**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

| R      | **ANNUAL                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934**     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                      |
|   | **For                the fiscal year ended December 30, 2006**                                                                            |
| **or** |
| £ | **TRANSITION                REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|   |                                                                                                                                      |
|   | **For                the transition period from                to**                                                                       |

**_____________________________**

**Commission      File No. 0-17541**

**PRESSTEK,      INC.**

*(Exact      name of registrant as specified in its charter)*

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

**55      Executive Drive, Hudson, New Hampshire 03051-4903**

**(603)      595-7000**

| **Title                of each class**                 |   | **Name                of each exchange on which registered** |
|--------------------------------------------------------|--------|--------------------------------------------------------------|
| Common                stock, par value $0.01 per share |   | The                NASDAQ Global Market                      |

**None**

**Documents      Incorporated by Reference**

----

**PRESSTEK,      INC.**

**ANNUAL      REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 30,      2006**

|                    |   |                                                                                                                                             | PAGE   |
|-------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| PART                1   |   |                                                                                                                                             |   |
| Item                    |   |                                                                                                                                             |   |
| 1.                      |   | Business                                                                                                                                         | 3      |
| 1A.                     |   | Risk                Factors                                                                                                                      | 19     |
| 1B.                     |   | Unresolved                Staff Comments                                                                                                         | 31     |
| 2.                      |   | Properties                                                                                                                                       | 32     |
| 3.                      |   | Legal                Proceedings                                                                                                                 | 33     |
| 4.                      |   | Submission                of Matters to a Vote of Security Holders                                                                               | 34     |
|                    |   |                                                                                                                                             |   |
| PART                II  |   |                                                                                                                                             |   |
| Item                    |   |                                                                                                                                             |   |
| 5.                      |   | Market                for Registrant’s Common Equity, Related Stockholder Matters and Issuer                Purchases of Equity Securities | 35     |
| 6.                      |   | Selected                Financial Data                                                                                                           | 36     |
| 7.                      |   | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                        | 38     |
| 7A.                     |   | Quantitative                and Qualitative Disclosures About Market Risk                                                                        | 56     |
| 8.                      |   | Financial                Statements and Supplementary Data                                                                                       | 58     |
| 9.                      |   | Changes                in and Disagreements With Accountants on Accounting and Financial                Disclosure                               | 99     |
| 9A.                     |   | Controls                and Procedures                                                                                                           | 99     |
| 9B.                     |   | Other                Information                                                                                                                 | 104    |
|                    |   |                                                                                                                                             |   |
| PART                III |   |                                                                                                                                             |   |
| Item                    |   |                                                                                                                                             |   |
| 10.                     |   | Directors,                Executive Officers and Corporate Governance                                                                            | 104    |
| 11.                     |   | Executive                Compensation                                                                                                            | 104    |
| 12.                     |   | Security                Ownership of Certain Beneficial Owners and Management and Related                Stockholder Matters                     | 104    |
| 13.                     |   | Certain                Relationships and Related Transactions, and Director                Independence                                          | 104    |
| 14.                     |   | Principal                Accounting Fees and Services                                                                                            | 104    |
|                    |   |                                                                                                                                             |   |
| PART                IV  |   |                                                                                                                                             |   |
| Item                    |   |                                                                                                                                             |   |
| 15.                     |   | Exhibits                and Financial Statement Schedules                                                                                        | 105    |
|                    |   |                                                                                                                                             |   |
|                    |   |                                                                                                                                             |   |

----

**PART      I**

**Item      1. **
***Business      Overview***

**General**

| ·   | provide                advanced digital offset printing solutions through the development                and                manufacture of digital laser imaging equipment and advanced technology                chemistry-free printing plates, which we call consumables, targeting                the                growing market for high quality, fast turnaround color                printing; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | are                a leading sales and services company delivering Presstek digital                solutions                and solutions from other manufacturing partners through our direct                sales                and service force and through distribution partners                worldwide; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | manufacture                semiconductor solid state laser diodes for Presstek imaging applications                and for use by external applications;                and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | distribute                printing plates for conventional print applications through original                equipment manufacturing (OEM) and private-labeling                relationships. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Background**

**We      are Innovators**

| ·   | invented                on-press Direct Imaging technology; |
|--------------------|-------------------------------------------------------------|

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

| ·   | through                our many innovations, have significantly streamlined the print production                workflow; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | have                implemented workflows that transition printing from a skilled craft                to a                manufacturing process; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | continue                to innovate with our recent announcement of the Presstek 52DI, a                highly-automated landscape format DI press that offers a larger sheet                size                for higher production environments. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Primary      Market and Its Changing Requirements**

**Providing      Solutions for New Market Requirements **

**Solutions      that Benefit the Target Market**

**Providing      Migration Path for Adopting Digital Solutions**

**Manufacturing**

----

**Service      and Support**

**Go-to-Market      Strategy**

| ·   | in                the United States., Canada we use a mix of direct sales and service                as                well as a network of graphic arts                dealers; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | in                the United Kingdom we use our direct sales and service                operation; |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | in                continental Europe and worldwide; we have developed a network of                graphic                art dealers and; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | we                use OEMs to deliver our products to markets                worldwide. |
|--------------------|-----------------------------------------------------------------------------------------|

**ABDick      **

**Precision**

----

*www.presstek.com*

**Business      Overview**

**Strategic      Transformation Activity**

***Acquisition      of Customer Base***

***Increased      Control Over Delivery***

*North      America and UK*

*Europe*

----

*Rest      of World*

***Expanded      Product Line***

**Lasertel**

**Our      Business Segments**

----

**The      Presstek Segment**

**The      Lasertel Segment**

**Strategy**

----

*Our      primary focus is on the growth of our consumables product.*

*We      focus on select market segments.*

| a.   | Commercial                printers that need to adjust their production capacity, level of                productivity and output quality while improving profitability have                demonstrated success with our digital products. These printers are                often                acquiring their first four-color press. 2005 research from InfoTrends                indicates that there are approximately 24,000 print establishments                in the                United States that fall within this                category. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Digital                printers and copy shops, facilities that operate toner-based digital                copier equipment, are acquiring DI presses as complementary devices.                They                are using DI presses for applications that require run lengths greater                than 250 copies. The DI press offers a lower production cost with                a higher                level of quality and the ability to print on a wider range of substrates.                2005 research from InfoTrends indicates that there are approximately                6,500                print establishments in the United States that fall within this                category. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | In-plant                print shops that operate within corporations, colleges and universities                and government agencies are attracted to the ease-of-use, compact                footprint and environmentally responsible nature of our solutions.                2005                research from InfoTrends indicates that there are approximately 10,000                in-plant establishments in the United                States. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Because      we compete on the basis of technology and innovation, we deliver differentiated      solutions.*

----

| *4.  * | *We                provide solutions that meet the growth demand for short-run, fast                turnaround high-quality color                printing.* |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

*We      provide environmentally responsible solutions through our application of      technology.*

**Technology      and Products**

**Direct      Imaging Technology**

----

*FirePower      laser diode system*
*integrated      motion system *
*FireStation      digital controller and data server*

***Presstek      34DI and 52DI***

**CTP      Products**

***Dimension      Excel***

***Dimension800***

----

***Vector      TX52***

***The      Digital PlateMaster***

**Printing      Plates**

***General      Background***

***DI***

***ProFire      Digital Media***

----

***PearlDry      Plus***

***PearlDry***

***CTP***

***Anthem      Pro***

***Freedom***

***Applause***

***Aurora***

**Lasertel      Diode Products**

----

**Manufacturing**

**Marketing,      Distribution and Customer Support**

----

| ·   | for                the sourcing of our raw materials, including aluminum and rolled                polyester, which serve as the base of our                plates |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for                the purpose of purchasing certain plate material that are imaged                in some                of our CTP solutions and in conventional printing applications. The                companies are Kodak, Mitsubishi Imaging (MPM), Inc., which we call                Mitsubishi, and Agfa-Gevaert N.V., who we call                Agfa |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | for                the distribution of our proprietary plates and equipment with other                entities within the graphic arts                industry |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Competition**

----

----

**Patents,      Trademarks and Proprietary Rights**

**Research      and Development**

**Backlog**

----

**Employees**

**Investor      Information**

*www.presstek.com*

**Glossary**

| A1                (8-page)             | a                printing term referring to a standard paper size capable of printing                eight                8.5” x 11” pages on a sheet of paper                                                       |
|----------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |                                                                                                                                                                                                                             |
| A2                (4-page)             | 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                (2-page)          | 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         |
|                                   |                                                                                                                                                                                                                             |
| Anthem                Pro              | Presstek’s                line of wet offset digital plates with a unique polymer-ceramic                construction                                                                                                      |
|                                   |                                                                                                                                                                                                                             |
| Computer-to-plate                (CTP) | a                general term referring to the exposure of lithographic plate material                from                a digital database, off-press                                                                          |
|                                   |                                                                                                                                                                                                                             |
| Creo,                Inc.              | A                company acquired by Kodak                                                                                                                                                                                       |
|                                   |                                                                                                                                                                                                                             |
| Direct                Imaging (DI)     | Presstek’s                registered trademark for digital imaging systems that allow image                carriers                (film and plates) to be imaged from a digital database, on and                off-press |
|                                   |                                                                                                                                                                                                                             |
| Dots                per inch (dpi)     | a                measurement of the resolving power or the addressability of an imaging                device                                                                                                                    |
|                                   |                                                                                                                                                                                                                             |
| Heidelberg                             | Heidelberger                Druckmaschinen AG, one of the world’s largest printing press                manufacturers, headquartered in Heidelberg, Germany                                                                |
|                                   |                                                                                                                                                                                                                             |
| Infrared                               | light                lying outside of the visible spectrum beyond its red-end, characterized                by                longer wavelengths; used in our thermal imaging process                                            |
|                                   |                                                                                                                                                                                                                             |
| KBA                                    | Koenig                & Bauer, AG, one of the world’s largest printing press manufacturers,                headquartered in Wurzburg, Germany                                                                          |
|                                   |                                                                                                                                                                                                                             |
| Kodak                                  | Eastman                Kodak Company, a leading supplier of digital, conventional and business                solutions for the graphic arts industry, headquartered in Rochester,                New                York        |

----

|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Dimension                                                              | Presstek’s                product line of CTP off-press platemaking equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 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                                                                                                                                                                                                                                                                                                                                    |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Quickmaster                DI                                          | the                second generation of direct imaging, waterless presses, highly automated                with roll-fed PearlDry Plus plate material, a joint development effort                between Heidelberg and Presstek                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Ryobi                                                                  | Ryobi                Limited of Japan, a printing press manufacturer headquartered in                Japan                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Ryobi                3404DI                                            | an                A3 format size four-color sheetfed press, incorporating Presstek’s dual                plate cylinder concept and PearlDry Plus spooled plates, a joint                development effort between Ryobi and Presstek                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Semiconductor                laser diode                               | a                high-powered, infrared imaging technology employed in the DI imaging                systems                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Short-run                markets/printing                              | a                graphic arts classification used to denote an emerging growth market                for                lower print quantities. InfoTrends, Inc. has examined the market                to better                understand which run lengths are increasing and which are decreasing.                The                findings: run lengths above 10,000 sheets are clearly in decline.                Run                lengths between 5,000 and 9,999 are essentially stable with a slight                increase. Run lengths below 5,000 show significant increases, especially                in the range of 500 - 999 sheets. |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Thermal                                                                | a                method of digitally exposing a material via the heat generated from                a                laser beam                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Vacuum                deposition process                               | a                technology to accurately, uniformly coat substrates in a controlled                environment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Waterless                                                              | a                lithographic printing method that uses dry offset printing plates                and inks                and does not require a dampening                system                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

**Item      1A.**
***Risk Factors***

----

| ·   | our                expectations for our financial and operating performance in 2007                and                beyond; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

| ·   | the                adequacy of internal cash and working capital for our                operations; |
|--------------------|-----------------------------------------------------------------------------------------------------|

| ·   | our                ability to supply sufficient product for anticipated demand and production                delays associated with such demand; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | availability                of component materials; |
|--------------------|-----------------------------------------------------|

| ·   | management’s                plans and goals with regard to our shipping and production capabilities,                including the adequacy of our facilities for present and expected                future                operations; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                availability of alternative suppliers and                manufacturers; |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | manufacturing                constraints or difficulties; |
|--------------------|-----------------------------------------------------------|

| ·   | the                introduction of competitive products into the                marketplace; |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | management’s                plans and goals for our                subsidiaries; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | the                ability of our subsidiaries to generate positive cash flows in the                near-term; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | our                subsidiaries’ ability to produce commercially competitive                products; |
|--------------------|-------------------------------------------------------------------------------------------------------------|

| ·   | the                strength of our various strategic partnerships both on manufacturing                and                distribution; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                ability to secure other strategic alliances and                relationships; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | our                expectations regarding our strategy for growth, including statements                regarding our expectations for continued product mix                improvement; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                expectations regarding the balance, independence and control of our                business; |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | the                resulting and expected effects and benefits from our transformation                efforts; |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | our                expectations regarding the strength and improvement of our fundamentals,                including management of our financial                controls; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | our                expectations and plans regarding market penetration, including the                strength and scope of our distribution channels and our expectations                regarding sales of DI presses or CTP                devices; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                expansion of our products and                technology; |
|--------------------|-----------------------------------------------------------------------------|

| ·   | the                status of our technology leadership in our                market/industry; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | the                commercialization and marketing of our                technology; |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | our                expectations regarding the sale of our products and use of our                technology; |
|--------------------|--------------------------------------------------------------------------------------------------------------|

| ·   | our                current plans for product development and the expected market acceptance                of recently introduced products and the likely acceptance of planned                future products; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                expected growth in market share; |
|--------------------|-----------------------------------------------------|

----

| ·   | the                effects, market acceptance or pricing of competitive products, including                the possibility of a competitive plate product being introduced by                a                strategic partner; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                placement of orders for direct imaging                kits; |
|--------------------|--------------------------------------------------------------------------------|

| ·   | our                expectations regarding reductions in warranty                costs; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | statements                regarding the profitability of process-free                CTP; |
|--------------------|-------------------------------------------------------------------------------------------|

| ·   | the                adequacy of our intellectual property protections and our ability                to                protect and enforce our intellectual property rights;                and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the                expected effect of adopting recently issued accounting standards,                among                others. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

***We      are substantially dependent on our strategic alliances, as well as our      manufacturing and distribution relationships to develop and grow our business.      The loss or failure of one or more of our strategic partners could significantly      harm our business.***

----

***The      move to a direct-sales and distribution business may affect our relationship      with our third-party distribution and service partners, which may negatively      impact our sales and distribution channels.***

***If      we are unable to manage acquisitions successfully it could harm our financial      results, business and prospects.***

| ·   | The                integration process could disrupt the activities of the businesses                that                are being combined. The combination of the businesses or plants may                require, among other things, coordination of administrative and other                functions and consolidation of production capacity. Plant consolidation                may strain our ability to deliver products of acceptable quality                in a                timely manner from consolidated facilities. We may experience attrition                among the skilled labor force at the companies acquired in reaction                to                being acquired and in reaction to our consolidation of                plants. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                execution of our integration plans may divert the attention of our                management from operating our existing                business. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We                may assume known and unanticipated liabilities and                contingencies. |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Future                acquisitions could cause a reduction of our reported earnings because                of                the use of capital, the issuance of additional securities or debt,                increased interest expense, goodwill write-offs and an increased                income                tax rate. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Our      lengthy and variable sales cycle makes it difficult for us to predict when      or if      sales will occur and therefore we may experience an unplanned shortfall in      revenues.***

