $                    | 13,488   |   |                 | $      | 8,686  |                   |   | $ | 8,270 |   |
| Profit      (loss) before other charges               |   |                 | 1,621    |   |                 |   | (4,336 | )                      |   |   | (2,924 | ) |
|   Impairment      charge                    |   |                 | (1,428   | )      |                 |   | -      |                   |   |   | - |   |
|   Transaction      costs related to sale    |   |                 | (933     | )      |                 |   | -      |                   |   |   | - |   |
| Loss      before income taxes                         |   |                 | (740     | )      |                 |   | (4,336 | )                      |   |   | (2,924 | ) |
|   Provision      (benefit) for income taxes |   |                 |  -- |   |                 |   | (1,637 | )                      |   |   | (1,129 | ) |
| Net      loss from discontinued operations            |   | $                    | (740     | )      |                 | $      | (2,699 | )                      |   | $ | (1,795 | ) |
|     Loss      per diluted share   |   | $                    | (0.02    | )      |                 | $      | (0.08  | )                      |   | $ | (0.05 | ) |

----

|                                      |   | January      2, 2010 |   |   | January      3, 2009 |   |
|-------------------------------------------|--------|----------------------|--------|--------|----------------------|--------|
|                                      |   |                 |   |   |                 |   |
| Cash      and cash equivalents            |   | $                    | 585    |   |                 | $      | 369 |   |
| Receivables,      net                     |   |                 | 2,938  |   |                 |   | 2,187 |   |
| Inventories                               |   |                 | 3,774  |   |                 |   | 4,478 |   |
| Other      current assets                 |   |                 | 212    |   |                 |   | 134 |   |
| Property,      plant & equipment, net |   |                 | 4,377  |   |                 |   | 5,263 |   |
| Intangible      assets, net               |   |                 | 696    |   |                 |   | 899 |   |
| Other      noncurrent assets              |   |                 | 42     |   |                 |   | -- |   |
|    Total      assets       |   | $                    | 12,624 |   |                 | $      | 13,330 |   |
|                                      |   |                 |   |   |                 |   |   |   |
| Accounts      payable                     |   | $                    | 729    |   |                 | $      | 884 |   |
| Accrued      expenses                     |   |                 | 459    |   |                 |   | 448 |   |
| Deferred      gain                        |   |                 | 4,015  |   |                 |   | 4,370 |   |
|  Total      Liabilities              |   | $                    | 5,203  |   |                 | $      | 5,702 |   |

----

----

----

|                                           |   |   |   |   | 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          |   | $      | 17,911 |   |                        | $      | 17,911 |   |   | $ | -- |   |   | $ | -- |   |   | $ | -- |   |
| Purchase      commitments                      |   |   | 2,106  |   |                        |   | 2,106 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Royalty      obligation                        |   |   | 4,724  |   |                        |   | 696 |   |   |   | 1,392 |   |   |   | 1,014 |   |   |   | 1,622 |   |
| Operating      leases                          |   |   | 10,086 |   |                        |   | 2,323 |   |   |   | 3,951 |   |   |   | 1,549 |   |   |   | 2,263 |   |
|   Total      contractual obligations |   | $      | 34,827 |   |                        | $      | 23,036 |   |   | $ | 5,343 |   |   | $ | 2,563 |   |   | $ | 3,885 |   |

----

----

----

----

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

----

----

----

Item 7A. Quantitative and QualitativeDisclosures About Market Risk.

----

PART II

Item 8. FinancialStatements and Supplementary Data.

|                                                                                                                                                                                  | Page   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                  |   |
| Report of Independent Registered Public Accounting      Firm                                                                                                                          | 51     |
| Consolidated Balance Sheets as of January 2, 2010 and      January 3, 2009                                                                                                            | 52     |
| Consolidated Statements of Operations for      the fiscal years ended January 2, 2010, January 3, 2009 and December 29,      2007                                                     | 53     |
| Consolidated Statements of Changes in Stockholders’ Equity      and Comprehensive Income for the fiscal years ended January 2, 2010,      January 3, 2009 and December 29, 2007 | 54     |
| Consolidated Statements of Cash Flows for the fiscal      years ended January 2, 2010, January 3, 2009 and December 29,      2007                                                     | 55     |
| Notes to Consolidated Financial    Statements                                                                                                                                         | 56     |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |
|                                                                                                                                                                                  |   |

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Report of Independent Registered Public AccountingFirm