***We      may not be able to increase revenues if we do not expand our sales and      distribution channels.***

***Our      growth strategy may include licenses or acquisitions of technologies or      businesses, which entail a number of risks.***

----

***We      face risks associated with our efforts to expand into international market      and      such risks could result in diversion of our management’s attention from our      existing business and/or cause us to incur additional expected and unexpected      costs associated with penetrating, operating in and servicing such markets,      any      of which could have a material adverse effect on our financial condition and      results of operations.***

***We      have experienced losses in the past, could incur substantial losses in the      future, and may not be able to maintain      profitability.***

***Our      quarterly revenues and operating results are likely to fluctuate      significantly.***

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

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

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

***We      are dependent on third party suppliers for critical components and our inability      to maintain an adequate supply of advanced laser diodes and other critical      components could adversely affect us.***

----

***Our      manufacturing capabilities may be insufficient to meet the demand for our      products.***

***Recently      introduced products that incorporate our technology may not be commercially      successful and may not gain market acceptance.***

***Recently      introduced products that incorporate our technology may result in substantial      support costs and warranty expenditures.***

----

***If      the United States and global economies slow down, the demand for our products      could decrease and our revenue may be materially adversely      affected.***

***As      of December 30, 2006, we identified a material weakness in internal control      over      financial reporting, and concluded that our disclosure controls were not      effective. If we fail to maintain an effective system of internal and disclosure      controls, we may not be able to accurately report our financial results or      prevent fraud. As a result, investors may be misled and lose confidence in      our      financial reporting and disclosures, and the price of our common stock may      be      negatively affected.***

***The      expansion of Lasertel into areas other than the production of laser diodes      for      our printing business may be unsuccessful.***

----

***Lasertel      may require additional working capital infusions from us, which may have a      material adverse effect on our business.***

***Our      success is dependent on our ability to maintain and protect our proprietary      rights.***

----

***We      use hazardous materials in the production of many of our products at our various      manufacturing facilities.***

----

***We      face substantial competition in the sale of our      products.***

***We      may not be able to adequately respond to changes in technology affecting the      printing industry.***

| ·   | use                leading technologies effectively; |
|--------------------|------------------------------------------------------|

| ·   | continue                to develop our technical expertise and patented                position; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | enhance                our current products and develop new products that meet changing                customer                needs; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | time                new product introductions in a way that minimizes the impact of customers                delaying purchases of existing products in anticipation of new product                releases; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | adjust                the prices of our existing products to increase customer                demand; |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | successfully                advertise and market our products; and |
|--------------------|--------------------------------------------------------------------|

----

| ·   | influence                and respond to emerging industry standards and other technological                changes. |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

***Ongoing      litigation could have an adverse impact on our      business.***

***The      loss or unavailability of our key personnel would have a material adverse effect      on our business.***

***Our      stock price has been and could continue to be extremely      volatile.***

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

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

| ·   | changes                in national or regional economic conditions; |
|--------------------|---------------------------------------------------------------------|

----

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

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

**Item      1B. Unresolved Staff Comments**

----

**Item      2. **
***Properties***

|  Location                                             |   |  Functions                                                                                                                                                                        |   | Square                footage (approximate) |   | Ownership                status/lease                expiration                                         |
|------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Hudson,                New Hampshire                       |   | Corporate                headquarters, manufacturing, research and development, marketing,                demonstration activities, administrative and customer                support |   | 165,000                                     |   | Owned                                                                                                   |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| South                Hadley, Massachusetts (two buildings) |   | Manufacturing,                research and development, administrative support                                                                                                         |   | 100,000                                     |   | Owned                                                                                                   |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Tucson,                Arizona                             |   | Manufacturing,                research and development, administrative supports                                                                                                        |   | 75,000                                      |   | Owned                                                                                                   |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Des                Plaines, Illinois                       |   | Distribution                center                                                                                                                                                     |   | 127,000                                     |   | Lease                expires in February 2008                                                           |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Des                Plaines, Illinois                       |   | Sales,                service                                                                                                                                                          |   | 10,000                                      |   | Lease                expires in October 2007                                                            |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Fresno,                California                          |   | Distribution                center                                                                                                                                                     |   | 13,000                                      |   | Lease                expires in July 2007                                                               |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Harrisburg,                Pennsylvania                    |   | Distribution                center                                                                                                                                                     |   | 15,000                                      |   | Lease                expires in June 2007                                                               |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Mississauga,                Ontario                        |   | Sales,                service                                                                                                                                                          |   | 28,000                                      |   | Lease                expires in March 2010                                                              |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Vancouver,                British Columbia                 |   | Sales,                service                                                                                                                                                          |   | 10,500                                      |   | Lease                expires in December 2007                                                           |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |
| Heathrow,                United Kingdom                    |   | European                headquarters, sales, service                                                                                                                                   |   | 20,000                                      |   | Lease                expires in November 2020, with an option to cancel in November                2010 |
|                                                       |   |                                                                                                                                                                                   |   |                                        |   |                                                                                                    |

----

**Item      3. **
***Legal      Proceedings***

----

**Item      4. **
***Submission      of Matters to a Vote of Security Holders***

----

**PART      II**

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

|                                               | High                   |   | Low                    |
|----------------------------------------------------|------------------------|--------|------------------------|
| Fiscal                year ended December 30, 2006 |                   |   |                   |
| First                quarter                       | $                12.72 |   | $                8.90  |
| Second                quarter                      | $                12.05 |   | $                8.93  |
| Third                quarter                       | $                10.62 |   | $                4.83  |
| Fourth                quarter                      | $                6.89  |   | $                5.09  |
|                                               |                   |   |                   |
| Fiscal                year ended December 31, 2005 |                   |   |                   |
| First                quarter                       | $                10.75 |   | $                7.27  |
| Second                quarter                      | $                11.75 |   | $                7.05  |
| Third                quarter                       | $                13.74 |   | $                11.14 |
| Fourth                quarter                      | $                13.20 |   | $                8.73  |

**Dividend      Policy**

----

**Performance      Graph**

**Item      6. **
***Selected      Financial Data***

----

| (in                  thousands, except per-share data)                                                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |   |   | Fiscal                  year ended |
|                                                                                                                                                                                      |   |   | December                  30,  |   |   | December                  31, |   |   | January                  1, |   |   | January                  3, |   |   | December                  28, |   |
|                                                                                                                                                                                      |   |   | 2006 |   |   | 2005 |   |   | 2005                  (1) |   |   | 2004                  (2) |   |   | 2002                  (3) |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                                                                                                                   |   | $ | 265,694 |   | $ | 259,134 |   | $ | 121,453 |   | $ | 87,232 |   | $ | 83,453 |   |
| Cost                  of revenue                                                                                                                                                          |   |   | 186,716 |   |   | 176,814 |   |   | 78,180 |   |   | 51,151 |   |   | 54,639 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit                                                                                                                                                             |   |   | 78,978 |   |   | 82,320 |   |   | 43,273 |   |   | 36,081 |   |   | 28,814 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research                  and development                                                                                                                                                 |   |   | 6,409 |   |   | 7,335 |   |   | 6,460 |   |   | 7,061 |   |   | 9,303 |   |
| Sales,                  marketing and customer support                                                                                                                                    |   |   | 39,970 |   |   | 40,241 |   |   | 17,574 |   |   | 12,272 |   |   | 10,767 |   |
| General                  and administrative                                                                                                                                               |   |   | 19,938 |   |   | 20,970 |   |   | 12,399 |   |   | 8,399 |   |   | 9,345 |   |
| Amortization                  of intangible assets                                                                                                                                        |   |   | 2,980 |   |   | 2,595 |   |   | 1,261 |   |   | 964 |   |   | 867 |   |
| Restructuring                  and special charges (credits)                                                                                                                              |   |   | 5,481 |   |   | 874 |   |   | (392 | ) |   | 550 |   |   | 5,961 |   |
| Total                  operating expenses                                                                                                                                                 |   |   | 74,778 |   |   | 72,015 |   |   | 37,302 |   |   | 29,246 |   |   | 36,243 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  income                                                                                                                                                         |   |   | 4,200 |   |   | 10,305 |   |   | 5,971 |   |   | 6,835 |   |   | (7,429 | ) |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other                  income (expense), net                                                                                                                                              |   |   | (1,826 | ) |   | (2,220 | ) |   | (870 | ) |   | (167 | ) |   | (851 | ) |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| before                  income taxes                                                                                                                                                      |   |   | 2,374 |   |   | 8,085 |   |   | 5,101 |   |   | 6,668 |   |   | (8,280 | ) |
| Provision                  (benefit) for income taxes                                                                                                                                     |   |   | (10,643 | ) |   | 1,164 |   |   | 166 |   |   | - |   |   | - |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations                                                                                                                                 |   |   | 13,017 |   |   | 6,921 |   |   | 4,935 |   |   | 6,668 |   |   | (8,280 | ) |
| Income                  (loss) from discontinued operations, net of income tax                                                                                                            |   |   | (3,273 | ) |   | (835 | ) |   | (1,070 | ) |   | 1,429 |   |   | - |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                                                                                                                                                        |   | $ | 9,744 |   | $ | 6,086 |   | $ | 3,865 |   | $ | 8,097 |   | $ | (8,280 | ) |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) per share - basic                                                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations                                                                                                                                 |   | $ | 0.36 |   | $ | 0.20 |   | $ | 0.14 |   | $ | 0.20 |   | $ | (0.24 | ) |
| Income                  (loss) from discontinued operations                                                                                                                               |   |   | (0.09 | ) |   | (0.03 | ) |   | (0.03 | ) |   | 0.04 |   |   | - |   |
|                                                                                                                                                                                      |   | $ | 0.27 |   | $ | 0.17 |   | $ | 0.11 |   | $ | 0.24 |   | $ | (0.24 | ) |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  (loss) per share - diluted                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                  (loss) from continuing operations                                                                                                                                 |   | $ | 0.36 |   | $ | 0.19 |   | $ | 0.14 |   | $ | 0.20 |   | $ | (0.24 | ) |
| Income                  (loss) from discontinued operations                                                                                                                               |   |   | (0.09 | ) |   | (0.02 | ) |   | (0.03 | ) |   | 0.04 |   |   | - |   |
|                                                                                                                                                                                      |   | $ | 0.27 |   | $ | 0.17 |   | $ | 0.11 |   | $ | 0.24 |   | $ | (0.24 | ) |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                                                                                                                                     |   |   | 35,565 |   |   | 35,153 |   |   | 34,558 |   |   | 34,167 |   |   | 34,124 |   |
| Diluted                                                                                                                                                                                   |   |   | 35,856 |   |   | 35,572 |   |   | 35,357 |   |   | 34,400 |   |   | 34,124 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   | As                  of |
|                                                                                                                                                                                      |   |   | December                  30,  |   |   | December                  31, |   |   | January                  1, |   |   | January                  3, |   |   | December                  28, |   |
|                                                                                                                                                                                      |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |   | 2004 |   |   | 2002 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Working                  capital                                                                                                                                                          |   | $ | 47,498 |   | $ | 41,392 |   | $ | 41,117 |   | $ | 42,512 |   | $ | 28,572 |   |
| Total                  assets                                                                                                                                                             |   | $ | 198,014 |   | $ | 181,487 |   | $ | 171,318 |   | $ | 106,528 |   | $ | 101,796 |   |
| Total                  debt and capital lease obligations                                                                                                                                 |   | $ | 37,572 |   | $ | 35,643 |   | $ | 41,822 |   | $ | 14,464 |   | $ | 16,707 |   |
| Stockholders'                  equity                                                                                                                                                     |   | $ | 111,237 |   | $ | 98,633 |   | $ | 89,402 |   | $ | 80,183 |   | $ | 71,766 |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)                  Amounts include results of operations of ABD International, Inc.                  (which                  acquired certain assets and assumed certain liabilities of |
| The                  A.B. Dick Company on November 5, 2004) and Precision Lithograining                  Corp.                  (acquired July 30, 2004) for the periods subsequent       |
| to                  their respective acquisitions.                                                                                                                                        |
| (2)                  The income from discontinued operations amount relates to the operations                  of Delta V Technologies, Inc., which were shut down                        |
| in                  fiscal 1999.                                                                                                                                                          |
| (3)                  The cost of revenue amount reported for the fiscal year ended December                  28,                  2002 includes $3.7 million of inventory writedowns and  |
| other                  charges related to discontinued programs.                                                                                                                          |   |

----

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

**Overview**

| ·   | provide                advanced print solutions through the development and manufacture                of                digital laser imaging equipment and advanced technology chemistry-free                printing plates, which we call consumables, for commercial and in-plant                print providers targeting the growing market for high quality, fast                turnaround short-run color                printing; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | are                a leading sales and services company delivering Presstek digital                solutions                and solutions from other manufacturing partners through our direct                sales                and service force and through distribution partners                worldwide; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | manufacture                semiconductor solid state laser diodes for Presstek imaging applications                and for use in external applications;                and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | distribute                printing plates for conventional print                applications. |
|--------------------|-----------------------------------------------------------------------------------------------|

----

----

**RESULTS      OF OPERATIONS**

|                                                                 |   | Fiscal                year ended   |    |
|----------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                 |   | December                30, 2006 1 |    | December                31, 20051 |   | January                1, 20051 |   |
|                                                                 |   |                               |    | %                ofrevenue |   |   |   | %                ofrevenue |   |   |   | %                ofrevenue |   |
| Revenue                                                              |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                                              |   | $                                  | 220,724 |   |   | 83.1 |   | $ | 210,613 |   |   | 81.3 |   | $ | 108,390 |   |   | 89.2 |   |
| Service                and parts                                     |   |                               | 44,970  |   |   | 16.9 |   |   | 48,521 |   |   | 18.7 |   |   | 13,063 |   |   | 10.8 |   |
| Total                revenue                                         |   |                               | 265,694 |   |   | 100.0 |   |   | 259,134 |   |   | 100.0 |   |   | 121,453 |   |   | 100.0 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                of revenue                                       |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                                              |   |                               | 154,250 |   |   | 58.1 |   |   | 143,952 |   |   | 55.5 |   |   | 69,045 |   |   | 56.9 |   |
| Service                and parts                                     |   |                               | 32,466  |   |   | 12.2 |   |   | 32,862 |   |   | 12.7 |   |   | 9,135 |   |   | 7.5 |   |
| Total                cost of revenue                                 |   |                               | 186,716 |   |   | 70.3 |   |   | 176,814 |   |   | 68.2 |   |   | 78,180 |   |   | 64.4 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                profit                                          |   |                               | 78,978  |   |   | 29.7 |   |   | 82,320 |   |   | 31.8 |   |   | 43,273 |   |   | 35.6 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses                                    |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research                and development                              |   |                               | 6,409   |   |   | 2.4 |   |   | 7,335 |   |   | 2.8 |   |   | 6,460 |   |   | 5.3 |   |
| Sales,                marketing and customer support                 |   |                               | 39,970  |   |   | 15.0 |   |   | 40,241 |   |   | 15.6 |   |   | 17,574 |   |   | 14.5 |   |
| General                and administrative                            |   |                               | 19,938  |   |   | 7.5 |   |   | 20,970 |   |   | 8.1 |   |   | 12,399 |   |   | 10.2 |   |
| Amortization                of intangible assets                     |   |                               | 2,980   |   |   | 1.1 |   |   | 2,595 |   |   | 1.0 |   |   | 1,261 |   |   | 1.0 |   |
| Restructuring                and other charges (credits)             |   |                               | 5,481   |   |   | 2.1 |   |   | 874 |   |   | 0.3 |   |   | (392 | ) |   | (0.3 | ) |
| Total                operating expenses                              |   |                               | 74,778  |   |   | 28.1 |   |   | 72,015 |   |   | 27.8 |   |   | 37,302 |   |   | 30.7 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                                      |   |                               | 4,200   |   |   | 1.6 |   |   | 10,305 |   |   | 4.0 |   |   | 5,971 |   |   | 4.9 |   |
| Interest                and other expense, net                       |   |                               | (1,826  | ) |   | (0.7 | ) |   | (2,220 | ) |   | (0.9 | ) |   | (870 | ) |   | (0.7 | ) |
| Income                from continuing operations before income taxes |   |                               | 2,374   |   |   | 0.9 |   |   | 8,085 |   |   | 3.1 |   |   | 5,101 |   |   | 4.2 |   |
| Provision                (benefit) for income taxes                  |   |                               | (10,643 | ) |   | (4.0 | ) |   | 1,164 |   |   | 0.4 |   |   | 166 |   |   | 0.1 |   |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                from continuing operations                     |   |                               | 13,017  |   |   | 4.9 |   |   | 6,921 |   |   | 2.7 |   |   | 4,935 |   |   | 4.1 |   |
| Loss                from discontinued operations                     |   |                               | (3,273  | ) |   | (1.2 | ) |   | (835 | ) |   | (0.3 | ) |   | (1,070 | ) |   | (0.9 | ) |
|                                                                 |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                            |   | $                                  | 9,744   |   |   | 3.7 |   | $ | 6,086 |   |   | 2.4 |   | $ | 3,865 |   |   | 3.2 |   |