----

| ITEM      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          |   |            |    |   |            |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------|---------|--------|-----------------|--------|
|                                                                                              |   |            |    |   |            |   |
| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |   |
| CONSOLIDATED BALANCE SHEETS                                                                       |   |
| (in      thousands, except share data)                                                            |   |
|                                                                                              |   |            |    |   |            |   |
|                                                                                              |   | January      2, |    |   | January      3, |   |
|                                                                                              |   | 2010            |    |   | 2009            |   |
|                                                                                              |   |            |    |   |            |   |
| ASSETS                                                                                            |   |            |    |   |            |   |
| Current      assets                                                                               |   |            |    |   |            |   |
| Cash      and cash equivalents                                                                    |   | $               | 5,843   |   |            | $      | 4,738 |   |
| Accounts      receivable, net                                                                     |   |            | 22,605  |   |            |   | 30,759 |   |
| Inventories                                                                                       |   |            | 30,378  |   |            |   | 37,122 |   |
| Assets      of discontinued operations                                                            |   |            | 12,624  |   |            |   | 13,330 |   |
| Deferred      income taxes                                                                        |   |            | 243     |   |            |   | 7,066 |   |
| Other      current assets                                                                         |   |            | 2,598   |   |            |   | 4,095 |   |
| Total      current assets                                                                         |   |            | 74,291  |   |            |   | 97,110 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Property,      plant and equipment, net                                                           |   |            | 24,307  |   |            |   | 26,015 |   |
| Goodwill                                                                                          |   |            | -       |   |            |   | 19,114 |   |
| Intangible      assets, net                                                                       |   |            | 4,316   |   |            |   | 4,174 |   |
| Deferred      income taxes                                                                        |   |            | 1,140   |   |            |   | 10,494 |   |
| Other      noncurrent assets                                                                      |   |            | 481     |   |            |   | 606 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Total      assets                                                                                 |   | $               | 104,535 |   |            | $      | 157,513 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                         |   |            |    |   |            |   |   |   |
| Current      liabilities                                                                          |   |            |    |   |            |   |   |   |
| Current      portion of long-term debt and capital lease obligation                               |   | $               | -       |   |            | $      | 4,074 |   |
| Line      of credit                                                                               |   |            | 17,910  |   |            |   | 12,415 |   |
| Accounts      payable                                                                             |   |            | 9,887   |   |            |   | 12,060 |   |
| Accrued      expenses                                                                             |   |            | 8,049   |   |            |   | 13,261 |   |
| Deferred      revenue                                                                             |   |            | 6,497   |   |            |   | 7,300 |   |
| Liabilities      of discontinued operations                                                       |   |            | 5,203   |   |            |   | 5,702 |   |
| Total      current liabilities                                                                    |   |            | 47,546  |   |            |   | 54,812 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Other      long-term liabilities                                                                  |   |            | 141     |   |            |   | 170 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Total      liabilities                                                                            |   |            | 47,687  |   |            |   | 54,982 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Commitments      and contingencies (See Note 19)                                                  |   |            |    |   |            |   |   |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Stockholders'      equity                                                                         |   |            |    |   |            |   |   |   |
| Preferred      stock, $0.01 par value, 1,000,000 shares authorized, no shares      issued         |   |            | -       |   |            |   | - |   |
| Common      stock, $0.01 par value, 75,000,000 shares authorized, 36,854,802      and             |   |            |    |   |            |   |   |   |
| 36,637,181      shares issued and outstanding at January 2, 2010 and                              |   |            |    |   |            |   |   |   |
| January      3, 2009, respectively                                                                |   |            | 368     |   |            |   | 366 |   |
| Additional      paid-in capital                                                                   |   |            | 120,005 |   |            |   | 117,985 |   |
| Accumulated      other comprehensive income (loss)                                                |   |            | (3,810  | )      |            |   | (5,954 | ) |
| Accumulated      deficit                                                                          |   |            | (59,715 | )      |            |   | (9,866 | ) |
| Total      stockholders' equity                                                                   |   |            | 56,848  |   |            |   | 102,531 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| Total      liabilities and stockholders' equity                                                   |   | $               | 104,535 |   |            | $      | 157,513 |   |
|                                                                                              |   |            |    |   |            |   |   |   |
|                                                                                              |   |            |    |   |            |   |   |   |
| 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      2, |   |   | January      3, |   |   | December      29, |   |
|                                                                                              |   | 2010 |   |   | 2009 |   |   | 2007 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                           |   |   |   |   |   |   |   |   |   |
| Equipment                                                                                         |   | $ | 19,646 |   |   | $ | 52,716 |   |   | $ | 87,674 |   |
| Consumables                                                                                       |   |   | 85,741 |   |   |   | 106,027 |   |   |   | 119,931 |   |
| Service      and parts                                                                            |   |   | 29,071 |   |   |   | 34,509 |   |   |   | 38,968 |   |
| Total      revenue                                                                                |   |   | 134,458 |   |   |   | 193,252 |   |   |   | 246,573 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Equipment                                                                                         |   |   | 23,916 |   |   |   | 45,818 |   |   |   | 80,137 |   |
| Consumables                                                                                       |   |   | 46,765 |   |   |   | 53,270 |   |   |   | 65,587 |   |
| Service      and parts                                                                            |   |   | 21,585 |   |   |   | 25,423 |   |   |   | 31,622 |   |
| Total      cost of revenue                                                                        |   |   | 92,266 |   |   |   | 124,511 |   |   |   | 177,346 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                 |   |   | 42,192 |   |   |   | 68,741 |   |   |   | 69,227 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Research      and development                                                                     |   |   | 4,975 |   |   |   | 5,144 |   |   |   | 4,969 |   |
| Sales,      marketing and customer support                                                        |   |   | 24,967 |   |   |   | 29,937 |   |   |   | 39,194 |   |
| General      and administrative                                                                   |   |   | 21,912 |   |   |   | 25,496 |   |   |   | 33,172 |   |
| Amortization      of intangible assets                                                            |   |   | 926 |   |   |   | 1,084 |   |   |   | 2,168 |   |
| Restructuring      and other charges                                                              |   |   | 1,684 |   |   |   | 2,108 |   |   |   | 2,714 |   |
| Goodwill      impairment                                                                          |   |   | 19,114 |   |   |   | - |   |   |   | - |   |
| Total      operating expenses                                                                     |   |   | 73,578 |   |   |   | 63,769 |   |   |   | 82,217 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                      |   |   | (31,386 | ) |   |   | 4,972 |   |   |   | (12,990 | ) |
| Interest      and other income (expense), net                                                     |   |   | (1,389 | ) |   |   | 938 |   |   |   | (1,254 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before income taxes                                 |   |   | (32,775 | ) |   |   | 5,910 |   |   |   | (14,244 | ) |
| Provision      (benefit) for income taxes                                                         |   |   | 16,334 |   |   |   | 2,780 |   |   |   | (3,889 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   |   | (49,109 | ) |   |   | 3,130 |   |   |   | (10,355 | ) |
| Loss      from discontinued operations, net of income taxes                                       |   |   | (740 | ) |   |   | (2,606 | ) |   |   | (1,849 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                            |   | $ | (49,849 | ) |   | $ | 524 |   |   | $ | (12,204 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - basic                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   | $ | (1.34 | ) |   | $ | 0.09 |   |   | $ | (0.29 | ) |
| Loss      from discontinued operations                                                            |   |   | (0.02 | ) |   |   | (0.08 | ) |   |   | (0.05 | ) |
|                                                                                              |   | $ | (1.36 | ) |   | $ | 0.01 |   |   | $ | (0.34 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - diluted                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |   | $ | (1.34 | ) |   | $ | 0.09 |   |   | $ | (0.29 | ) |
| Loss      from discontinued operations                                                            |   |   | (0.02 | ) |   |   | (0.08 | ) |   |   | (0.05 | ) |
|                                                                                              |   | $ | (1.36 | ) |   | $ | 0.01 |   |   | $ | (0.34 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding - basic                                                  |   |   | 36,744 |   |   |   | 36,596 |   |   |   | 36,199 |   |
| Dilutive      effect of stock options                                                             |   |   | - |   |   |   | 9 |   |   |   | - |   |
| Weighed      average shares outstanding - diluted                                                 |   |   | 36,744 |   |   |   | 36,605 |   |   |   | 36,199 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 30, 2006                                                                 |   |   | 35,662 |   |   | $ | 357 |   |   | $ | 108,769 |   |   | $ | 297 |   |   | $ | 1,814 |   |   | $ | 111,237 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                                                     |   |   | 903 |   |   |   | 9 |   |   |   | 3,126 |   |   |   | - |   |   |   | - |   |   |   | 3,135 |   |
| Foreign      currency translation adjustments                                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 735 |   |   |   | - |   |   |   | 735 |   |
| Share      based compensation                                                                     |   |   | - |   |   |   | - |   |   |   | 3,989 |   |   |   | - |   |   |   | - |   |   |   | 3,989 |   |
| Net      income (loss)                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12,204 | ) |   |   | (12,204 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 29, 2007                                                                 |   |   | 36,565 |   |   |   | 366 |   |   |   | 115,884 |   |   |   | 1,032 |   |   |   | (10,390 | ) |   |   | 106,892 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                                                     |   |   | 72 |   |   |   | - |   |   |   | 298 |   |   |   | - |   |   |   | - |   |   |   | 298 |   |
| Foreign      currency translation adjustments                                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (6,986 | ) |   |   | - |   |   |   | (6,986 | ) |
| Share      based compensation                                                                     |   |   | - |   |   |   | - |   |   |   | 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 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss) is calculated as follows:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   | Fiscal      year ended |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   | January      2, |   |   | January      3, |   |   | December      29, |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   | 2010 |   |   |   | 2009 |   |   |   | 2007 |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                            |   |   |   |   |   | $ | (49,849 | ) |   | $ | 524 |   |   | $ | (12,204 | ) |   |   |   |   |   |   |   |   |
| Adjustments      to accumulated other comprehensive income                                        |   |   |   |   |   |   | 2,144 |   |   |   | (6,986 | ) |   |   | 735 |   |   |   |   |   |   |   |   |   |
|   Comprehensive      income (loss)                                                      |   |   |   |   |   | $ | (47,705 | ) |   | $ | (6,462 | ) |   | $ | (11,469 | ) |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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      2, |   |   | January      3, |   |   | December      29, |   |
|                                                                                                             |   | 2010 |   |   | 2009 |   |   | 2007 |   |
| Operating      activities                                                                                        |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                           |   | $ | (49,849 | ) |   | $ | 524 |   |   | $ | (12,204 | ) |
| Add      loss from discontinued operations                                                                       |   |   | 740 |   |   |   | 2,606 |   |   |   | 1,849 |   |
| Income      (loss) from continuing operations                                                                    |   |   | (49,109 | ) |   |   | 3,130 |   |   |   | (10,355 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Adjustments      to reconcile net income (loss) to net cash provided by operating      activities                |   |   |   |   |   |   |   |   |   |   |   |   |
| from      continuing operations:                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                     |   |   | 3,807 |   |   |   | 4,519 |   |   |   | 5,564 |   |
| Amortization      of intangible assets                                                                           |   |   | 926 |   |   |   | 1,084 |   |   |   | 2,168 |   |
| Restructuring      and other charges                                                                             |   |   | 1,684 |   |   |   | 1,686 |   |   |   | 2,714 |   |
| Impairment                                                                                                       |   |   | 19,114 |   |   |   | 422 |   |   |   | - |   |
| Provision      for warranty costs                                                                                |   |   | (384 | ) |   |   | 40 |   |   |   | 3,517 |   |
| Provision      for accounts receivable allowances                                                                |   |   | 2,685 |   |   |   | 1,915 |   |   |   | 1,671 |   |
| Stock      compensation expense                                                                                  |   |   | 1,702 |   |   |   | 1,803 |   |   |   | 3,989 |   |
| Loss      on disposal of assets                                                                                  |   |   | 80 |   |   |   | 127 |   |   |   | 572 |   |
| Changes      in operating assets and liabilities, net of effects from business      acquisitions and divestures: |   |   |   |   |   |   |   |   |   |
| Accounts      receivable                                                                                         |   |   | 4,564 |   |   |   | 8,556 |   |   |   | 6,841 |   |
| Inventories                                                                                                      |   |   | 6,621 |   |   |   | 7,049 |   |   |   | (2,082 | ) |
| Other      current assets                                                                                        |   |   | (55 | ) |   |   | 546 |   |   |   | (2,137 | ) |
| Deferred      income taxes                                                                                       |   |   | 16,177 |   |   |   | 1,081 |   |   |   | (6,187 | ) |
| Other      noncurrent assets                                                                                     |   |   | (3 | ) |   |   | (219 | ) |   |   | 98 |   |
| Accounts      payable                                                                                            |   |   | (2,083 | ) |   |   | (5,336 | ) |   |   | (8,736 | ) |
| Accrued      expenses                                                                                            |   |   | (4,749 | ) |   |   | (11,460 | ) |   |   | 7,364 |   |
| Deferred      revenue                                                                                            |   |   | (758 | ) |   |   | 219 |   |   |   | (816 | ) |
| Net      cash provided by operating activities from continuing      operations                                   |   |   | 219 |   |   |   | 15,162 |   |   |   | 4,185 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing      activities                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchase      of property, plant and equipment                                                                   |   |   | (724 | ) |   |   | (1,777 | ) |   |   | (2,514 | ) |
| Business      acquisitions, net of cash acquired                                                                 |   |   | - |   |   |   | - |   |   |   | (119 | ) |
| Investment      in patents and other intangible assets                                                           |   |   | (1,068 | ) |   |   | (146 | ) |   |   | (204 | ) |
| Net      cash used in investing activities from continuing    operations                                         |   |   | (1,792 | ) |   |   | (1,923 | ) |   |   | (2,837 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing      activities                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      proceeds from issuance of common stock                                                                  |   |   | 320 |   |   |   | 298 |   |   |   | 3,135 |   |
| Repayments      of term loan and capital lease                                                                   |   |   | (4,074 | ) |   |   | (11,461 | ) |   |   | (7,037 | ) |
| Net      borrowings (repayments) under line of credit agreement                                                  |   |   | 5,495 |   |   |   | (7,585 | ) |   |   | 5,000 |   |
| Net      cash provided by (used in) financing activities from continuing      operations                         |   |   | 1,741 |   |   |   | (18,748 | ) |   |   | 1,098 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      provided by (used in) discontinued operations                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      activities                                                                                        |   |   | (1,731 | ) |   |   | (3,514 | ) |   |   | 273 |   |
| Investing      activities                                                                                        |   |   | (339 | ) |   |   | 7,240 |   |   |   | (532 | ) |
| Financing      activities                                                                                        |   |   | - |   |   |   | - |   |   |   | - |   |
| Net      cash provided by (used in) discontinued operations                                                      |   |   | (2,070 | ) |   |   | 3,726 |   |   |   | (259 | ) |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents                                                |   |   | 3,007 |   |   |   | (6,037 | ) |   |   | 824 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                                        |   |   | 1,105 |   |   |   | (7,820 | ) |   |   | 3,011 |   |
| Cash      and cash equivalents, beginning of year                                                                |   |   | 4,738 |   |   |   | 12,558 |   |   |   | 9,547 |   |
| Cash      and cash equivalents, end of year                                                                      |   | $ | 5,843 |   |   | $ | 4,738 |   |   | $ | 12,558 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      paid for interest                                                                                      |   | $ | 1,094 |   |   | $ | 1,605 |   |   | $ | 3,106 |   |
| Cash      paid for income taxes                                                                                  |   | $ | 49 |   |   | $ | 727 |   |   | $ | 236 |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements.                |   |