----

**Fiscal      2006 Compared to Fiscal 2005**

***Revenue***

----

***Cost      of Revenue***

***Gross      Margin***

***Research      and Development***

***Sales,      Marketing and Customer Support***

----

***General      and Administrative***

***Amortization      of Intangible Assets***

***Restructuring      and Other Charges (Credits)***

----

***Interest      and Other Income (Expense), Net***

***Provision      (Benefit) for Income Taxes***

*“Accounting      for Income Taxes”*

**Fiscal      2005 Compared to Fiscal 2004 **

***Revenue***

----

*Presstek      Segment*

*Lasertel      Segment*

***Cost      of Revenue***

----

***Consolidated      Gross Margin***

***Research      and Development***

***Sales,      Marketing and Customer Support***

----

***General      and Administrative***

***Amortization      of Intangible Assets***

***Restructuring      and Other Charges/Credits***

***Interest      and Other Income/Expense, Net***

----

***Provision      for Income Taxes***

**Discontinued      Operations**

*Accounting      for Impairment or Disposal of Long-Lived Assets,*

|                                                                                                                                                        | December                30, 2006 | December                31, 2005 | January                1, 2005 |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------|----------------------------------|--------------------------------|
| Revenue                                                                                                                                                     | $                10,816          | $                15,006          | $                8,398         |
| Loss                before income taxes                                                                                                                     | (2,267)                          | (825)                            | (1,036)                        |
| Provision                (benefit) for income taxes                                                                                                         | (771)                            | 10                               | 34                             |
| Loss                from discontinued operations                                                                                                            | (1,496)                          | (835)                            | (1,070)                        |
| Loss                from disposal of discontinued operations, net of tax benefit of $915                for                the year ended December 30, 2006 |  (1,777)                    |  --                         |  --                       |
| Net                loss from discontinued operations                                                                                                        | $                (3,273)         |  $                (835)     | $                (1,070)       |
| Loss                per diluted share                                                                                                                       | $                (0.09)          | $                (0.02)          | $                (0.03)        |

----

**Liquidity      and Capital Resources**

----

*Accounting      for Derivative Instruments and Hedging Activities*
*Amendment      of Statement 133 on Derivative Instruments and Hedging      Activities*

*Accounting      for Leases*

----

**Contractual      Obligations**

|                                                                           |                    | 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                                | $                37,500 | $                22,000               | $                15,500 | $                -- | $                -- |
| Estimated                interest payments on Senior Secured Credit Facilities |  3,855             |  2,499                           |  1,356 |  -- | -- |
| Capital                lease, including contractual interest                   |  72                |  37                              |  35 |  -- |  -- |
| Royalty                obligation                                              | 7,616                   | 880                                   | 1,604 | 1,320 | 3,812 |
| Executive                contractual obligations                               | 2,532                   | 1,532                                 | 1,000 | -- | -- |
| Operating                leases                                                | 5,293                   | 2,463                                 | 2,444 | 386 | -- |
|                                                                           |                    |                                  |   |   |   |
| Total                contractual obligations                                   | $                56,868 | $                29,411               | $                21,939 | $                1,706 | $                3,812 |

***Effect      of Inflation***

----

***Net      Operating Loss Carryforwards***

**Critical      Accounting Policies and Estimates**

***General***

***Revenue      Recognition***

*Revenue      Recognition *
*Revenue      Arrangements with Multiple Deliverables *

----

*Products*

*End-User      Customers - *
* *

*OEM      Relationships - *

*Distributor      Relationships*

*Services      and Parts*

*Sales      Transactions Financed with Recourse Clauses*

*Sales      Transactions Financed by the Company*

*Accounting      for Leases*

***Allowance      for Doubtful Accounts***

----

***Inventory      Valuation***

***Acquisitions***

*Recognition      of Liabilities in Connection with a Purchase Business      Combination*

***Goodwill      and Intangible Assets***

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

----

| Trade                names            | 2                -                3 years  |
|---------------------------------------|--------------------------------------------|
| Customer                relationships | 7                -                10 years |
| Software                licenses      | 3                years                     |
| Non-compete                covenants  | 5                years                     |

***Accounting      for Income Taxes***

*Accounting      for Income Taxes*

**Recently      Issued Accounting Standards**

*Accounting      for Uncertainty in Income Taxes, an interpretation of FASB Statement      No. 109*

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

*Inventory      Costs*
*Inventory      Pricing*

----

*Accounting      Changes and Error Corrections*
*Accounting      Changes*
*Reporting      Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion      No. 28*

*How      Taxes Collected from Customers and Remitted to Governmental Authorities Should      Be Presented in the Income Statement (That Is, Gross versus Net      Presentation)*

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Financial Liabilities - Including      an      amendment of FASB Statement No 115*

**Off-Balance      Sheet Arrangements**

**Item      7A.**
***Quantitative and Qualitative Disclosures About Market      Risk***

----

----

**PART      II**

**Item      8. **
***Financial      Statements and Supplementary Data***

|                                                                                                                                                                                                                                      | Page   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                      |   |
| Reports                of Independent Registered Public Accounting Firms                                                                                                                                                                  | 59     |
| Consolidated                Balance Sheets as of December 30, 2006 and December 31,                2005                                                                                                                                   | 61     |
| Consolidated                Statements of Income for the fiscal years ended December 30, 2006,                December 31, 2005 and January 1, 2005                                                                                       | 62     |
| Consolidated                Statements of Changes in Stockholders’ Equity and Comprehensive Income for                the fiscal years ended December 30, 2006, December 31, 2005 and January                1,                2005 | 63     |
| Consolidated                Statements of Cash Flows for the fiscal years ended December 30,                2006,                December 31, 2005 and January 1, 2005                                                                    | 64     |
| Notes                to Consolidated Financial Statements                                                                                                                                                                                 | 65     |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                                      |   |

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Share-Based      Payment*

*Internal      Control — Integrated Framework*

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

| **ITEM                  8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**                                                  |
|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |   |   |   |   |   |   |   |
| PRESSTEK,                  INC. AND SUBSIDIARIES                                                                          |
| CONSOLIDATED                  BALANCE SHEETS                                                                              |
| (in                  thousands, except share data)                                                                        |
|                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                      |   |   | December                  30, |   |   | December                  31, |   |
|                                                                                                                      |   |   | 2006 |   |   | 2005 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| ASSETS                                                                                                                    |   |   |   |   |   |   |   |
| Current                  assets                                                                                           |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                                |   | $ | 9,449 |   | $ | 5,615 |   |
| Accounts                  receivable, net                                                                                 |   |   | 53,158 |   |   | 42,194 |   |
| Inventories,                  net                                                                                         |   |   | 46,050 |   |   | 48,463 |   |
| Assets                  of discontinued operations                                                                        |   |   | 3,321 |   |   | 3,514 |   |
| Deferred                  income taxes                                                                                    |   |   | 4,162 |   |   | - |   |
| Other                  current assets                                                                                     |   |   | 2,600 |   |   | 1,175 |   |
| Total                  current assets                                                                                     |   |   | 118,740 |   |   | 100,961 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Property,                  plant and equipment, net                                                                       |   |   | 42,194 |   |   | 45,147 |   |
| Intangible                  assets, net                                                                                   |   |   | 8,741 |   |   | 11,303 |   |
| Goodwill                                                                                                                  |   |   | 20,280 |   |   | 23,089 |   |
| Assets                  of discontinued operations                                                                        |   |   | - |   |   | 774 |   |
| Deferred                  income taxes                                                                                    |   |   | 7,515 |   |   | - |   |
| Other                  noncurrent assets                                                                                  |   |   | 544 |   |   | 213 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Total                  assets                                                                                             |   | $ | 198,014 |   | $ | 181,487 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| LIABILITIES                  AND STOCKHOLDERS' EQUITY                                                                     |   |   |   |   |   |   |   |
| Current                  liabilities                                                                                      |   |   |   |   |   |   |   |
| Current                  portion of long-term debt and capital lease obligation                                           |   | $ | 7,037 |   | $ | 7,037 |   |
| Line                  of credit                                                                                           |   |   | 15,000 |   |   | 6,036 |   |
| Accounts                  payable                                                                                         |   |   | 27,126 |   |   | 20,114 |   |
| Accrued                  expenses                                                                                         |   |   | 10,471 |   |   | 16,570 |   |
| Deferred                  revenue                                                                                         |   |   | 7,901 |   |   | 8,579 |   |
| Liabilities                  of discontinued operations                                                                   |   |   | 3,707 |   |   | 1,233 |   |
| Total                  current liabilities                                                                                |   |   | 71,242 |   |   | 59,569 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Long-term                  debt and capital lease obligation, less current portion                                        |   |   | 15,535 |   |   | 22,570 |   |
| Deferred                  income taxes                                                                                    |   |   | - |   |   | 715 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Total                  liabilities                                                                                        |   |   | 86,777 |   |   | 82,854 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Commitments                  and contingencies (See Note 20)                                                              |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| 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, 35,662,318                  and             |   |   |   |   |   |   |   |
| 35,366,024                  shares issued and outstanding at December 30, 2006 and                                        |   |   |   |   |   |   |   |
| December                  31, 2005, respectively                                                                          |   |   | 357 |   |   | 354 |   |
| Additional                  paid-in capital                                                                               |   |   | 108,769 |   |   | 106,268 |   |
| Accumulated                  other comprehensive income (loss)                                                            |   |   | 297 |   |   | (59 | ) |
| Retained                  earnings (accumulated deficit)                                                                  |   |   | 1,814 |   |   | (7,930 | ) |
| Total                  stockholders' equity                                                                               |   |   | 111,237 |   |   | 98,633 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| Total                  liabilities and stockholders' equity                                                               |   | $ | 198,014 |   | $ | 181,487 |   |
|                                                                                                                      |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these consolidated financial                  statements. |

----

| PRESSTEK,                  INC. AND SUBSIDIARIES                                                                          |
|---------------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF INCOME                                                                        |
| (in                  thousands, except per-share data)                                                                    |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   | Fiscal                  year ended |
|                                                                                                                      |   |   | December                  30, |   |   | December                  31, |   |   | January                  1, |   |
|                                                                                                                      |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Product                                                                                                                   |   | $ | 220,724 |   | $ | 210,613 |   | $ | 108,390 |   |
| Service                  and parts                                                                                        |   |   | 44,970 |   |   | 48,521 |   |   | 13,063 |   |
| Total                  revenue                                                                                       |   |   | 265,694 |   |   | 259,134 |   |   | 121,453 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Cost                  of revenue                                                                                          |   |   |   |   |   |   |   |   |   |   |
| Product                                                                                                                   |   |   | 154,250 |   |   | 143,952 |   |   | 69,045 |   |
| Service                  and parts                                                                                        |   |   | 32,466 |   |   | 32,862 |   |   | 9,135 |   |
| Total                  cost of revenue                                                                               |   |   | 186,716 |   |   | 176,814 |   |   | 78,180 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit                                                                                             |   |   | 78,978 |   |   | 82,320 |   |   | 43,273 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses                                                                                       |   |   |   |   |   |   |   |   |   |   |
| Research                  and development                                                                                 |   |   | 6,409 |   |   | 7,335 |   |   | 6,460 |   |
| Sales,                  marketing and customer support                                                                    |   |   | 39,970 |   |   | 40,241 |   |   | 17,574 |   |
| General                  and administrative                                                                               |   |   | 19,938 |   |   | 20,970 |   |   | 12,399 |   |
| Amortization                  of intangible assets                                                                        |   |   | 2,980 |   |   | 2,595 |   |   | 1,261 |   |
| Restructuring                  and other charges (credits)                                                                |   |   | 5,481 |   |   | 874 |   |   | (392 | ) |
| Total                  operating expenses                                                                            |   |   | 74,778 |   |   | 72,015 |   |   | 37,302 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Operating                  income                                                                                         |   |   | 4,200 |   |   | 10,305 |   |   | 5,971 |   |
| Interest                  and other income (expense), net                                                                 |   |   | (1,826 | ) |   | (2,220 | ) |   | (870 | ) |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations before income taxes                                                    |   |   | 2,374 |   |   | 8,085 |   |   | 5,101 |   |
| Provision                  (benefit) for income taxes                                                                     |   |   | (10,643 | ) |   | 1,164 |   |   | 166 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations                                                                        |   |   | 13,017 |   |   | 6,921 |   |   | 4,935 |   |
| Loss                  from discontinued operations, net of income taxes                                                   |   |   | (3,273 | ) |   | (835 | ) |   | (1,070 | ) |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                                               |   | $ | 9,744 |   | $ | 6,086 |   | $ | 3,865 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per common share - basic                                                                        |   |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations                                                                        |   | $ | 0.36 |   | $ | 0.20 |   | $ | 0.14 |   |
| Loss                  from discontinued operations                                                                        |   |   | (0.09 | ) |   | (0.03 | ) |   | (0.03 | ) |
|                                                                                                                      |   | $ | 0.27 |   | $ | 0.17 |   | $ | 0.11 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Earnings                  per common share - diluted                                                                      |   |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations                                                                        |   | $ | 0.36 |   | $ | 0.19 |   | $ | 0.14 |   |
| Loss                  from discontinued operations                                                                        |   |   | (0.09 | ) |   | (0.02 | ) |   | (0.03 | ) |
|                                                                                                                      |   | $ | 0.27 |   | $ | 0.17 |   | $ | 0.11 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding                                                                      |   |   |   |   |   |   |   |   |   |   |
| Weighted                  average shares outstanding - basic                                                              |   |   | 35,565 |   |   | 35,153 |   |   | 34,558 |   |
| Dilutive                  effect of stock options                                                                         |   |   | 291 |   |   | 419 |   |   | 799 |   |
| Weighed                  average shares outstanding - diluted                                                             |   |   | 35,856 |   |   | 35,572 |   |   | 35,357 |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these consolidated financial                  statements. |