----

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

----

----

----

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

----

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

----

----

----

----

----

|                                                  |   | January      2, 2010 |     |   | January      3, 2009 |   |   | December      29, 2007 |   |
|-------------------------------------------------------|--------|----------------------|----------|--------|----------------------|--------|--------|------------------------|--------|
| Revenue                                               |   | $                    | 13,488   |   |                 | $      | 8,686  |                   |   | $ | 8,270 |   |
| Profit      (loss) before other charges               |   |                 | 1,621    |   |                 |   | (4,336 | )                      |   |   | (2,924 | ) |
|   Impairment      charge                    |   |                 | (1,428   | )      |                 |   | -      |                   |   |   | - |   |
|   Transaction      costs related to sale    |   |                 | (933     | )      |                 |   | -      |                   |   |   | - |   |
| Loss      before income taxes                         |   |                 | (740     | )      |                 |   | (4,336 | )                      |   |   | (2,924 | ) |
|   Provision      (benefit) for income taxes |   |                 |  -- |   |                 |   | (1,637 | )                      |   |   | (1,129 | ) |
| Net      loss from discontinued operations            |   | $                    | (740     | )      |                 | $      | (2,699 | )                      |   | $ | (1,795 | ) |
|     Loss      per diluted share   |   | $                    | (0.02    | )      |                 | $      | (0.08  | )                      |   | $ | (0.05 | ) |

|                                      |   | January      2, 2010 |   |   | January      3, 2009 |   |
|-------------------------------------------|--------|----------------------|--------|--------|----------------------|--------|
|                                      |   |                 |   |   |                 |   |
| Cash      and cash equivalents            |   | $                    | 585    |   |                 | $      | 369 |   |
| Receivables,      net                     |   |                 | 2,938  |   |                 |   | 2,187 |   |
| Inventories                               |   |                 | 3,774  |   |                 |   | 4,478 |   |
| Other      current assets                 |   |                 | 212    |   |                 |   | 134 |   |
| Property,      plant & equipment, net |   |                 | 4,377  |   |                 |   | 5,263 |   |
| Intangible      assets, net               |   |                 | 696    |   |                 |   | 899 |   |
| Other      noncurrent assets              |   |                 | 42     |   |                 |   | -- |   |
|    Total      assets       |   | $                    | 12,624 |   |                 | $      | 13,330 |   |
|                                      |   |                 |   |   |                 |   |   |   |
| Accounts      payable                     |   | $                    | 729    |   |                 | $      | 884 |   |
| Accrued      expenses                     |   |                 | 459    |   |                 |   | 448 |   |
| Deferred      gain                        |   |                 | 4,015  |   |                 |   | 4,370 |   |
|  Total      Liabilities              |   | $                    | 5,203  |   |                 | $      | 5,702 |   |

----

|                     |   | January      2,2010 |   |   | January      3,2009 |   |
|--------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                     |   |                |   |   |                |   |
| Accounts      receivable |   | $                   | 26,155 |   |                | $      | 33,235 |   |
| Less      allowances     |   |                | (3,550 | )      |                |   | (2,476 | ) |
|                     |   |                | 22,605 |   |                | $      | 30,759 |   |

|                                |   | Fiscal2009 |   |   | Fiscal2008 |   |   | Fiscal2007 |   |
|-------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of period |   | $          | 2,476  |   |       | $      | 2,538  |       |   | $ | 2,712 |   |
| Charged      to costs and expenses  |   |       | 2,685  |   |       |   | 1,915  |       |   |   | 1,671 |   |
| Deductions      and write-offs      |   |       | (1,611 | )      |       |   | (1,977 | )          |   |   | (1,845 | ) |
| Balance      at end of period       |   | $          | 3,550  |   |       | $      | 2,476  |       |   | $ | 2,538 |   |

|                 |   | January      2,2010 |   |   | January      3,2009 |   |
|----------------------|--------|---------------------|--------|--------|---------------------|--------|
|                 |   |                |   |   |                |   |
| Raw      materials   |   | $                   | 4,485  |   |                | $      | 2,946 |   |
| Work      in process |   |                | 1,093  |   |                |   | 4,950 |   |
| Finished      goods  |   |                | 24,800 |   |                |   | 29,226 |   |
|                 |   | $                   | 30,378 |   |                | $      | 37,122 |   |

----

|                                                           |   | January      2,2010 |    |   | January      3,2009 |   |
|----------------------------------------------------------------|--------|---------------------|---------|--------|---------------------|--------|
|                                                           |   |                |    |   |                |   |
| Land      and improvements                                     |   | $                   | 1,301   |   |                | $      | 1,301 |   |
| Buildings      and leasehold improvements                      |   |                | 22,443  |   |                |   | 22,016 |   |
| Production      and other equipment                            |   |                | 44,900  |   |                |   | 42,950 |   |
| Office      furniture and equipment                            |   |                | 9,865   |   |                |   | 9,402 |   |
| Construction      in process                                   |   |                | 571     |   |                |   | 1,098 |   |
|   Total      property, plant and equipment, at cost  |   |                | 79,080  |   |                |   | 76,767 |   |
| Accumulated      depreciation and amortization                 |   |                | (54,773 | )      |                |   | (50,752 | ) |
|     Net      property, plant and equipment |   | $                   | 24,307  |   |                | $      | 26,015 |   |

| Balance      at December 29, 2007                                  |   | $      | 19,891  |   |
|--------------------------------------------------------------------|--------|--------|---------|--------|
| Purchase      accounting adjustments for prior period acquisitions |   |   | (777    | )      |
| Impairment      adjustments                                        |   |   | --      |   |
| Balance      at January 3, 2009                                    |   | $      | 19,114  |   |
| Purchase      accounting adjustments for prior period acquisitions |   |   | --      |   |
| Impairment      adjustments                                        |   |   | (19,114 | )      |
| Balance      at January 2, 2010                                    |   | $      | --      |   |

----

|                                   |   | January      2, 2010 |   |   | January      3, 2009    |   |
|----------------------------------------|--------|----------------------|--------|--------|-------------------------|--------|
|                                   |   | Cost                 |   |   | Accumulatedamortization |   |   | Cost |   |   | Accumulatedamortization |   |
|                                   |   |                 |   |   |                    |   |   |   |   |   |   |   |
| Patents      and intellectual property |   | $                    | 10,398 |   |                    | $      | 8,264 |   |   | $ | 9,390 |   |   | $ | 7,739 |   |
| Trade      names                       |   |                 | 2,360  |   |                    |   | 2,360 |   |   |   | 2,360 |   |   |   | 2,360 |   |
| Customer      relationships            |   |                 | 4,452  |   |                    |   | 2,615 |   |   |   | 4,452 |   |   |   | 2,366 |   |
| Software      licenses                 |   |                 | 450    |   |                    |   | 450 |   |   |   | 450 |   |   |   | 450 |   |
| License      agreements                |   |                 | 750    |   |                    |   | 405 |   |   |   | 750 |   |   |   | 368 |   |
| Non-compete      covenants             |   |                 | 100    |   |                    |   | 100 |   |   |   | 100 |   |   |   | 100 |   |
| Loan      origination fees             |   |                 | 332    |   |                    |   | 332 |   |   |   | 332 |   |   |   | 277 |   |
|                                   |   | $                    | 18,842 |   |                    | $      | 14,526 |   |   | $ | 17,834 |   |   | $ | 13,660 |   |

| Fiscal      2010 |   | $      | 812 |   |
|------------------|--------|--------|-----|--------|
| Fiscal      2011 |   |   | 705 |   |
| Fiscal      2012 |   |   | 492 |   |
| Fiscal      2013 |   |   | 472 |   |
| Fiscal      2014 |   |   | 347 |   |
| Thereafter       |   |   | --  |   |

----

|                                  |   | January      2, 2010 |    |   | January      3, 2009 |   |
|---------------------------------------|--------|----------------------|---------|--------|----------------------|--------|
|                                  |   |                 |    |   |                 |   |
| Term      loan                        |   | $                    | --      |   |                 | $      | 4,074 |   |
| Line      of credit                   |   |                 | 17,910  |   |                 |   | 12,415 |   |
|                                  |   |                 | 17,910  |   |                 |   | 16,489 |   |
|   Less      current portion |   |                 | (17,910 | )      |                 |   | (16,489 | ) |
|                                  |   |                 |    |   |                 |   |   |   |
| Long-term      debt                   |   | $                    | --      |   |                 | $      | -- |   |

----

|                                         |   | January      2,2010 |   |   | January      3,2009 |   |
|----------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                         |   |                |   |   |                |   |
| Accrued      payroll and employee benefits   |   | $                   | 1,732  |   |                | $      | 4,068 |   |
| Accrued      warranty                        |   |                | 1,260  |   |                |   | 2,102 |   |
| Accrued      restructuring and other charges |   |                | 405    |   |                |   | 799 |   |
| Accrued      royalties                       |   |                | 81     |   |                |   | 232 |   |
| Accrued      income taxes                    |   |                | -      |   |                |   | 282 |   |
| Accrued      legal                           |   |                | 828    |   |                |   | 2,394 |   |
| Accrued      professional fees               |   |                | 827    |   |                |   | 1,122 |   |
| Other                                        |   |                | 2,916  |   |                |   | 2,262 |   |
|                                         |   | $                   | 8,049  |   |                | $      | 13,261 |   |