----

| PRESSTEK,                  INC. AND SUBSIDIARIES                              |
|-------------------------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY   |
| AND                  COMPREHENSIVE INCOME                                     |
| (in                  thousands)                                               |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   | Accumulated |   | Retained |   |   |   |
|                                                                          |   |   |   |   |   | Additional |   | other |   | earnings |   |   |   |
|                                                                          |   | Common                  stock |   | paid-in |   | comprehensive |   | (accumulated |   |   |   |
|                                                                          |   | Shares |   | Par                  value |   | capital |   | income                  (loss) |   | deficit) |   | Total |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Balance                  at January 3, 2004*                                 |   |   | 34,202 |   | $ | 342 |   | $ | 97,769 |   | $ | (47 | ) | $ | (17,881 | ) | $ | 80,183 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                     |   |   | 695 |   |   | 7 |   |   | 5,193 |   |   | - |   |   | - |   |   | 5,200 |   |
| Realization                  of loss related to interest rate swaps           |   |   | - |   |   | - |   |   | - |   |   | 47 |   |   | - |   |   | 47 |   |
| Foreign                  currency translation adjustments                     |   |   | - |   |   | - |   |   | - |   |   | 107 |   |   | - |   |   | 107 |   |
| Net                  income                                                   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 3,865 |   |   | 3,865 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Balance                  at January 1, 2005*                                 |   |   | 34,897 |   |   | 349 |   |   | 102,962 |   |   | 107 |   |   | (14,016 | ) |   | 89,402 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                     |   |   | 469 |   |   | 5 |   |   | 3,306 |   |   | - |   |   | - |   |   | 3,311 |   |
| Foreign                  currency translation adjustments                     |   |   | - |   |   | - |   |   | - |   |   | (166 | ) |   | - |   |   | (166 | ) |
| Net                  income                                                   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 6,086 |   |   | 6,086 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Balance                  at December 31, 2005*                               |   |   | 35,366 |   |   | 354 |   |   | 106,268 |   |   | (59 | ) |   | (7,930 | ) |   | 98,633 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                     |   |   | 296 |   |   | 3 |   |   | 2,127 |   |   | - |   |   | - |   |   | 2,130 |   |
| Foreign                  currency translation adjustments                     |   |   | - |   |   | - |   |   | - |   |   | 356 |   |   | - |   |   | 356 |   |
| Share                  based compensation under SFAS No. 123(R)               |   |   | - |   |   | - |   |   | 374 |   |   | - |   |   | - |   |   | 374 |   |
| Net                  income                                                   |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 9,744 |   |   | 9,744 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Balance                  at December 30, 2006*                               |   |   | 35,662 |   | $ | 357 |   | $ | 108,769 |   | $ | 297 |   | $ | 1,814 |   | $ | 111,237 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive                  income is calculated as follows:               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   | Year                  ended |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   | December                  30, |   |   | December                  31, |   |   | January                  1, |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                   |   |   |   |   | $ | 9,744 |   | $ | 6,086 |   | $ | 3,865 |   |   |   |   |   |   |   |
| Adjustments                  to accumulated other comprehensive income (loss) |   |   |   |   |   | 356 |   |   | (166 | ) |   | 154 |   |   |   |   |   |   |   |
| Comprehensive                  income                                         |   |   |   |   | $ | 10,100 |   | $ | 5,920 |   | $ | 4,019 |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| PRESSTEK,                  INC. AND SUBSIDIARIES                                                                                         |
|------------------------------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF CASH FLOWS                                                                                   |
| (in                  thousands)                                                                                                          |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |  Fiscal                  year ended |
|                                                                                                                                     |   |   | December                  30, |   |   | December                  31, |   |   | January                  1, |   |
|                                                                                                                                     |   |   | 2006 |   |   | 2005 |   |   | 2005 |   |
| Operating                  activities                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                  income                                                                                                              |   | $ | 9,744 |   | $ | 6,086 |   | $ | 3,865 |   |
| Add                  loss from discontinued operations                                                                                   |   |   | 3,273 |   |   | 835 |   |   | 1,070 |   |
| Income                  from continuing operations                                                                                       |   |   | 13,017 |   |   | 6,921 |   |   | 4,935 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities:                      |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                                                                             |   |   | 6,964 |   |   | 8,132 |   |   | 7,762 |   |
| Amortization                  of intangible assets                                                                                       |   |   | 2,953 |   |   | 2,595 |   |   | 1,261 |   |
| Restructuring                  and other charges (credits)                                                                               |   |   | 5,481 |   |   | 874 |   |   | (392 | ) |
| Provision                  for warranty costs                                                                                            |   |   | 3,400 |   |   | 1,558 |   |   | 1,109 |   |
| Provision                  for accounts receivable allowances                                                                            |   |   | 391 |   |   | 1,604 |   |   | 2,474 |   |
| Stock                  compensation expense                                                                                              |   |   | 374 |   |   | 148 |   |   | - |   |
| Deferred                  income taxes                                                                                                   |   |   | (11,677 | ) |   | 715 |   |   | 120 |   |
| Loss                  on disposal of assets                                                                                              |   |   | 72 |   |   | 153 |   |   | 24 |   |
| Changes                  in operating assets and liabilities, net of effects from business                  acquisitions and divestures: |   |   |   |   |   |   |   |   |   |   |
| Accounts                  receivable                                                                                                |   |   | (10,947 | ) |   | (8,588 | ) |   | (6,474 | ) |
| Inventories                                                                                                                         |   |   | 2,214 |   |   | (7,707 | ) |   | (4,939 | ) |
| Other                  current assets                                                                                               |   |   | (1,445 | ) |   | 214 |   |   | 324 |   |
| Other                  noncurrent assets                                                                                            |   |   | 39 |   |   | (43 | ) |   | (304 | ) |
| Accounts                  payable                                                                                                   |   |   | 9,163 |   |   | 7,516 |   |   | (4,633 | ) |
| Accrued                  expenses                                                                                                   |   |   | (6,522 | ) |   | (3,390 | ) |   | 7,454 |   |
| Deferred                  revenue                                                                                                   |   |   | (692 | ) |   | (1,940 | ) |   | 1,039 |   |
|  Net                  cash provided by operating activities                                                                         |   |   | 12,785 |   |   | 8,762 |   |   | 9,760 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Investing                  activities                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Purchase                  of property, plant and equipment                                                                               |   |   | (4,033 | ) |   | (6,100 | ) |   | (2,087 | ) |
| Business                  acquisitions, net of cash acquired                                                                             |   |   | (832 | ) |   | (3,467 | ) |   | (57,317 | ) |
| Investment                  in patents and other intangible assets                                                                       |   |   | (2,791 | ) |   | (2,176 | ) |   | (387 | ) |
| Proceeds                  from the sale of long-lived assets                                                                             |   |   | - |   |   | 124 |   |   | 5 |   |
|  Net                  cash used in investing activities                                                                             |   |   | (7,656 | ) |   | (11,619 | ) |   | (59,786 | ) |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Financing                  activities                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Net                  proceeds from issuance of common stock                                                                              |   |   | 2,130 |   |   | 3,113 |   |   | 5,200 |   |
| Proceeds                  from term loan                                                                                                 |   |   | - |   |   | - |   |   | 35,000 |   |
| Repayments                  of term loan and capital lease                                                                               |   |   | (7,035 | ) |   | (5,503 | ) |   | (14,464 | ) |
| Net                  borrowings (repayments) under line of credit agreement                                                              |   |   | 8,964 |   |   | (786 | ) |   | 6,822 |   |
| Debt                  financing costs                                                                                                    |   |   | - |   |   | - |   |   | (332 | ) |
|  Net                  cash provided by (used in) financing activities                                                               |   |   | 4,059 |   |   | (3,176 | ) |   | 32,226 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  provided by (used in) discontinued operations                                                                      |   |   |   |   |   |   |   |   |   |   |
| Operating                  activities                                                                                                    |   |   | (4,531 | ) |   | 2,968 |   |   | (3,399 | ) |
| Investing                  activities                                                                                                    |   |   | (396 | ) |   | (29 | ) |   | 1,742 |   |
| Financing                  activities                                                                                                    |   |   | - |   |   | - |   |   | - |   |
|  Net                  cash used in discontinued operations                                                                          |   |   | (4,927 | ) |   | 2,939 |   |   | (1,657 | ) |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Effect                  of exchange rate changes on cash and cash equivalents                                                            |   |   | (427 | ) |   | (30 | ) |   | - |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  increase (decrease) in cash and cash equivalents                                                                    |   |   | 3,834 |   |   | (3,124 | ) |   | (19,457 | ) |
| Cash                  and cash equivalents, beginning of period                                                                          |   |   | 5,615 |   |   | 8,739 |   |   | 28,196 |   |
| Cash                  and cash equivalents, end of period                                                                                |   | $ | 9,449 |   | $ | 5,615 |   | $ | 8,739 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| ***Supplemental                  disclosure of cash flow information***                                                                  |   |   |   |   |   |   |   |   |   |   |
| Cash                  paid for interest                                                                                                  |   | $ | 2,364 |   | $ | 2,459 |   | $ | 923 |   |
| Cash                  paid for income taxes                                                                                              |   | $ | 1,252 |   | $ | 327 |   | $ | - |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                     |   |   |   |   |   |   |   |   |   |   |
| The                  accompanying notes are an integral part of these consolidated financial                  statements.                |

----

**PRESSTEK,      INC.**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**1.      NATURE OF THE BUSINESS**

**2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

*Principles      of Consolidation and Basis of Presentation*

*Use      of Estimates*

----

*Revenue      Recognition*

*Revenue      Recognition *
*Revenue      Arrangements with Multiple Deliverables *

*Products*

*End-User      Customers - *
* *

*OEM      Relationships - *

*Distributor      Relationships*

*Services      and Parts*

----

*Sales      Transactions Financed with Recourse Clauses*

*Sales      Transactions Financed by the Company*

*Accounting      for Leases*

*Fair      Value of Financial Instruments*

*Cash      and Cash Equivalents*

*Concentration      of Credit Risk*

*Accounts      Receivable, Net of Allowances*

*Inventories,      Net*

----

*Property,      Plant and Equipment, Net*

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

*Acquisitions*

*Business      Combinations*

*Recognition      of Liabilities in Connection with a Purchase Business      Combination*

*Intangible      Assets and Goodwill*

----

| Trade                names            | 2                -                3 years  |
|---------------------------------------|--------------------------------------------|
| Customer                relationships | 7                -                10 years |
| Software                licenses      | 3                years                     |
| Non-compete                covenants  | 5                years                     |

*Goodwill      and Other Intangible Asset*

*Impairment      of Goodwill and Long-Lived Assets *

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

*Product      Warranties*

*Research      and Development Costs*

----

*Advertising      Costs*

*Income      Taxes*

*Accounting      for Income Taxes*

*Stock-Based      Compensation*

*Accounting      for Stock Issued to Employees*
*Share-Based      Payment*

----

|                                                                                                                                                                                 |   | December                31, 2005 |   | January                1, 2005 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
|                                                                                                                                                                                 |   |                             |   |                           |   |
| Net                income, as reported                                                                                                                                               |   | $                                | 6,086  |                           | $      | 3,865 |   |
| Add:                stock-based compensation expense recognized                                                                                                                      |   |                             | 148    |                           |   | -- |   |
| Deduct:                total stock-based employee compensation determined under the                fair-value-based method for all awards, net of related tax                effects |   |                             | (4,011 | )                              |   | (2,074 | ) |
| Pro                forma net income                                                                                                                                                  |   | $                                | 2,223  |                           | $      | 1,791 |   |
|                                                                                                                                                                                 |   |                             |   |                           |   |   |   |
| Earnings                per common share, as reported:                                                                                                                               |   |                             |   |                           |   |   |   |
| Basic                                                                                                                                                                                |   | $                                | 0.17   |                           | $      | 0.11 |   |
| Diluted                                                                                                                                                                              |   | $                                | 0.17   |                           | $      | 0.11 |   |
|                                                                                                                                                                                 |   |                             |   |                           |   |   |   |
| Pro                forma earnings per common share:                                                                                                                                  |   |                             |   |                           |   |   |   |
| Basic                                                                                                                                                                                |   | $                                | 0.06   |                           | $      | 0.05 |   |
| Diluted                                                                                                                                                                              |   | $                                | 0.06   |                           | $      | 0.05 |   |

*Accounting      for Stock-Based Compensation*
*Accounting      for Stock-Based Compensation - Transition and Disclosure - an amendment of      FASB      Statement No. 123*

*Comprehensive      Income*

*Foreign      Currency Translation*

----

*Derivatives*

*Accounting      for Derivative Instruments and Hedging Activities*
*Amendment      of Statement 133 on Derivative Instruments and Hedging      Activities*

*Earnings      (Loss) per Share*

*Earnings      per Share*

*Reclassifications*

*Recent      Accounting Pronouncements*

*Accounting      for Uncertainty in Income Taxes, an interpretation of FASB Statement      No. 109*

*Considering      the Effects of Prior Year Misstatements when Quantifying Misstatements in      Current Year Financial Statements*

----

*Inventory      Costs*
*Inventory      Pricing*

*Accounting      Changes and Error Corrections*
*Accounting      Changes*
*Reporting      Accounting Changes in Interim Financial Statements - An Amendment of APB Opinion      No. 28*

*How      Taxes Collected from Customers and Remitted to Governmental Authorities Should      Be Presented in the Income Statement (That Is, Gross versus Net      Presentation)*

*Fair      Value Measurements*

*The      Fair Value Option for Financial Assets and Financial Liabilities - Including      an      amendment of FASB Statement No 115*

**3.      DISCONTINUED OPERATIONS**

*Accounting      for Impairment or Disposal of Long-Lived Assets,*

----

|                                                                                                                                                        |   | December                30, 2006 |   | December                31, 2005 |   | January                1, 2005 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|----------------------------------|--------|--------------------------------|--------|
| Revenue                                                                                                                                                     |   | $                                | 10,816 |                             | $      | 15,006                         |   | $ | 8,398 |   |
| Loss                before income taxes                                                                                                                     |   |                             | (2,267 | )                                |   | (825                           | )      |   | (1,036 | ) |
| Provision                (benefit) for income taxes                                                                                                         |   |                             | (771   | )                                |   | 10                             |   |   | 34 |   |
| Loss                from discontinued operations                                                                                                            |   |                             | (1,496 | )                                |   | (835                           | )      |   | (1,070 | ) |
| Loss                from disposal of discontinued operations, net of tax benefit of $915                for                the year ended December 30, 2006 |   |                             | (1,777 | )                                |   | --                             |   |   | -- |   |
| Net                loss from discontinued operations                                                                                                        |   | $                                | (3,273 | )                                | $      | (835                           | )      | $ | (1,070 | ) |
| Loss                per diluted share                                                                                                                       |   | $                                | (0.09  | )                                | $      | (0.02                          | )      | $ | (0.03 | ) |

|                                              |   | December                30, 2006 |   | December                31, 2005 |   |
|---------------------------------------------------|--------|----------------------------------|--------|----------------------------------|--------|
|                                              |   |                             |   |                             |   |
| Receivables,                net                   |   | $                                | 1,875  |                             | $      | 1,894 |   |
| Inventories,                net                   |   |                             | 1,446  |                             |   | 1,620 |   |
| Total                current assets               |   | $                                | 3,321  |                             | $      | 3,514 |   |
|                                              |   |                             |   |                             |   |   |   |
| Property,                plant and equipment, net |   | $                                | --     |                             | $      | 103 |   |
| Intangible                assets, net             |   |                             | --     |                             |   | 671 |   |
| Total                noncurrent assets            |   | $                                | --     |                             | $      | 774 |   |
|                                              |   |                             |   |                             |   |   |   |
| Accounts                payable                   |   | $                                | 2,126  |                             | $      | 1,085 |   |
| Accrued                expenses                   |   |                             | 1,581  |                             |   | 148 |   |
| Total                current liabilities          |   | $                                | 3,707  |                             | $      | 1,233 |   |
|                                              |   |                             |   |                             |   |   |   |