----

|                                           |   | Fiscal2009 |   |   | Fiscal2008 |   |   | Fiscal2007 |   |
|------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                           |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of year              |   | $          | 2,102  |   |       | $      | 3,534  |       |   | $ | 1,729 |   |
| Accruals      for warranties                   |   |       | (380   | )      |       |   | 40     |       |   |   | 3,517 |   |
| Utilization      of accrual for warranty costs |   |       | (462   | )      |       |   | (1,472 | )          |   |   | (1,712 | ) |
| Balance      at end of year                    |   | $          | 1,260  |   |       | $      | 2,102  |       |   | $ | 3,534 |   |

|                          |   | January      2,2010 |   |   | January      3,2009 |   |
|-------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                          |   |                |   |   |                |   |
| Deferred      service revenue |   | $                   | 5,645  |   |                | $      | 6,507 |   |
| Deferred      product revenue |   |                | 852    |   |                |   | 793 |   |
|                          |   | $                   | 6,497  |   |                | $      | 7,300 |   |

|                                                                                     |   | January      2,2010 |   |   | January      3,2009 |   |   | December      29,2007 |   |
|------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|--------|-----------------------|--------|
|                                                                                     |   |                |   |   |                |   |   |                  |   |
| Severance      and fringe benefits                                                       |   | $                   | 1,518  |   |                | $      | 691    |                  |   | $ | 1,210 |   |
| Executive      contractual obligations                                                   |   |                | --     |   |                |   | 536    |                  |   |   | 1,466 |   |
| Other      exit costs                                                                    |   |                | 166    |   |                |   | 881    |                  |   |   | 38 |   |
|        Total      net restructuring and other charges |   | $                   | 1,684  |   |                | $      | 2,108  |                  |   | $ | 2,714 |   |

----

|                                   |   | 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 |   |

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

|                             |   | Fiscal2009 |   |   | Fiscal2008 |   |   | Fiscal2007 |   |
|----------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                             |   |       |   |   |       |   |   |       |   |
| Interest      expense            |   | $          | (1,163 | )      |       | $      | (946   | )          |   | $ | (2,142 | ) |
| Interest      income             |   |       | 47     |   |       |   | 111    |       |   |   | 90 |   |
| Other      income (expense), net |   |       | (273   | )      |       |   | 1,773  |       |   |   | 798 |   |
|                             |   | $          | (1,389 | )      |       | $      | 938    |       |   | $ | (1,254 | ) |

----

|    |   | Fiscal2009 |               |   | Fiscal2008 |   |            | Fiscal2007 |   |
|---------|--------|------------|--------------------|--------|------------|--------|-----------------|------------|--------|
|    |   |       |               |   |       |   |            |       |   |
| U.S.    |   | $          | (29,578            | )      |       | $      | 5,296           |       |   | $ | (15,899 | ) |
| Foreign |   |       |   (3,197 | )      |       |   |   614 |       |   |   |  1,655 |   |
|    |   | $          | (32,775            | )      |       | $      | 5,910           |       |   | $ | (14,244 | ) |

|                                      |   | Fiscal2009 |   |   | Fiscal2008 |   |   | Fiscal2007 |   |
|-------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                      |   |       |   |   |       |   |   |       |   |
| Current:                                  |   |       |   |   |       |   |   |       |   |
| Federal                                   |   | $          | --     |   |       | $      | (131   | )          |   | $ | 138 |   |
| State                                     |   |       | (232   | )      |       |   | 293    |       |   |   | 456 |   |
| Foreign                                   |   |       | (21    | )      |       |   | (121   | )          |   |   | 507 |   |
|                                      |   | $          | (253   | )      |       | $      | 41     |       |   | $ | 1,101 |   |
|                                      |   |       |   |   |       |   |   |       |   |   |   |   |
| Deferred:                                 |   |       |   |   |       |   |   |       |   |   |   |   |
| Federal                                   |   |       | 15,777 |   |       |   | 2,326  |       |   |   | (4,458 | ) |
| State                                     |   |       | 1,419  |   |       |   | 128    |       |   |   | (532 | ) |
| Foreign                                   |   |       | (609   | )      |       |   | 285    |       |   |   | (- | ) |
|                                      |   |       | 16,587 |   |       |   | 2,739  |       |   |   | (4,990 | ) |
| Provision      (benefit) for income taxes |   | $          | 16,334 |   |       | $      | 2,780  |       |   | $ | (3,889 | ) |

|                                            |   | Fiscal2009 |   |   | Fiscal2008 |   |       | Fiscal2007 |   |
|-------------------------------------------------|--------|------------|--------|--------|------------|--------|------------|------------|--------|
|                                            |   |       |   |   |       |   |       |       |   |
| Federal      statutory tax rate                 |   |       | 34.00  | %      |       |   | 34.00      | %          |   |   | 34.00 | % |
| Nondeductible      Officer’s compensation |   |       | (0.29  | )      |       |   | 1.90       |       |   |   | (4.61 | ) |
| State      tax, net of federal benefit          |   |       | 4.10   |   |       |   | 4.70       |       |   |   | 0.35 |   |
| Other                                           |   |       | (1.68  | )      |       |   | (2.76      | )          |   |   | (2.44 | ) |
| Change      in valuation allowance              |   |       | (85.98 | )      |       |   |  9.20 |       |   |   | 0.00 |   |
|                                            |   |       | (49.84 | %)     |       |   | 47.04      | %          |   |   | 27.30 | % |

----

|                                                                                                                                                        |   | January      2,2010 |        |   | January      3,2009 |   |        | December      27,2007 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|-------------|--------|---------------------|--------|-------------|-----------------------|--------|
|                                                                                                                                                        |   |                |        |   |                |   |        |                  |   |
| Deferred      tax assets                                                                                                                                    |   |                |        |   |                |   |        |                  |   |
| Net      operating loss carryforwards                                                                                                                       |   | $                   | 11,426      |   |                | $      | 5,745       |                  |   | $ | 7,439 |   |
| Tax      credits                                                                                                                                            |   |                | 4,185       |   |                |   | 4,073       |                  |   |   | 3,875 |   |
| Warranty      provisions, litigation and other                                                                                                              |   |                | 7,295       |   |                |   | 8,450       |                  |   |   | 6,940 |   |
|      Goodwill      impairment                                                                                                      |   |                | 5,632       |   |                |   | -           |                  |   |   | - |   |
|      Accumulated      depreciation and amortization                                                                                |   |                |  2,822 |   |                |   |  2,507 |                  |   |   | 712 |   |
| Gross      deferred tax assets                                                                                                                              |   |                | 31,360      |   |                |   | 20,775      |                  |   |   | 18,966 |   |
|            Valuation      allowance                                                                  |   |                | (28,973     | )      |                |   |  (795  | )                     |   |   | (250 | ) |
|                    Total      deferred tax assets            |   |                | 2,387       |   |                |   | 19,980      |                  |   |   | 18,716 |   |
|                                                                                                                                                        |   |                |        |   |                |   |        |                  |   |   |   |   |
| Deferred      tax liabilities                                                                                                                               |   |                |        |   |                |   |        |                  |   |   |   |   |
| Amortizable      and depreciable assets                                                                                                                     |   |                | (1,004      | )      |                |   | (2,420      | )                     |   |   | (852 | ) |
| Accumulated      depreciation and amortization                                                                                                              |   |                | --          |   |                |   | --          |                  |   |   | - |   |
|                     Total      deferred tax liabilities |   |                | (1,004      | )      |                |   | (2,420      | )                     |   |   | (852 | ) |
|                                                                                                                                                        |   |                |        |   |                |   |        |                  |   |   |   |   |
|      Net      deferred tax assets (liabilities)                                                                                    |   | $                   | 1,383       |   |                | $      | 17,560      |                  |   | $ | 17,864 |   |

----

| 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 |   |
| Increases      related to prior year tax positions |   |   | --    |   |
| Decreases      related to prior year tax positions |   |   | (579  | )      |
| Balance      at January 3, 2009                    |   | $      | 1,221 |   |
| Increases      related to prior year tax positions |   |   | --    |   |
| Decreases      related to prior year tax positions |   |   | (184  | )      |
| Balance      at January 2, 2010                    |   | $      | 1,037 |   |

----

----

|                                  |   |             |   |   |             |   |   |             |   |
|---------------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
| Stock      purchase right assumptions |   | Fiscal      2009 |   |   | Fiscal      2008 |   |   | Fiscal      2007 |   |
|                                  |   |             |   |   |             |   |   |             |   |
| Risk-free      interest rate          |   |             | 0.00   | %      |             |   | 0.84   | %                |   |   | 4.03 | % |
| Volatility                            |   |             | 110.75 | %      |             |   | 95.79  | %                |   |   | 51.77 | % |
| Expected      life (in years)         |   |             | 0.25   |   |             |   | 0.25   |             |   |   | 0.25 |   |
| Dividend      yield                   |   |             | --     |   |             |   | --     |             |   |   | -- |   |

|                          |   |             |   |   |             |   |   |             |   |
|-------------------------------|--------|------------------|--------|--------|------------------|--------|--------|------------------|--------|
| Stock      option assumptions |   | Fiscal      2009 |   |   | Fiscal      2008 |   |   | Fiscal      2007 |   |
|                          |   |             |   |   |             |   |   |             |   |
| Risk-free      interest rate  |   |             | 2.65   | %      |             |   | 2.28   | %                |   |   | 4.25 | % |
| Volatility                    |   |             | 71.00  | %      |             |   | 60.63  | %                |   |   | 60.97 | % |
| Expected      life (in years) |   |             | 5.67   |   |             |   | 5.67   |             |   |   | 5.56 |   |
| Dividend      yield           |   |             | --     |   |             |   | --     |             |   |   | -- |   |

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

----

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

|                                |   | Fiscal      Year ended |   |
|-------------------------------------|--------|------------------------|--------|
|  Stock option plan             |   | January      2, 2010   |   |   | January      3,2009 |   |   | December      29, 2007 |   |
|                                |   |                   |   |   |   |   |   |   |   |
| 2008      Plan                      |   | $                      | 758    |   |   | $ | 319 |   |   | $ | -- |   |
| 2003      Plan                      |   |                   | 401    |   |   |   | 718 |   |   |   | 1,379 |   |
| 1998      Plan                      |   |                   | (6     | ) |   |   | 171 |   |   |   | 7 |   |
| ESPP                                |   |                   | 33     |   |   |   | 79 |   |   |   | 71 |   |
| Restricted      Stock               |   |                   | --     |   |   |   | -- |   |   |   | 1,500 |   |
| Non-plan,      non-qualified        |   |                   | 516    |   |   |   | 516 |   |   |   | 1,032 |   |
|                                |   |                   |   |   |   |   |   |   |   |   |   |   |
|      Total |   | $                      | 1,702  |   |   | $ | 1,803 |   |   | $ | 3,989 |   |

----

|                                  |   |   Shares |           |   | Weighted      averageexercise      price |   | Weighted      average remaining contractual term |   Aggregate      intrinsic value |
|---------------------------------------|--------|--------------------|----------------|--------|------------------------------------------|--------|--------------------------------------------------|--------------------------------------------|
|                                  |   |               |           |   |                                     |   |                                             |                                       |
| Outstanding      at December 30, 2006 |   |               | 2,956,350      |   |                                     | $      | 9.01                                             |                                       |   |   |
| Granted                               |   |               | 2,203,333      |   |                                     | $      | 5.40                                             |                                       |   |   |
| Exercised                             |   |               | (836,950       | )      |                                     | $      | 3.36                                             |                                       |   |   |
| Canceled/expired                      |   |               |  (506,166 | )      |                                     | $      | 8.29                                             |                                       |   |   |
| Outstanding      at December 29, 2007 |   |               | 3,816,567      |   |                                     | $      | 8.26                                             |                                       |   |   |
| Granted                               |   |               | 1,019,609      |   |                                     | $      | 5.14                                             |                                       |   |   |
| Exercised                             |   |               | (2,500         | )      |                                     | $      | 3.60                                             |                                       |   |   |
| Canceled/expired                      |   |               | (489,588       | )      |                                     | $      | 11.10                                            |                                       |   |   |
| Outstanding      at January 3, 2009   |   |               | 4,344,088      |   |                                     | $      | 7.24                                             |                                       |   |   |
| Granted                               |   |               | 266,115        |   |                                     | $      | 2.03                                             |                                       |   |   |
| Exercised                             |   |               | --             |   |                                     | $      | --                                               |                                       |   |   |
| Canceled/expired                      |   |               | (316,462       | )      |                                     | $      | 9.20                                             |                                       |   |   |
| Outstanding      at January 2, 2010   |   |               | 4,293,741      |   |                                     | $      | 6.77                                             |                                       | 6.05      years | $  0.1      million |
| Exercisable      at January 2, 2010   |   |               | 3,175,802      |   |                                     | $      | 7.34                                             |                                       | 5.35      years | $  0.0      million |

|                           |   |   | Outstanding  |   |   | Exercisable                                                      |   |
|--------------------------------|--------|--------|--------------|--------|--------|------------------------------------------------------------------|--------|
|  Range of exercise prices |   |   |  Shares |   |   | Weighted      averageremaining      contractuallife      (years) |   |   | Weighted      average exercise price |   |   |   Shares |   |   | Weightedaverageexercise      price |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 4.96 |   |   |   | 443,082 |   |   |   | 8.04 |   |   |   | 2.81 |   |   |   | 200,350 |   |   |   | 3.13 |   |
| $                              | 4.97   |   |         |   | -      |                                                             |   | $ | 9.92 |   |   |   | 3,517,909 |   |   |   | 6.09 |   |   |   | 6.70 |   |   |   | 2,642,702 |   |   |   | 6.97 |   |
| $                              | 9.93   |   |         |   | -      |                                                             |   | $ | 14.88 |   |   |   | 229,750 |   |   |   | 4.16 |   |   |   | 11.28 |   |   |   | 229,750 |   |   |   | 11.28 |   |
| $                              | 14.89  |   |         |   | -      |                                                             |   | $ | 19.85 |   |   |   | 103,000 |   |   |   | 0.40 |   |   |   | 16.12 |   |   |   | 103,000 |   |   |   | 16.12 |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 19.85 |   |   |   | 4,293,741 |   |   |   | 6.05 |   |   | $ | 6.77 |   |   |   | 3,175,802 |   |   | $ | 7.34 |   |

----

|                                              |   | January      2,2010 |    |   | January      3,2009 |   |
|---------------------------------------------------|--------|---------------------|---------|--------|---------------------|--------|
|                                              |   |                |    |   |                |   |
| Presstek                                          |   | $                   | 90,438  |   |                | $      | 144,183 |   |
| Lasertel      (assets of discontinued operations) |   |                | 14,097  |   |                |   | 13,330 |   |
|                                              |   | $                   | 104,535 |   |                | $      | 157,513 |   |

|                |   | Fiscal2009 |    |   | Fiscal2008 |   |    | Fiscal2007 |   |
|---------------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|                |   |       |    |   |       |   |    |       |   |
| United      States  |   | $          | 88,971  |   |       | $      | 123,484 |       |   | $ | 150,703 |   |
| United      Kingdom |   |       | 15,564  |   |       |   | 20,732  |       |   |   | 27,426 |   |
| All      other      |   |       | 29,923  |   |       |   | 49,036  |       |   |   | 68,444 |   |
|                |   | $          | 134,458 |   |       | $      | 193,252 |       |   | $ | 246,573 |   |

|                |   | January      2,2010 |   |   | January      3,2009 |   |
|---------------------|--------|---------------------|--------|--------|---------------------|--------|
|                |   |                |   |   |                |   |
| United      States  |   | $                   | 27,296 |   |                | $      | 58,580 |   |
| United      Kingdom |   |                | 1,620  |   |                |   | 602 |   |
| Canada              |   |                | 1,328  |   |                |   | 736 |   |
|                |   | $                   | 30,244 |   |                | $      | 59,918 |   |