**4.      BUSINESS ACQUISITIONS**

*ABDick*

----

----

| Consideration                                                                                         |   |   |   |   |
|-------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| Net                cash paid                                                                          |   | $      | 40,000 |   |
| Transaction                costs                                                                      |   |   | 5,121  |   |
| Integration                costs                                                                      |   |   | 3,029  |   |
| Total                consideration                                                                    |   |   | 48,150 |   |
|                                                                                                  |   |   |   |   |
| Allocation                of consideration to assets acquired (liabilities assumed)                   |   |   |   |   |
| Accounts                receivable                                                                    |   |   | 16,930 |   |
| Inventories                                                                                           |   |   | 21,172 |   |
| Other                current assets                                                                   |   |   | 646    |   |
| Property,                plant and equipment                                                          |   |   | 1,375  |   |
| Other                noncurrent assets                                                                |   |   | 109    |   |
| Accounts                payable and accrued expenses                                                  |   |   | (7,472 | )      |
| Deferred                revenue                                                                       |   |   | (8,899 | )      |
| Fair                value of net tangible assets acquired                                             |   |   | 23,861 |   |
|                                                                                                  |   |   |   |   |
| Excess                of consideration over fair value of net tangible assets                acquired |   |   | 24,289 |   |
|                                                                                                  |   |   |   |   |
| Allocation                of excess consideration to identifiable intangible assets                   |   |   |   |   |
| Trade                names (estimated life of 3 years)                                                |   |   | 2,100  |   |
| Customer                relationships (estimated life of 10 years)                                    |   |   | 3,800  |   |
| Software                license (estimated life of 3 years)                                           |   |   | 450    |   |
|                                                                                                  |   |   | 6,350  |   |
|                                                                                                  |   |   |   |   |
| Allocation                of excess consideration to goodwill                                         |   | $      | 17,939 |   |

|                                             |   | Fiscal                2006 Activity    |   |
|--------------------------------------------------|--------|----------------------------------------|--------|
|                                             |   |                                   |   |   |   |   |   |   |   |
|                                             |   | BalanceDecember                31,2005 |   |   Utilization |   |  Currency                Translation |   | BalanceDecember                30,2006 |   |
|                                             |   |                                   |   |   |   |   |   |   |   |
| Severance                and fringe benefits     |   | $                                      | 1,242  |   | $ | (761 | ) | $ | 6 |   | $ | 487 |   |
| Lease                termination and other costs |   |                                   | 95     |   |   | (71 | ) |   | -- |   |   | 24 |   |
|                                             |   | $                                      | 1,337  |   | $ | (832 | ) | $ | 6 |   | $ | 511 |   |

----

|                                             |   | Fiscal                2005 Activity  |   |
|--------------------------------------------------|--------|--------------------------------------|--------|
|                                             |   |                                 |   | Purchase                accountingadjustments                offset to goodwill |   |   |   |   |   |
|                                             |   | BalanceJanuary                1,2005 |   |   Additions |   | Reversals                - changes in estimate |   |   Utilization |   | BalanceDecember                31,2005 |   |
|                                             |   |                                 |   |   |   |   |   |   |   |   |   |
| Severance                and fringe benefits     |   | $                                    | 795    |   | $ | 2,340 |   | $ | (380 | ) | $ | (1,513 | ) | $ | 1,242 |   |
| Lease                termination and other costs |   |                                 | 703    |   |   | 75 |   |   | (504 | ) |   | (179 | ) |   | 95 |   |
|                                             |   | $                                    | 1,498  |   | $ | 2,415 |   | $ | (884 | ) | $ | (1,692 | ) | $ | 1,337 |   |

|                                             |   | Fiscal                2004 Activity              |                                                                                                                                                                                                     |
|--------------------------------------------------|--------|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             |   |   BalanceJanuary                3,2004 |                                                                                                                                                                                                     | Purchaseaccountingadjustments                offset to goodwill |   |     Utilization |   |   BalanceJanuary                1,2005 |   |
|                                             |   |                                             |                                                                                                                                                                                                     |   |   |   |   |   |   |
| Severance                and fringe benefits     |   | $                                                | --                                                                                                                                                                              |   | $ | 795 |   | $ | -- |   | $ | 795 |   |
| Lease                termination and other costs |   |                                             | --                                                                                                                                                                              |   |   | 703 |   |   | -- |   |   | 703 |   |
|                                             |   |  $                                          |                                  -- |   | $ | 1,498 |   | $ | -- |   | $ | 1,498 |   |

*Precision*

| Consideration                                                                                              |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| Net                cash paid                                                                               |   | $      | 12,127 |   |
| Integration                costs                                                                           |   |   | 400    |   |
| Total                consideration                                                                         |   |   | 12,527 |   |
|                                                                                                       |   |   |   |   |
| Allocation                of consideration to assets acquired (liabilities assumed)                        |   |   |   |   |
| Accounts                receivable                                                                         |   |   | 2,636  |   |
| Inventories                                                                                                |   |   | 2,695  |   |
| Property,                plant and equipment                                                               |   |   | 6,065  |   |
| Accounts                payable and accrued expenses                                                       |   |   | (5,279 | ) |
| Fair                value of net tangible assets acquired                                                  |   |   | 6,117  |   |
|                                                                                                       |   |   |   |   |
| Excess                of consideration over fair value of net tangible assets                acquired      |   |   | 6,410  |   |
|                                                                                                       |   |   |   |   |
| Allocation                of excess consideration to identifiable intangible assets                        |   |   |   |   |
| Customer                relationships (estimated life of 7 years)                                          |   |   | 900    |   |
| Trade                names (estimated life of 2 years)                                                     |   |   | 260    |   |
| Non-compete                covenants (estimated life of 5 years)                                           |   |   | 100    |   |
|                                                                                                       |   |   | 1,260  |   |
|                                                                                                       |   |   |   |   |
| Allocation                of excess consideration to goodwill (deductible for tax                purposes) |   | $      | 5,150  |   |

----

*Pro      forma results of operations *

|                                                                   |   | Fiscal2004 |    |
|------------------------------------------------------------------------|--------|------------|---------|
|                                                                   |   |       |    |
| Revenue                                                                |   | $          | 271,990 |   |
| Net                income from continuing operations                   |   | $          | 3,433   |   |
| Earnings                per share from continuing operations (basic)   |   | $          | 0.10    |   |
| Earnings                per share from continuing operations (diluted) |   | $          | 0.10    |   |

**5.      ACCOUNTS RECEIVABLE, NET OF ALLOWANCES**

|                               |   | December                30,2006 |   | December                31,2005 |   |
|------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                               |   |                            |   |                            |   |
| Accounts                receivable |   | $                               | 56,152 |                            | $      | 45,488 |   |
| Less                allowances     |   |                            | (2,994 | )                               |   | (3,294 | ) |
|                               |   | $                               | 53,158 |                            | $      | 42,194 |   |

|                                                     |   | Fiscal2006 |   | Fiscal2005 |   | Fiscal2004 |   |
|----------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|
|                                                     |   |       |   |       |   |       |   |
| Balance                at beginning of period            |   | $          | 3,294  |       | $      | 4,304      |   | $ | 1,892 |   |
| Charged                to costs and expenses             |   |       | 391    |       |   | 1,604      |   |   | 2,474 |   |
| Charged                to other accounts:                |   |       |   |       |   |       |   |   |   |   |
| Purchase                accounting adjustments           |   |       | --     |       |   | (30        | )      |   | -- |   |
| Acquired                balance in business combinations |   |       | --     |       |   | --         |   |   | 1,964 |   |
| Deductions                and write-offs                 |   |       | (691   | )          |   | (2,584     | )      |   | (2,026 | ) |
| Balance                at end of period                  |   | $          | 2,994  |       | $      | 3,294      |   | $ | 4,304 |   |

----

**6.      INVENTORIES, NET**

|                           |   | December                30,2006 |   | December                31,2005 |   |
|--------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                           |   |                            |   |                            |   |
| Raw                materials   |   | $                               | 3,434  |                            | $      | 6,325 |   |
| Work                in process |   |                            | 7,102  |                            |   | 8,953 |   |
| Finished                goods  |   |                            | 35,514 |                            |   | 33,185 |   |
|                           |   | $                               | 46,050 |                            | $      | 48,463 |   |

**7.      PROPERTY, PLANT AND EQUIPMENT, NET**

|                                                        |   | December                30,2006 |    | December                31,2005 |   |
|-------------------------------------------------------------|--------|---------------------------------|---------|---------------------------------|--------|
|                                                        |   |                            |    |                            |   |
| Land                and improvements                        |   | $                               | 2,286   |                            | $      | 2,241 |   |
| Buildings                and leasehold improvements         |   |                            | 29,428  |                            |   | 28,902 |   |
| Production                and other equipment               |   |                            | 56,462  |                            |   | 51,879 |   |
| Office                furniture and equipment               |   |                            | 7,263   |                            |   | 6,668 |   |
| Construction                in process                      |   |                            | 1,886   |                            |   | 3,882 |   |
| Total                property, plant and equipment, at cost |   |                            | 97,325  |                            |   | 93,572 |   |
| Accumulated                depreciation and amortization    |   |                            | (55,131 | )                               |   | (48,425 | ) |
| Net                property, plant and equipment            |   | $                               | 42,194  |                            | $      | 45,147 |   |

*Accounting      for Costs of Computer Software Developed or Obtained for Internal      Use*

----

**8.      GOODWILL AND OTHER INTANGIBLE ASSET**

|                                                                         |   |   |   |
|------------------------------------------------------------------------------|--------|--------|--------|
| Balance                at January 1, 2005                                    |   | $      | 18,888 |   |
| Purchase                accounting adjustments for prior period acquisitions |   |   | 4,201  |   |
| Balance                at December 31, 2005                                  |   | $      | 23,089 |   |
| Purchase                accounting adjustments for prior period acquisitions |   |   | --     |   |
| Impairment                adjustments                                        |   |   | (2,809 | ) |
| Balance                at December 30, 2006                                  |   | $      | 20,280 |   |

|                                             |   | December                30, 2006 |   | December                31, 2005 |   |
|--------------------------------------------------|--------|----------------------------------|--------|----------------------------------|--------|
|                                             |   |  Cost                       |   | Accumulatedamortization          |   |  Cost |   | Accumulatedamortization |   |
|                                             |   |                             |   |                             |   |   |   |   |   |
| Patents                and intellectual property |   | $                                | 11,277 |                             | $      | 7,206 |   | $ | 10,840 |   | $ | 6,173 |   |
| Trade                names                       |   |                             | 2,360  |                             |   | 1,776 |   |   | 2,360 |   |   | 1,001 |   |
| Customer                relationships            |   |                             | 4,583  |                             |   | 1,443 |   |   | 4,641 |   |   | 705 |   |
| Software                licenses                 |   |                             | 450    |                             |   | 325 |   |   | 450 |   |   | 175 |   |
| License                agreements                |   |                             | 750    |                             |   | 169 |   |   | 750 |   |   | 11 |   |
| Non-compete                covenants             |   |                             | 100    |                             |   | 48 |   |   | 100 |   |   | 28 |   |
| Loan                origination fees             |   |                             | 332    |                             |   | 144 |   |   | 332 |   |   | 77 |   |
|                                             |   | $                                | 19,852 |                             | $      | 11,111 |   | $ | 19,473 |   | $ | 8,170 |   |

| Fiscal                2007 |   | $      | 2,252 |   |
|----------------------------|--------|--------|-------|--------|
| Fiscal                2008 |   |   | 1,275 |   |
| Fiscal                2009 |   |   | 1,129 |   |
| Fiscal                2010 |   |   | 961   |   |
| Fiscal                2011 |   |   | 744   |   |
| Thereafter                 |   |   | 1,664 |   |

----

**9.      FINANCING ARRANGEMENTS**

|                                |   | December                30, 2006 |    | December                31, 2005 |   |
|-------------------------------------|--------|----------------------------------|---------|----------------------------------|--------|
|                                |   |                             |    |                             |   |
| Term                loan            |   | $                                | 22,500  |                             | $      | 29,500 |   |
| Line                of credit       |   |                             | 15,000  |                             |   | 6,036 |   |
| Capital                lease        |   |                             | 72      |                             |   | 107 |   |
|                                |   |                             | 37,572  |                             |   | 35,643 |   |
| Less                current portion |   |                             | (22,037 | )                                |   | (13,073 | ) |
|                                |   |                             |    |                             |   |   |   |
| Long-term                debt       |   | $                                | 15,535  |                             | $      | 22,570 |   |

----

| 2007 |   | $      | 22,037 |   |
|------|--------|--------|--------|--------|
| 2008 |   |   | 7,035  |   |
| 2009 |   |   | 8,500  |   |

**10.      ACCRUED EXPENSES**

|                                                   |   | December                30,2006 |   | December                31,2005 |   |
|--------------------------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                                                   |   |                            |   |                            |   |
| Accrued                payroll and employee benefits   |   | $                               | 5,642  |                            | $      | 8,184 |   |
| Accrued                warranty                        |   |                            | 1,729  |                            |   | 1,481 |   |
| Accrued                integration costs               |   |                            | 511    |                            |   | 1,337 |   |
| Accrued                restructuring and other charges |   |                            | 233    |                            |   | 482 |   |
| Accrued                royalties                       |   |                            | 276    |                            |   | 344 |   |
| Accrued                income taxes                    |   |                            | --     |                            |   | 312 |   |
| Other                                                  |   |                            | 2,080  |                            |   | 4,430 |   |
|                                                   |   | $                               | 10,471 |                            | $      | 16,570 |   |

**11.      ACCRUED WARRANTY AND DEFERRED REVENUES**

*Accrued      Warranty*

----

|                                                                |   | Fiscal2006 |   | Fiscal2005 |   | Fiscal2004 |   |
|---------------------------------------------------------------------|--------|------------|--------|------------|--------|------------|--------|
|                                                                |   |       |   |       |   |       |   |
| Balance                at beginning of period                       |   | $          | 1,481  |       | $      | 1,466      |   | $ | 935 |   |
| Accruals                for warranties                              |   |       | 3,400  |       |   | 1,558      |   |   | 1,109 |   |
| Assumed                warranty liabilities - business acquisitions |   |       | --     |       |   | --         |   |   | 795 |   |
| Utilization                of accrual for warranty costs            |   |       | (3,152 | )          |   | (1,543     | )      |   | (1,373 | ) |
| Balance                at end of period                             |   | $          | 1,729  |       | $      | 1,481      |   | $ | 1,466 |   |

*Deferred      Revenues*

|                                    |   | December                30,2006 |   | December                31,2005 |   |
|-----------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                                    |   |                            |   |                            |   |
| Deferred                service revenue |   | $                               | 7,505  |                            | $      | 7,951 |   |
| Deferred                product revenue |   |                            | 396    |                            |   | 628 |   |
|                                    |   | $                               | 7,901  |                            | $      | 8,579 |   |

**12.      RESTRUCTURING AND OTHER CHARGES (CREDITS)**

|                                                                  |   | December                30,2006 |   | December                31,2005 |   | January                1, 2005 |   |
|-----------------------------------------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|--------------------------------|--------|
|                                                                  |   |                            |   |                            |   |                           |   |
| Asset                impairment - goodwill                            |   | $                               | 2,809  |                            | $      | --                             |   | $ | -- |   |
| Impairment                of intangible assets - patent defense costs |   |                            | 2,297  |                            |   | --                             |   |   | -- |   |
| Impairment                of other assets                             |   |                            | 260    |                            |   | --                             |   |   | -- |   |
| Severance                and fringe benefits                          |   |                            | 115    |                            |   | 592                            |   |   | (316 | ) |
| Executive                contractual obligations                      |   |                            | --     |                            |   | 282                            |   |   | (76 | ) |
| Total                net restructuring and other charges              |   | $                               | 5,481  |                            | $      | 874                            |   | $ | (392 | ) |

----

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

|                                             |   | Fiscal                2005 Activity  |   |
|--------------------------------------------------|--------|--------------------------------------|--------|
|                                             |   | BalanceJanuary                1,2005 |   |  Charged                toExpense |   |   Reversals |   |   Utilization |   | BalanceDecember                31,2005 |   |
|                                             |   |                                 |   |   |   |   |   |   |   |   |   |
| Executive                contractual obligations |   | $                                    | 154    |   | $ | 282 |   | $ | -- |   | $ | (436 | ) | $ | -- |   |
| Severance                and fringe benefits     |   |                                 | --     |   |   | 700 |   |   | (                108 | ) |   | (110 | ) |   | 482 |   |
|                                             |   | $                                    | 154    |   | $ | 982 |   | $ | (108 | ) | $ | (546 | ) | $ | 482 |   |

|                                             |   | Fiscal                2004 Activity  |   |
|--------------------------------------------------|--------|--------------------------------------|--------|
|                                             |   | BalanceJanuary                3,2004 |   |  Charged                toExpense |   |   Reversals |   |   Utilization |   | BalanceJanuary                1,2005 |   |
|                                             |   |                                 |   |   |   |   |   |   |   |   |   |
| Executive                contractual obligations |   | $                                    | 699    |   | $ | -- |   | $ | (76 | ) | $ | (469 | ) | $ | 154 |   |
| Severance                and fringe benefits     |   |                                 | 356    |   |   | -- |   |   | (316 | ) |   | (40 | ) |   | -- |   |
|                                             |   | $                                    | 1,055  |   | $ | -- |   | $ | (392 | ) | $ | (509 | ) | $ | 154 |   |

----

**13.      INTEREST AND OTHER INCOME AND EXPENSE**

|                                       |   | Fiscal2006 |   | Fiscal2005 |   | Fiscal2004 |   |
|--------------------------------------------|--------|------------|--------|------------|--------|------------|--------|
|                                       |   |       |   |       |   |       |   |
| Interest                expense            |   | $          | (2,364 | )          | $      | (2,459     | )      | $ | (923 | ) |
| Interest                income             |   |       | 119    |       |   | 130        |   |   | 318 |   |
| Other                income (expense), net |   |       | 419    |       |   | 109        |   |   | (265 | ) |
|                                       |   | $          | (1,826 | )          | $      | (2,220     | )      | $ | (870 | ) |

**14.      INCOME TAXES **

|    |   | Fiscal2006 |   | Fiscal2005 |   | Fiscal2004 |   |
|---------|--------|------------|--------|------------|--------|------------|--------|
|    |   |       |   |       |   |       |   |
| U.S.    |   | $          | 3,198  |       | $      | 7,603      |   | $ | 4,990 |   |
| Foreign |   |       | (824   | )          |   | 482        |   |   | 111 |   |
|    |   | $          | 2,374  |       | $      | 8,085      |   | $ | 5,101 |   |

----

|                                      |   | Fiscal2006 |    | Fiscal2005 |   | Fiscal2004 |   |
|-------------------------------------------|--------|------------|---------|------------|--------|------------|--------|
|                                      |   |       |    |       |   |       |   |
| Current:                                  |   |       |    |       |   |       |   |
| Federal                                   |   | $          | 129     |       | $      | 175        |   | $ | 40 |   |
| State                                     |   |       | 545     |       |   | 176        |   |   | 6 |   |
| Foreign                                   |   |       | 37      |       |   | 218        |   |   | -- |   |
|                                      |   | $          | 711     |       | $      | 569        |   | $ | 46 |   |
|                                      |   |       |    |       |   |       |   |   |   |   |
| Deferred:                                 |   |       |    |       |   |       |   |   |   |   |
| Federal                                   |   |       | (10,274 | )          |   | 475        |   |   | 96 |   |
| State                                     |   |       | (802    | )          |   | 120        |   |   | 24 |   |
| Foreign                                   |   |       | (278    | )          |   | --         |   |   | -- |   |
|                                      |   |       | (11,354 | )          |   | 595        |   |   | 120 |   |
| Provision                for income taxes |   | $          | (10,643 | )          | $      | 1,164      |   | $ | 166 |   |

|                                             |   | Fiscal2006 |    | Fiscal2005 |   | Fiscal2004 |   |
|--------------------------------------------------|--------|------------|---------|------------|--------|------------|--------|
|                                             |   |       |    |       |   |       |   |
| Federal                statutory tax rate        |   |       | 34.0    | %          |   | 34.0       | %      |   | 34.0 | % |
| State                tax, net of federal benefit |   |       | (7.2    | )          |   | 3.6        |   |   | 0.6 |   |
| Alternative                minimum tax           |   |       | --      |       |   | 2.2        |   |   | 0.8 |   |
| Other                                            |   |       | (2.5    | )          |   | 0.7        |   |   | (0.7 | ) |
| Change                in valuation allowance     |   |       | (472.6  | )          |   | (26.1      | )      |   | (31.4 | ) |
|                                             |   |       | (448.3) | %          |   | 14.4       | %      |   | 3.3 | % |

----

|                                                              |   | December                30,2006 |   | December                31,2005 |   | January                1,2005 |   |
|-------------------------------------------------------------------|--------|---------------------------------|--------|---------------------------------|--------|-------------------------------|--------|
|                                                              |   |                            |   |                            |   |                          |   |
| Deferred                tax assets                                |   |                            |   |                            |   |                          |   |
| Net                operating loss carryforwards                   |   | $                               | 5,751  |                            | $      | 26,500                        |   | $ | 29,000 |   |
| Tax                credits                                        |   |                            | 3,757  |                            |   | 5,300                         |   |   | 4,900 |   |
| Warranty                provisions, litigation and other accruals |   |                            | 4,162  |                            |   | 5,900                         |   |   | 4,400 |   |
| Gross                deferred tax assets                          |   |                            | 13,670 |                            |   | 37,700                        |   |   | 38,300 |   |
| Valuation                allowance                                |   |                            | (261   | )                               |   | (35,700                       | )      |   | (34,200 | ) |
| Total                assets                                       |   |                            | 13,409 |                            |   | 2,000                         |   |   | 4,100 |   |
|                                                              |   |                            |   |                            |   |                          |   |   |   |   |
| Deferred                tax liabilities                           |   |                            |   |                            |   |                          |   |   |   |   |
| Amortizable                and depreciable assets                 |   |                            | (136   | )                               |   | (715                          | )      |   | (320 | ) |
| Accumulated                depreciation and amortization          |   |                            | (1,596 | )                               |   | (2,000                        | )      |   | (3,900 | ) |
| Total                liabilities                                  |   |                            | (1,732 | )                               |   | (2,715                        | )      |   | (4,220 | ) |
|                                                              |   |                            |   |                            |   |                          |   |   |   |   |
| Net                deferred tax assets (liabilities)              |   | $                               | 11,677 |                            | $      | (715                          | )      | $ | (120 | ) |

----

**15.      PREFERRED STOCK**

**16.      STOCK-BASED COMPENSATION PLANS**

*Stock      Incentive Plans*

----

*Employee      Stock Purchase Plan*

*Director      Stock Option Plan*

***Valuation      Assumptions***

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

----

|                                    |   |                       |   |
|-----------------------------------------|--------|----------------------------|--------|
| Stock                option assumptions |   | Fiscal                2006 |   |
|                                    |   |                       |   |
| Risk-free                interest rate  |   |                       | 5.05   | % |
| Volatility                              |   |                       | 57.16  | % |
| Expected                life (in years) |   |                       | 4.51   |   |
| Dividend                yield           |   |                       | --     |   |

|                                           |   | Fiscal2005 |   | Fiscal2004 |   |
|------------------------------------------------|--------|------------|--------|------------|--------|
|                                           |   |       |   |       |   |
| Risk-free                interest rate         |   |       | 4.55   | %          |   | 3.71 | % |
| Volatility                                     |   |       | 55.05  | %          |   | 63.38 | % |
| Expected                option life (in years) |   |       | 4.27   |       |   | 5.10 |   |
| Dividend                yield                  |   |       | --     |       |   | -- |   |

----

|                                            |   |  Shares |      |  Weighted                averageexercise                price |   | Weighted                average remaining contractual term |   |   Aggregate                intrinsic value |   |
|-------------------------------------------------|--------|--------------|-----------|--------------------------------------------------------------------|--------|------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                            |   |         |      |                                                               |   |                                                       |   |                                                 |   |
| Outstanding                at January 3, 2004   |   |         | 3,452,476 |                                                               | $      | 8.36                                                       |   |                                                 |   |   |   |   |   |
| Granted                                         |   |         | 76,750    |                                                               | $      | 10.08                                                      |   |                                                 |   |   |   |   |   |
| Exercised                                       |   |         | (663,450  | )                                                                  | $      | 7.53                                                       |   |                                                 |   |   |   |   |   |
| Canceled/expired                                |   |         | (112,550  | )                                                                  | $      | 9.25                                                       |   |                                                 |   |   |   |   |   |
| Outstanding                at January 1, 2005   |   |         | 2,753,226 |                                                               | $      | 8.57                                                       |   |                                                 |   |   |   |   |   |
| Granted                                         |   |         | 1,104,667 |                                                               | $      | 8.83                                                       |   |                                                 |   |   |   |   |   |
| Exercised                                       |   |         | (477,654  | )                                                                  | $      | 6.51                                                       |   |                                                 |   |   |   |   |   |
| Canceled/expired                                |   |         | (278,764  | )                                                                  | $      | 9.92                                                       |   |                                                 |   |   |   |   |   |
| Outstanding                at December 31, 2005 |   |         | 3,101,475 |                                                               | $      | 8.86                                                       |   |                                                 |   |   |   |   |   |
| Granted                                         |   |         | 143,333   |                                                               | $      | 9.12                                                       |   |                                                 |   |   |   |   |   |
| Exercised                                       |   |         | (246,883  | )                                                                  | $      | 6.82                                                       |   |                                                 |   |   |   |   |   |
| Canceled/expired                                |   |         | (41,575   | )                                                                  | $      | 11.30                                                      |   |                                                 |   |   |   |   |   |
| Outstanding                at December 30, 2006 |   |         | 2,956,350 |                                                               | $      | 9.01                                                       |   |                                                 | 5.6    |   | $ | 4.5                million |   |
| Exercisable                at December 30, 2006 |   |         | 2,813,017 |                                                               | $      | 9.00                                                       |   |                                                 | 5.4    |   | $ | 4.5                million |   |

*Options      Outstanding and Exercisable*

|                                                |        | Outstanding        |   | Exercisable                                                                                    |   |
|-----------------------------------------------------|-------------|--------------------|--------|------------------------------------------------------------------------------------------------|--------|
|   Range                of exercise prices |        |   Shares |   | Weighted                averageremaining                contractuallife                (years) |   | Weighted                average exercise price |   |    Shares |   | Weightedaverageexercise                price |   |
| $                                                   |  2.88  |  -       | $      | 5.22                                                                                           |   |   | 127,267 |   |   | 5.4 |   | $ | 4.24 |   |   | 127,267 |   | $ | 4.24 |   |
| $                                                   |  5.23  |  -       | $      | 6.00                                                                                           |   |   | 575,400 |   |   | 5.1 |   | $ | 5.27 |   |   | 575,400 |   | $ | 5.27 |   |
| $                                                   |  6.01  |  -       | $      | 6.75                                                                                           |   |   | 248,925 |   |   | 5.2 |   | $ | 6.35 |   |   | 248,925 |   | $ | 6.35 |   |
| $                                                   |  6.76  |  -       | $      | 8.00                                                                                           |   |   | 340,133 |   |   | 5.5 |   | $ | 7.39 |   |   | 301,800 |   | $ | 7.36 |   |
| $                                                   |  8.01  |  -       | $      | 10.00                                                                                          |   |   | 790,325 |   |   | 8.5 |   | $ | 8.98 |   |   | 685,325 |   | $ | 8.88 |   |
| $                                                   |  10.01 |  -       | $      | 15.00                                                                                          |   |   | 659,800 |   |   | 3.5 |   | $ | 12.71 |   |   | 659,800 |   | $ | 12.71 |   |
| $                                                   |  15.01 |  -       | $      | 23.00                                                                                          |   |   | 214,500 |   |   | 3.4 |   | $ | 16.17 |   |   | 214,500 |   | $ | 16.17 |   |
| $                                                   |  2.88  |  -            | $      | 23.00                                                                                          |   |   | 2,956,350 |   |   | 5.6 |   | $ | 9.01 |   |   | 2,813,017 |   | $ | 9.00 |   |

----

|                                                            |   |   Shares |     |  Weighted                averageexercise                price |   | Weighted                average remaining contractual term |   |  Aggregate                intrinsic value |   |
|-----------------------------------------------------------------|--------|--------------------|----------|--------------------------------------------------------------------|--------|------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                            |   |               |     |                                                               |   |                                                       |   |                                           |   |
| Outstanding                at January 3, 2004                   |   |               | 543,437  |                                                               | $      | 0.17                                                       |   |                                           |   |   |   |   |   |
| Granted                                                         |   |               | 12,750   |                                                               | $      | 0.15                                                       |   |                                           |   |   |   |   |   |
| Exercised                                                       |   |               | --       |                                                               | $      | --                                                         |   |                                           |   |   |   |   |   |
| Canceled/expired                                                |   |               | (312,487 | )                                                                  | $      | 0.13                                                       |   |                                           |   |   |   |   |   |
| Outstanding                at January 1, 2005                   |   |               | 243,700  |                                                               | $      | 0.21                                                       |   |                                           |   |   |   |   |   |
| Granted                                                         |   |               | 15,000   |                                                               | $      | 0.15                                                       |   |                                           |   |   |   |   |   |
| Exercised                                                       |   |               | (250     | )                                                                  | $      | 0.15                                                       |   |                                           |   |   |   |   |   |
| Canceled/expired                                                |   |               | (8,376   | )                                                                  | $      | 0.60                                                       |   |                                           |   |   |   |   |   |
| Outstanding                at December 31, 2005                 |   |               | 250,074  |                                                               | $      | 0.20                                                       |   |                                           |   |   |   |   |   |
| Granted                                                         |   |               | --       |                                                               | $      | --                                                         |   |                                           |   |   |   |   |   |
| Exercised                                                       |   |               | --       |                                                               | $      | --                                                         |   |                                           |   |   |   |   |   |
| Canceled/expired                                                |   |               | (12,874  | )                                                                  | $      | 0.15                                                       |   |                                           |   |   |   |   |   |
| Outstanding                and exercisable at December 30, 2006 |   |               | 237,200  |                                                               | $      | 0.20                                                       |   |                                           | 4.47   |   | $ | 0.05                million |   |