----

|             |   | Continuing Operations |   |   | DiscontinuedOperations |   |
|------------------|--------|----------------------------|--------|--------|------------------------|--------|
| Fiscal      2010 |   | $                          | 1,792  |   |                   | $      | 531 |   |
| Fiscal      2011 |   |                       | 1,500  |   |                   |   | 547 |   |
| Fiscal      2012 |   |                       | 1,341  |   |                   |   | 563 |   |
| Fiscal      2013 |   |                       | 371    |   |                   |   | 580 |   |
| Fiscal      2014 |   |                       | -      |   |                   |   | 598 |   |
| Thereafter       |   |                       | -      |   |                   |   | 2,263 |   |

----

----

----

|                                                                                    |   | FirstQuarter |   |   | SecondQuarter |   |    | ThirdQuarter |   |   | FourthQuarter |   |
|-----------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------|--------|---------|--------------|--------|--------|---------------|--------|
|                                                                                    |   |         |   |   |          |   |    |         |   |   |          |   |
| 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 | ) |
|                                                                                    |   |         |   |   |          |   |    |         |   |   |          |   |   |   |   |   |
| Fiscal      2008                                                                        |   |         |   |   |          |   |    |         |   |   |          |   |   |   |   |   |
| Revenue                                                                                 |   | $            | 50,794 |   |          | $      | 51,606  |         |   | $      | 48,534        |   |   | $ | 42,318 |   |
| Gross      profit                                                                       |   | $            | 18,400 |   |          | $      | 17,465  |         |   | $      | 16,849        |   |   | $ | 16,027 |   |
|   Income      from continuing operations                                      |   |         | 887    |   |          |   | 1,003   |         |   |   | 626           |   |   |   | 614 |   |
|   Loss      from discontinued operations                                      |   |         | (669   | )      |          |   | (436    | )            |   |   | (431          | )      |   |   | (1,070 | ) |
| Net      income (loss)                                                                  |   | $            | 218    |   |          | $      | 567     |         |   | $      | 195           |   |   | $ | (456 | ) |
|   Earnings  per      share from continuing operations – basic |   |         | 0.03   |   |          |   | 0.03    |         |   |   | 0.02          |   |   |   | 0.02 |   |
|   Loss      per share from discontinued operations – basic              |   |         | (0.02  | )      |          |   | (0.01   | )            |   |   | (0.01         | )      |   |   | (0.03 | ) |
| Earnings      (loss) per share – basic (1)                                        |   | $            | 0.01   |   |          | $      | 0.02    |         |   | $      | 0.01          |   |   | $ | (0.01 | ) |
|                                                                                    |   |         |   |   |          |   |    |         |   |   |          |   |   |   |   |   |
|   Earnings      per share from continuing operations – diluted          |   |         | 0.03   |   |          |   | 0.03    |         |   |   | 0.02          |   |   |   | 0.02 |   |
|   Loss      per share from discontinued operations – diluted            |   |         | (0.02  | )      |          |   | (0.01   | )            |   |   | (0.01         | )      |   |   | (0.03 | ) |
| Earnings      (loss) per share – diluted (1)                                      |   | $            | 0.01   |   |          | $      | 0.02    |         |   | $      | 0.01          |   |   | $ | (0.01 | ) |
|                                                                                    |   |         |   |   |          |   |    |         |   |   |          |   |   |   |   |   |

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

----

| 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                                |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                              |   | $ | 2,476 |   |   | $ | 2,685 |   |   | $ | (1,611 | ) |   | $ | 3,550 |   |
| 2008                                                              |   | $ | 2,538 |   |   | $ | 1,915 |   |   | $ | (1,977 | ) |   | $ | 2,476 |   |
| 2007                                                              |   | $ | 2,712 |   |   | $ | 1,671 |   |   | $ | (1,845 | ) |   | $ | 2,538 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves      for excess and obsolete inventory                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Fiscal      year                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009                                                              |   | $ | 9,066 |   |   | $ | 3,052 |   |   | $ | (2,517 | ) |   | $ | 9,601 |   |
| 2008                                                              |   | $ | 13,530 |   |   | $ | 437 |   |   | $ | (4,901 | ) |   | $ | 9,066 |   |
| 2007                                                              |   | $ | 13,868 |   |   | $ | 5,255 |   |   | $ | (5,593 | ) |   | $ | 13,530 |   |

----

Item 9. Changes inand Disagreements with Accountants on Accounting and FinancialDisclosure.

Item 9A.  Controls andProcedures.

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

----

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

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

| · | A      new Financial Reporting Manager was appointed to prepare SEC      filings. |
|--------|-----------------------------------------------------------------------------------|

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

----

----

Item 9B. OtherInformation.

PART III

Item 10. Directors, Executive Officers andCorporate Governance.

Directors

Information with respect to our directors and nominees may be foundunder the caption “Election of Directors” of the Company’s proxy statement to bedelivered to stockholders in connection with the Annual Meeting of Stockholdersto be held on June 2, 2010 (the “Proxy Statement”). Such information isincorporated herein by reference.

ExecutiveOfficers

The Company’s executive officers as of the date of this Annual Reporton Form 10-K are as follows:

|              |                                                                                                                             |   |                   |   |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
| Executive Officer | Position                                                                                                                         |   | Age at January 2, 2010 |   |
| Jeffrey Jacobson  | Chairman, President and Chief Executive    Officer                                                                               |   |                   | 50     |   |
|              |                                                                                                                             |   |                   |
| Jeffrey A. Cook   | Executive Vice President and Chief Financial      Officer                                                                        |   |                   | 55     |   |
|              |                                                                                                                             |   |                   |
| Mark J. Levin     | President, Americas Region                                                                                                       |   |                   | 53     |   |
|              |                                                                                                                             |   |                   |
| Guy Sasson        |              President,      Europe, Africa, Middle East Region |   |                   | 43     |   |
|              |                                                                                                                             |   |                   |   |   |
| Kathleen McHugh   | Vice President and Chief Marketing Officer                                                                                       |   |                   | 51     |   |
|              |                                                                                                                             |   |                   |   |   |
| Wayne L. Parker   | Vice President, Corporate Controller and Chief Accounting      Officer                                                           |   |                   | 52     |   |
|              |                                                                                                                             |   |                   |   |   |
| James R. Van Horn | Vice President, General Counsel and    Secretary                                                                                 |   |                   | 53     |   |

Jeffrey Jacobsonwas appointed President and Chief Executive Officer and a director of theCompany in May 2007, and added the title of Chairman on January 1, 2009. FromApril 2005 until April 2007, he was a Corporate Vice President and the ChiefOperating Officer of Kodak’s Graphic Communications Group, a division formed bythe integration of six different Kodak companies into a $3.6 billion globalenterprise. From April, 2000 through April, 2005, Mr. Jacobson served as ChiefExecutive Officer of Kodak Polychrome Graphics, a $1.7 billion global jointventure between Sun Chemical Corporation and Kodak. In all, Mr. Jacobson has 23years of experience in the graphics arts industry. Mr. Jacobson is a boardmember of the New York University Graphic Communications Management andTechnology Advisory Board.  Our Board believes Mr. Jacobson’s lengthyindustry experience in senior management positions qualifies him to serve as amember of our Board.