**17.      BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION**

|                                                  |   | Fiscal2006 |    | Fiscal2005 |   | Fiscal2004 |   |
|-------------------------------------------------------|--------|------------|---------|------------|--------|------------|--------|
|                                                  |   |       |    |       |   |       |   |
| Revenue                                               |   |       |    |       |   |       |   |
| Presstek                                              |   | $          | 258,936 |       | $      | 255,344    |   | $ | 118,576 |   |
| Lasertel                                              |   |       | 11,469  |       |   | 7,760      |   |   | 7,765 |   |
| Total                revenue, including inter-segment |   |       | 270,405 |       |   | 263,104    |   |   | 126,341 |   |
| Inter-segment                revenue                  |   |       | (4,711  | )          |   | (3,970     | )      |   | (4,888 | ) |
|                                                  |   | $          | 265,694 |       | $      | 259,134    |   | $ | 121,453 |   |
|                                                  |   |       |    |       |   |       |   |   |   |   |
| Revenues                from external customers       |   |       |    |       |   |       |   |   |   |   |
| Presstek                                              |   | $          | 258,936 |       | $      | 255,344    |   | $ | 118,576 |   |
| Lasertel                                              |   |       | 6,758   |       |   | 3,790      |   |   | 2,877 |   |
|                                                  |   | $          | 265,694 |       | $      | 259,134    |   | $ | 121,453 |   |

----

|                                                                                                   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Income                (loss) from continuing operations                                                |   |   |   |   |   |   |   |
| Presstek                                                                                               |   | $      | 5,310  |   | $      | 13,965 |   | $ | 9,609 |   |
| Lasertel                                                                                               |   |   | (1,110 | )      |   | (3,660 | )      |   | (3,638 | ) |
|                                                                                                   |   | $      | 4,200  |   | $      | 10,305 |   | $ | 5,971 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                           |   |   |   |   |   |   |   |   |   |   |
| Presstek                                                                                               |   | $      | 8,288  |   | $      | 8,374  |   | $ | 6,530 |   |
| Lasertel                                                                                               |   |   | 1,629  |   |   | 2,353  |   |   | 2,493 |   |
|                                                                                                   |   | $      | 9,917  |   | $      | 10,727 |   | $ | 9,023 |   |
|                                                                                                   |   |   |   |   |   |   |   |   |   |   |
| Capital                expenditures and other additions toproperty,                plant and equipment |   |   |   |   |   |   |   |   |   |   |
| Presstek                                                                                               |   |   |   |   |   |   |   |   |   |   |
| Capital                expenditures                                                                    |   | $      | 3,391  |   | $      | 3,416  |   | $ | 1,106 |   |
| Equipment                obtained under capital lease                                                  |   |   | --     |   |   | 110    |   |   | -- |   |
| Total                Presstek                                                                          |   |   | 3,391  |   |   | 3,526  |   |   | 1,106 |   |
| Lasertel                                                                                               |   |   | 642    |   |   | 2,684  |   |   | 981 |   |
|                                                                                                   |   | $      | 4,033  |   | $      | 6,210  |   | $ | 2,087 |   |

|     |   | December                30,2006 |    | December                31,2005 |   |
|----------|--------|---------------------------------|---------|---------------------------------|--------|
|     |   |                            |    |                            |   |
| Presstek |   | $                               | 184,510 |                            | $      | 169,677 |   |
| Lasertel |   |                            | 13,504  |                            |   | 11,810 |   |
|     |   | $                               | 198,014 |                            | $      | 181,487 |   |

|                          |   | Fiscal2006 |    | Fiscal2005 |   | Fiscal2004 |   |
|-------------------------------|--------|------------|---------|------------|--------|------------|--------|
|                          |   |       |    |       |   |       |   |
| United                States  |   | $          | 173,585 |       | $      | 159,907    |   | $ | 83,232 |   |
| United                Kingdom |   |       | 29,744  |       |   | 34,726     |   |   | 7,747 |   |
| Canada                        |   |       | 14,699  |       |   | 14,543     |   |   | 3,849 |   |
| Germany                       |   |       | 8,775   |       |   | 13,138     |   |   | 13,541 |   |
| Japan                         |   |       | 6,168   |       |   | 8,096      |   |   | 6,209 |   |
| All                other      |   |       | 32,723  |       |   | 28,724     |   |   | 6,875 |   |
|                          |   | $          | 265,694 |       | $      | 259,134    |   | $ | 121,453 |   |

----

|                          |   | December                30,2006 |   | December                31,2005 |   |
|-------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
|                          |   |                            |   |                            |   |
| United                States  |   | $                               | 78,077 |                            | $      | 79,462 |   |
| United                Kingdom |   |                            | 894    |                            |   | 682 |   |
| Canada                        |   |                            | 303    |                            |   | 382 |   |
|                          |   | $                               | 79,274 |                            | $      | 80,526 |   |

**18.      MAJOR CUSTOMERS**

**19.      RELATED PARTIES**

**20.      COMMITMENTS AND CONTINGENCIES**

*Commitments*

| Fiscal                2007 |   | $      | 2,463 |   |
|----------------------------|--------|--------|-------|--------|
| Fiscal                2008 |   |   | 1,572 |   |
| Fiscal                2009 |   |   | 872   |   |
| Fiscal                2010 |   |   | 386   |   |

----

*Contingencies*

*Litigation*

----

----

**21.      QUARTERLY RESULTS (UNAUDITED)**

|                                                                     |   |  FirstQuarter                                   |   |  SecondQuarter |   |  ThirdQuarter |   | FourthQuarter(2)(3)(4)(5) |   |
|--------------------------------------------------------------------------|--------|------------------------------------------------------|--------|---------------------|--------|--------------------|--------|---------------------------|--------|
|                                                                     |   | (in                thousands, except per-share data) |   |
| Fiscal                2006                                               |   |                                                 |   |                |   |               |   |                      |   |
| Revenue                                                                  |   | $                                                    | 67,327 |                | $      | 70,882             |   | $                         | 61,419 |   | $ | 66,066 |   |
| Gross                profit                                              |   | $                                                    | 20,785 |                | $      | 20,763             |   | $                         | 18,044 |   | $ | 19,386 |   |
| Income                from continuing operations                         |   |                                                 | 2,978  |                |   | 2,579              |   |                      | (40    | ) |   | 7,500 |   |
| Income                (loss) from discontinued operations                |   |                                                 | (254   | )                   |   | 167                |   |                      | (383   | ) |   | (2,803 | ) |
| Net                income                                                |   | $                                                    | 2,724  |                | $      | 2,746              |   | $                         | (423   | ) | $ | 4,697 |   |
| Earnings                per share from continuing operations - basic     |   |                                                 | 0.09   |                |   | 0.07               |   |                      | 0.00   |   |   | 0.21 |   |
| Earnings                per share from discontinued operations - basic   |   |                                                 | (0.01  | )                   |   | 0.01               |   |                      | (0.01  | ) |   | (0.08 | ) |
| Earnings                per share - basic (1)                            |   | $                                                    | 0.08   |                | $      | 0.08               |   | $                         | (0.01  | ) | $ | 0.13 |   |
| Earnings                per share from continuing operations - diluted   |   |                                                 | 0.09   |                |   | 0.07               |   |                      | 0.00   |   |   | 0.21 |   |
| Earnings                per share from discontinued operations - diluted |   |                                                 | (0.01  | )                   |   | 0.01               |   |                      | (0.01  | ) |   | (0.08 | ) |
| Earnings                per share - diluted (1)                          |   | $                                                    | 0.08   |                | $      | 0.08               |   | $                         | (0.01  | ) | $ | 0.13 |   |
|                                                                     |   |                                                 |   |                |   |               |   |                      |   |   |   |   |   |
| Fiscal                2005                                               |   |                                                 |   |                |   |               |   |                      |   |   |   |   |   |
| Revenue                                                                  |   | $                                                    | 66,097 |                | $      | 65,897             |   | $                         | 61,294 |   | $ | 65,846 |   |
| Gross                profit                                              |   | $                                                    | 20,554 |                | $      | 21,206             |   | $                         | 19,740 |   | $ | 20,820 |   |
| Income                from continuing operations                         |   |                                                 | 1,047  |                |   | 2,411              |   |                      | 1,024  |   |   | 2,439 |   |
| Income                (loss) from discontinued operations                |   |                                                 | (566   | )                   |   | (72                | )      |                      | (201   | ) |   | 4 |   |
| Net                income                                                |   | $                                                    | 481    |                | $      | 2,339              |   | $                         | 823    |   | $ | 2,443 |   |
| Earnings                per share from continuing operations - basic     |   |                                                 | 0.03   |                |   | 0.07               |   |                      | 0.03   |   |   | 0.07 |   |
| Earnings                per share from discontinued operations - basic   |   |                                                 | (0.02  | )                   |   | (0.00              | )      |                      | (0.01  | ) |   | 0.00 |   |
| Earnings                per share - basic (1)                            |   | $                                                    | 0.01   |                | $      | 0.07               |   | $                         | 0.02   |   | $ | 0.07 |   |
| Earnings                per share from continuing operations - diluted   |   |                                                 | 0.03   |                |   | 0.07               |   |                      | 0.03   |   |   | 0.07 |   |
| Earnings                per share from discontinued operations - diluted |   |                                                 | (0.02  | )                   |   | (0.00              | )      |                      | (0.01  | ) |   | 0.00 |   |
| Earnings                per share - diluted (1)                          |   | $                                                    | 0.01   |                | $      | 0.07               |   | $                         | 0.02   |   | $ | 0.07 |   |

----

| PRESSTEK,                  INC. AND SUBSIDIARIES                              |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
|-------------------------------------------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|--------|--------|--------|------------|-----------|-----------------------------|--------|
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
| SCHEDULE                  II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
|                                                                          |   |                        |   | Additions                   |   |                        |   |   |   |       |      |                        |   |
|                                                                          |   | Balance                  at |   | Charged                  to |   | Charged                  to |   |   |   | Deductions |      | Balance                  at |   |
|                                                                          |   | beginning                   |   | costs                  and  |   | other                       |   |   |   | and        |      | end                         |   |
|                                                                          |   | of                  period  |   | expenses                    |   | accounts                    |   |   |   | write-offs |      | of                  period  |   |
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
| Allowance                  for losses on accounts receivable                  |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
| Fiscal                  year                                                  |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |
| 2006                                                                          |   | $                           | 3,294  |                        | $      | 391                         |   | $      | -      |       |      |                        |   | $ | (691 | ) | $ | 2,994 |   |
| 2005                                                                          |   | $                           | 4,304  |                        | $      | 1,604                       |   | $      | (30    | )          |  (1) |                        | $      | (2,584 | ) | $ | 3,294 |   |
| 2004                                                                          |   | $                           | 1,892  |                        | $      | 2,474                       |   | $      | 1,964  |       |  (2) |                        | $      | (2,026 | ) | $ | 4,304 |   |
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |
| Reserves                  for excess and obsolete inventory                   |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |
| Fiscal                  year                                                  |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |
| 2006                                                                          |   | $                           | 16,507 |                        | $      | 1,346                       |   | $      | -      |       |      |                        |   | $ | (3,858 | ) | $ | 13,995 |   |
| 2005                                                                          |   | $                           | 17,707 |                        | $      | 2,912                       |   | $      | (3,074 | )          |  (1) | $                           | (1,038 | ) | $ | 16,507 |   |
| 2004                                                                          |   | $                           | 4,217  |                        | $      | 205                         |   | $      | 13,716 |       |  (2) | $                           | (431   | ) | $ | 17,707 |   |
|                                                                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |
| (1)                  Purchase accounting adjustments                          |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |
| (2)                  Acquired balance in business combinations                |   |                        |   |                        |   |                        |   |   |   |       |      |                        |   |   |   |   |   |   |   |

----

**Item      9. **
***Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosure***

**Item      9A. **
***Controls      and Procedures***

*Internal      Control - Integrated Framework*

----

** **

| ·   | A                new Senior Vice President and Chief Financial Officer was appointed,                effective February 28, 2007. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Audit Committee of the Board of Directors, effective April 3, 2007,                established a Financial Reporting Task Force to immediately develop                a                corrective action plan to ensure full remediation of the material                weakness. This task force will report directly to the Audit Committee                and                be led by the Senior Vice President & Chief Financial Officer. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                Senior Vice President and Chief Financial Officer has been authorized                to                engage third party professionals to advise the Company in connection                with                the remediation of existing                deficiencies. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During                March 2007, a new Financial Reporting Manager was appointed to manage                all                SEC related activities including accounting guidance and periodic                reporting. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Since                December 30, 2006, the Finance organization has been strengthened                by the                addition of four personnel in the Financial Analysis and General                Accounting areas. The Company plans to continue to enhance the staffing                and competency level within the Finance organization. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | A                Director of Internal Audit position, reporting directly to the Audit                Committee, will be filled as quickly as possible. In addition to                other                duties, this position will be responsible for reviewing and validating                compliance with all remedial                actions. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Require                all significant or non-routine transactions to be thoroughly researched,                analyzed, and documented by qualified accounting personnel, and to                provide                for complete review of the resulting proposed accounting treatment                by the                Principal Accounting Officer prior to recording the transactions.                In                addition, all major transactions will require the additional review                and                approval of the Senior Vice President & Chief Financial                Officer. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                addition to the review performed by the Company’s management, implement an                additional review by subject matter experts for complex accounting                estimates and accounting treatments, where                appropriate. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Develop                and implement focused monitoring controls and other procedures in                the                Internal Audit organization. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

*Management’s      Report on Internal Control over Financial Reporting*
*Internal      Control—Integrated Framework*

----

*Internal      Control - Integrated Framework*
*Internal      Control - Integrated Framework*

----

**Item      9B. **
***Other      Information***

**PART      III**

**Item      10. **
***Directors,      Executive Officers and Corporate Governance***

**Item      11. **
***Executive      Compensation***

**Item      12. **
***Security      Ownership of Certain Beneficial Owners and Management***

**Item      13. **
***Certain      Relationships and Related Transactions***

**Item      14. **
***Principal      Accounting Fees and Services***

----

**PART      IV**

**Item      15. **
***Exhibits      and Financial Statement Schedules***

----

**SIGNATURES**

| PRESSTEK,                INC.                        |
|------------------------------------------------------|
|                                                 |
|                                                 |
|                                                 |
| /s/                Edward J. Marino                  |
| Edward                J. Marino                      |
| President                and Chief Executive Officer |

| /s/                Edward J. Marino      | President,                Chief Executive Officer and Director | April                24, 2007 |
|------------------------------------------|----------------------------------------------------------------|-------------------------------|
| Edward                J. Marino          |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Gerald N. Herman      | Vice-President                and Corporate Controller         | April                24, 2007 |
| Gerald                N. Herman          | (Principal                Accounting Officer)                  |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                John W. Dreyer        | Chairman                of the Board                           | April                24, 2007 |
| John                W. Dreyer            |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Daniel S. Ebenstein   | Director                                                       | April                24, 2007 |
| Daniel                S. Ebenstein, Esq. |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Dr. Lawrence Howard   | Director                                                       | April                24, 2007 |
| Dr.                Lawrence Howard       |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Michael d. Moffitt    | Director                                                       | April                24, 2007 |
| Michael                D. Moffitt        |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Brian Mullaney        | Director                                                       | April                24, 2007 |
| Brian                Mullaney            |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Steven N. Rappaport   | Director                                                       | April                24, 2007 |
| Steven                N. Rappaport       |                                                           |                          |
|                                     |                                                           |                          |
|                                     |                                                           |                          |
| /s/                Donald C. Waite, III  | Director                                                       | April                24, 2007 |
| Donald                C. Waite, III      |                                                           |                          |