Jeffrey A.Cook was appointed Senior Vice President, Chief Financial Officer inFebruary 2007 and appointed Executive Vice President in February 2008. OnNovember 4th ,2009 he was elected to the Presstek Board of Directors.  From July2005 until February 2007 he was self-employed. Prior thereto, he served asSenior Vice President and Chief Financial Officer of Kodak Polychrome Graphics,a joint venture between Kodak and Sun Chemical Corporation.  Mr. Cookhas over 30 years of financial management experience, including 17 years withGeneral Electric. Our Board believes Mr. Cook’s lengthy print industryexperience in senior management positions qualifies him to serve as a member ofour Board.

  

----

  

Mark J.Levin was appointed President, Americas Region in November 2007. FromOctober 2005 until March 2007 he served as President-Commercial Group ofSun Chemical Corporation. From October 2003 until October 2005 he served asPresident-Publication Inks of Sun Chemical. Prior thereto, he served as SeniorVice President of Heidelberg.

Guy Sassonwas appointed President of Presstek’s Europe, Africa, and Middle East (“EAME”)Region in January 2009. Mr. Sasson’s background includes a decade of keyinternational roles at Kodak’s Graphics Communications Group (“KGCG”) and KodakPolychrome Graphics (KPG), a joint venture between the Eastman Kodak and SunChemical companies. In his most recent assignment Mr. Sasson served as VicePresident of Service and Support of KGCG’s Europe, Middle East and Africaregion. He will be focused on expanding Presstek’s presence in thisregion.

KathleenMcHugh wasappointed Vice President and Chief Marketing Officer in May, 2008. Ms. McHugh,with over 20 years of industry experience, is focused on expanding Presstek’sglobal presence in the growing digital color printing market. Ms. McHugh joinedKodak in 1984, and most recently served as Vice President and Regional BusinessManager of Kodak’s U.S. and Canadian Prepress Solutions. Previously, Ms. McHughserved as Kodak’s Vice President, Global Marketing, Prepress Solutions. From1998 to 2005, Ms. McHugh held high level strategic and marketing roles in KodakPolychrome Graphics, a joint venture between Kodak and Sun Chemicalcompanies.

Wayne LParker was appointed Vice President, Corporate Controller and ChiefAccounting Officer of the Company in April, 2008. Mr. Parker is a CPA withextensive financial experience, including compliance and audit, in majororganizations across several industries. Mr. Parker joined Presstek in May, 2007as Director of Internal Audit. Prior to joining Presstek, Mr. Parker served asDirector, Sarbanes-Oxley Compliance at Kodak Company’s Graphics CommunicationsGroup; and Director of Internal Audit at Kodak PolychromeGraphics.

James R. VanHorn was appointed Vice President and General Counsel of the Company inOctober 2007 and Secretary in December 2007. From January 2007 until October2007 he served as a consultant to Sun-Times Media Group, Inc. From March 2004 toJanuary 2007 he served as Vice President, General Counsel and Secretary ofSun-Times Media Group, Inc. Prior thereto he served as Chief AdministrativeOfficer, General Counsel and Secretary of NUICorporation. 

  

----

  

AuditCommittee

The information in the Proxy Statement under the caption “AuditCommittee” is incorporated herein by reference.

ComplianceWith Section 16(A) of the Exchange Act

The information in the Proxy Statement under the caption “Section16(a) Beneficial Ownership Reporting Compliance” is incorporated herein byreference.

Code ofEthics

The policies comprising the Company’s code of ethics are set forth inthe Company’s Code of Business Conduct and Ethics. These policies containprovisions satisfying all the elements of the SEC’s requirements for a “code ofethics,” and apply to all directors, officers and employees, as well as thedirectors, officers and employees of the Company and its subsidiaries. The Codeof Business Conduct and Ethics can be found on the Company’s website at www.presstek.com/about-investor-code.htm.The Company will disclose any amendments to the Code of Business Conduct andEthics with regard to the provisions of the Code required by SEC requirements,or any waivers from such provisions provided to any of the Company’s principalexecutive, financial or accounting officers or controller (or persons performingsimilar functions), on that website or in a report on Form 8-K.

Item 11. ExecutiveCompensation.

Item 12. SecurityOwnership of Certain Beneficial Owners and Management and Related StockholderMatters.

Item 13. CertainRelationships and Related Transactions, and DirectorIndependence.

----

Item 14. PrincipalAccountant Fees and Services.

PART IV

Item 15. Exhibitsand Financial Statement Schedules

----

SIGNATURES

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

|        /s/ Jeffrey Jacobson         |                                                      |                |
|------------------------------------------|-----------------------------------------------------------|---------------------|
| Jeffrey      Jacobson                    | Chairman,      President and Chief Executive Officer      | March      24, 2010 |
|                                     | (Principal      Executive Officer)                        |                |
|                                     |                                                      |                |
|        /s/ Jeffrey A. Cook          |                                                      |                |
| Jeffrey      A. Cook                     | Executive      Vice President and Chief Financial Officer | March      24, 2010 |
|                                     | (Principal      Financial Officer) and Director           |                |
|                                     |                                                      |                |
|        /s/ Wayne L. Parker          |                                                      |                |
| Wayne      L. Parker                     | Vice      President – Corporate Controller          | March      24, 2010 |
|                                     | (Principal      Accounting Officer)                       |                |
|                                     |                                                      |                |
|        /s/ Edward E. Barr           |                                                      |                |
| Edward      E. Barr                      |  Lead      Director                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|        /s/ Daniel S. Ebenstein, Esq |                                                      |                |
| Daniel      S. Ebenstein, Esq.           | Director                                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|        /s/ Stanley E. Freimuth      |                                                      |                |
| Stanley      E. Freimuth                 | Director                                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|        /s/ Dr. Lawrence Howard      |                                                      |                |
| Dr.      Lawrence Howard                 | Director                                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|        /s/ Steven N. Rappaport      |                                                      |                |
| Steven      N. Rappaport                 | Director                                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|        /s/ Donald C. Waite, III     |                                                      |                |
| Donald      C. Waite, III                | Director                                                  | March      24, 2010 |
|                                     |                                                      |                |
|                                     |                                                      |                |
|                                     |                                                      |                |

----

| 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.   |

----

|        ExhibitNumber |         Description                                                                                                                                          |   |         Reference                                                                                                                           |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                                   |   |                                                                                                                                                  |
| 10.7***                   | Employment      Agreement by and between Presstek, Inc. and Jeffrey Cook dated February      27, 2007.                                                                 |   | Incorporated      by reference to Exhibit 10(u) to the Company’s Annual Report on Form 10-K      for the fiscal year ended December 30, 2007.   |
| 10.8***                   | 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***                   | Employment      Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated May 10,      2007.                                                                  |   | Incorporated      by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form      10-Q for the quarter ended March 31, 2007.        |
|                      | (i) Amendment to Employment Agreement by and      between Presstek, Inc. and Jeffrey Jacobson dated May 13,      2009.                                                 |   | Filed      with this report.                                                                                                                          |
|                      | (ii) Amendment to Employment Agreement by and      between Presstek, Inc. and Jeffrey Jacobson dated November 23,      2009.                                           |   | Filed      with this report                                                                                                                           |
| 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 end 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.                                                                       |   | Filed      with this report                                                                                                                           |
| 10.14                     | 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                        |
| 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. |
|--------|--------------------------------------------------------------------|

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