----

| **Exhibit****Number** |  **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3(a)             | Amended                and Restated Certificate of Incorporation of Presstek, Inc., as amended.                (Previously filed as Exhibit 3 to Presstek’s Quarterly Report on Form 10-Q                for the Quarter ended June 29, 1996, hereby incorporated by                reference.)                                                                                                                                                                                                   |
| 3(b)             | By-laws                of Presstek, Inc. (Previously filed as an exhibit with Presstek’s Form                10-K for the fiscal year ended December 30, 1995, filed March 29,                1996,                hereby incorporated by reference.)                                                                                                                                                                                                                                             |
| 2(a)             | Stock                Purchase Agreement among Presstek, Inc., Precision Lithograining,                Inc. and                SDK Realty Co. dated June 2, 2004 (Previously filed as Exhibit 2.1                to                Presstek’s Form 8-K filed on July 30, 2004, hereby incorporated by                reference)                                                                                                                                                                    |
| 2(b)             | 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                (Previously filed as Exhibit 2.1 to Presstek’s Form 8-K filed on July 13,                2004, hereby incorporated by reference)                                                               |
| 2(c)             | Second                Amendment to Asset Purchase Agreement between the Company and A.B.                Dick                Company dated November 5, 2004 (Previously filed as Exhibit 2.1 to                Presstek’s Form 8-K filed on November 12, 2004, hereby incorporated by                reference)                                                                                                                                                                                    |
| 2(d)             | Amendment                to Asset Purchase Agreement between the Company and A.B. Dick Company                dated August 20, 2004 (Previously filed as Exhibit 2.2 to Presstek’s Form                8-K filed on November 12, 2004, hereby incorporated by                reference)                                                                                                                                                                                                           |
| 10(a)            | Confidentiality                Agreement between Presstek, Inc. and Heidelberger Druckmaschinen                A.G.,                effective December 7, 1989 as amended. (Previously filed as Exhibit                10(i)                of Presstek’s Annual Report on Form 10-K for the fiscal year ended                December 31, 1989, hereby incorporated by reference.)                                                                                                               |
| 10(b)            | Master                Agreement effective January 1, 1991, by and between Heidelberger                Druckmaschinen Aktiengesellschaft and Presstek, Inc. (Previously                filed as                an exhibit to Presstek’s Form 8-K, dated January 1, 1991, hereby                incorporated by reference.)                                                                                                                                                                         |
| 10(c)            | Technology                License effective January 1, 1991, by and between Heidelberger                Druckmaschinen Aktiengesellschaft and Presstek, Inc. (Previously                filed as                an exhibit to Presstek’s Form 8-K, dated January 1, 1991, hereby                incorporated by reference.)                                                                                                                                                                       |
| 10(d)            | Memorandum                of Performance No. 3 dated April 27, 1993, to the Master Agreement,                Technology License, and Supply Agreement between Presstek, Inc. and                Heidelberger Druckmaschinen Aktiengesellschaft. (Previously filed                as an                exhibit to Presstek’s Quarterly Report on Form 10-Q for the quarter ended                June 30, 1993, hereby incorporated by reference.)                                                  |
| 10(e)            | Modification                to Memorandum of Performance No. 3 dated April 27, 1993, to the Master                Agreement, Technology License, and Supply Agreement between Presstek,                Inc.                and Heidelberger Druckmaschinen Aktiengesellschaft. (Previously filed                as                an exhibit to Presstek’s Annual report on Form 10-K for the fiscal year                ended December 31, 1994, hereby incorporated by reference.)              |
| 10(f)*           | Memorandum                of Understanding No. 4 dated November 9, 1995, to the Master Agreement                and                Technology License and Supply Agreement between Presstek, Inc. and                Heidelberger Druckmaschinen Aktiengesellschaft. (Previously filed                as                Exhibit 10.k to Presstek’s Form 10-K for the fiscal year ended December                30, 1995, filed March 29, 1996, hereby incorporated by                reference.)  |
| 10(g)**          | 1991                Stock Option Plan. (Previously filed as an exhibit to Presstek’s Annual                report on Form 10-K for the fiscal year ended December 31, 1991,                hereby                incorporated by reference.)                                                                                                                                                                                                                                                      |
| 10(h)**          | 1994                Stock Option Plan. (Previously filed as an exhibit to Presstek’s Annual                report on Form 10-K for the fiscal year ended December 31, 1994,                hereby                incorporated by reference.)                                                                                                                                                                                                                                                      |
| 10(i)**          | Non-Employee                Director Stock Option Plan. (Previously filed as Exhibit 10.0 to                Presstek’s Form 10-K for the fiscal year ended January 2, 1999, filed                March 2, 1999, hereby incorporated by reference.)                                                                                                                                                                                                                                                |

----

| **Exhibit****Number** |  **Description** |
|-----------------------|-----------------------|

| 10(j)**  | 1997                Interim Stock Option Plan. (Previously filed as Exhibit 10.1 to Presstek’s                Quarterly report on Form 10-Q for the quarter ended September 27,                1997,                filed November 7, 1997, hereby incorporated by reference.)                                                                                                                                                                                                                                                                          |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(k)**  | 1998                Stock Incentive Plan. (Previously filed as Exhibit A to Presstek’s April                23, 1998 Proxy Statement, filed April 24, 1998, hereby incorporated                by                reference.)                                                                                                                                                                                                                                                                                                                            |
| 10(l)*   | Memorandum                of Understanding No. 5 dated March 7, 1997 between Presstek, Inc.                and                Heidelberger Druckmaschinen Aktiengesellschaft. (Previously filed                as                Exhibit 10(T) to Presstek’s Annual Report on Form 10-K for the fiscal year                ended December 28, 1996 filed March 31, 1997, hereby incorporated                by                reference.)                                                                                                               |
| 10(m)*   | Master                Supply and Distribution Agreement by and between Presstek, Inc. and                Xerox                Corporation dated September 22, 2000. (Previously filed as Exhibit                10.1 to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended September                30, 2000, filed November 14, 2000, hereby incorporated by                reference.)                                                                                                                                     |
| 10(n)    | Amended                Master Supply and Distribution Agreement by and between Presstek,                Inc. and                Xerox Corporation dated May 11, 2001. (Previously filed as Exhibit                10.1 to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended June 30,                2001, filed August 14, 2001, hereby incorporated by                reference.)                                                                                                                                          |
| 10(o)*   | Agreement                between Presstek, Inc. and Adamovski Strojírny a.s. dated as of April 24,                2001. (Previously filed as Exhibit 10.2 to Presstek’s Quarterly Report on                Form 10-Q for the quarter ended June 30, 2001, filed August 14, 2001                hereby incorporated by reference.)                                                                                                                                                                                                                  |
| 10(p)*   | Settlement                Agreement made as of July 13, 2001 by and between Heidelberger                Druckmaschinen Aktiengesellschaft and Presstek, Inc. (Previously                filed as                Exhibit 10.3 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended September 29, 2001, filed November 13, 2001, hereby incorporated                by                reference.)                                                                                                                             |
| 10(q)*   | Letter                Agreement dated September 19, 2001 between Xerox Corporation and                Presstek,                Inc. amending the Amended Master Supply and Distribution Agreement                by and                among, Presstek, Inc. and Xerox Corporation dated May 11, 2001.                (Previously filed as Exhibit 10.1 to Presstek’s Quarterly Report on Form                10-Q for the quarter ended September 29, 2001, filed November 13,                2001,                hereby incorporated by reference.)  |
| 10(r)**  | Resignation                Agreement and General Release by and between Presstek, Inc. and Neil                M.                Rossen, dated November 14, 2001 and effective as of December 31,                2001.                (Previously filed as Exhibit 10.1 to Presstek’s Quarterly Report on Form                10-Q for the quarter ended March 30, 2002, filed May 14, 2002, hereby                incorporated by reference.)                                                                                                          |
| 10(s)**  | Separation                Agreement by and between Presstek, Inc. and Robert W. Hallman dated                as of                April 26, 2002, and effective as of April 30, 2002. (Previously filed                as                Exhibit 10.1 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended June 29, 2002, filed August 13, 2002, hereby incorporated by                reference.)                                                                                                                          |
| 10(t)*   | Agreement                for Manufacture & Sale of “Sun Press” between Presstek, Inc. and Ryobi                Limited, dated as of April 5, 2002. (Previously filed as Exhibit                10.4 to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended June 29,                2002, filed on August 13, 2002, hereby incorporated by                reference.)                                                                                                                                          |
| 10(u)**  | 2002                Employee Stock Purchase Plan of Presstek, Inc. (Previously filed                as                Exhibit 4.3 to Presstek’s Registration Statement on Form S-8 filed with                the Commission on August 9, 2002, hereby incorporated by                reference.)                                                                                                                                                                                                                                                        |
| 10(v)**  | Description                of Presstek’s Non-Employee Director Compensation Arrangements approved by                Presstek’s Board of Directors on July 17, 2002 and amended by Presstek’s                Board of Directors on December 17, 2002. (Previously filed as Exhibit                10(hh) to Presstek’s Form 10-K for the fiscal year ended December 28,                2002, filed March 28, 2003, hereby incorporated by                reference.)                                                                   |

----

| **Exhibit****Number** |  **Description** |
|-----------------------|-----------------------|

| 10(w)**  | Retirement                Agreement by and between Presstek, Inc. and Richard A. Williams dated                January 7, 2003. (Previously filed as Exhibit 10(ll) to Presstek’s Form                10-K for the fiscal year ended December 28, 2002, filed March 28,                2003,                hereby incorporated by reference.)                                                                                                  |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(x)    | Distribution                Agreement by and between Presstek, Inc. and Kodak Polychrome Graphics                LLC                dated March 18, 2003. (Previously filed as Exhibit 10.1 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended March 29, 2003,                filed                May 13, 2003, hereby incorporated by reference.)                                                               |
| 10(y)    | Restated                Amended Master Supply and Distribution Agreement by and between Presstek,                Inc. and Xerox Corporation dated March 18, 2003. (Previously filed                as                Exhibit 10.1 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended March 29, 2003, filed May 13, 2003, hereby incorporated by                reference.)                                        |
| 10(z)**  | 2003                Stock Option and Incentive Plan of Presstek, Inc. (Previously filed                as                Exhibit 10.1 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended June 28, 2003, filed August 12, 2003, hereby incorporated by                reference.)                                                                                                                                  |
| 10(aa)*  | OEM                Consumables Supply Agreement by and between Presstek, Inc. and Heidelberg                Druckmaschinen, AG., dated July 1, 2003. (Previously filed as Exhibit                10.1                to Presstek’s Quarterly Report on Form 10-Q for the quarter ended                September 27, 2003, filed November 12, 2003, hereby incorporated                by                reference.)                             |
| 10(bb)*  | OEM                Consumables Supply Agreement by and between Presstek, Inc. and Heidelberg                U.S.A., Inc. dated July 1, 2003. (Previously filed as Exhibit 10.2                to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended September                27, 2003, filed November 12, 2003, hereby incorporated by                reference.)                                                    |
| 10(cc)   | Credit                Agreement by and among Presstek, Inc., Lasertel Inc., Citizens Bank                New                Hampshire and Keybank National Association dated October 15, 2003.                (Previously filed as Exhibit 10.3 to Presstek’s Quarterly Report on Form                10-Q for the quarter ended September 27, 2003, filed November 12,                2003,                hereby incorporated by reference.)  |
| 10(dd)   | Revolving                Note dated October 15, 2003 made by Presstek, Inc. in favor of Citizens                Bank New Hampshire. (Previously filed as Exhibit 10.4 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                            |
| 10(ee)   | Revolving                Note dated October 15, 2003 made by Presstek, Inc. in favor of Keybank                National Association. (Previously filed as Exhibit 10.5 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                           |
| 10(ff)   | Term                Note dated October 15, 2003 made by Presstek, Inc. in favor of Citizens                Bank New Hampshire. (Previously filed as Exhibit 10.6 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                                 |
| 10(gg)   | Term                Note dated October 15, 2003 made by Presstek, Inc. in favor of Keybank                National Association. (Previously filed as Exhibit 10.7 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                                |
| 10(hh)   | Swing                Line Note dated October 15, 2003 made by Presstek, Inc. in favor                of                Citizens Bank New Hampshire. (Previously filed as Exhibit 10.8 to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended September                27, 2003, filed November 12, 2003, hereby incorporated by                reference.)                                                            |
| 10(ii)   | Security                Agreement by and between Presstek, Inc. and Citizens Bank New Hampshire                dated October 15, 2003. (Previously filed as Exhibit 10.9 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                         |
| 10(jj)   | Security                Agreement by and between Lasertel, Inc. and Citizens Bank New Hampshire                dated October 15, 2003. (Previously filed as Exhibit 10.10 to Presstek’s                Quarterly Report on Form 10-Q for the quarter ended September 27,                2003,                filed November 12, 2003, hereby incorporated by reference.)                                                                        |

----

| **Exhibit****Number** |  **Description** |
|-----------------------|-----------------------|

| 10(kk)    | Security                Agreement (Intellectual Property) by and between Presstek, Inc. and                Citizens Bank New Hampshire dated October 15, 2003. (Previously filed                as                Exhibit 10.11 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended September 27, 2003, filed November 12, 2003, hereby incorporated                by                reference.)                                                                                                                    |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(ll)    | Security                Agreement (Intellectual Property) by and between Lasertel, Inc. and                Citizens Bank New Hampshire dated October 15, 2003. (Previously filed                as                Exhibit 10.12 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended September 27, 2003, filed November 12, 2003, hereby incorporated                by                reference.)                                                                                                                    |
| 10(mm)    | Mortgage                and Security Agreement between Presstek, Inc. and Citizens Bank New                Hampshire dated October 15, 2003. (Previously filed as Exhibit 10.13                to                Presstek’s Quarterly Report on Form 10-Q for the quarter ended September                27, 2003, filed November 12, 2003, hereby incorporated by                reference.)                                                                                                                                                     |
| 10(nn)    | Deed                of Trust, Assignment of Rents, Security Agreement and Fixture Filing                by                and among Presstek, Inc., First American Title Insurance Company                and                Citizens Bank New Hampshire dated October 15, 2003. (Previously filed                as                Exhibit 10.14 to Presstek’s Quarterly Report on Form 10-Q for the quarter                ended September 27, 2003, filed November 12, 2003, hereby incorporated                by                reference.)  |
| 10(oo)**  | Employment                Agreement by and between Presstek, Inc. and Moosa E. Moosa dated                December                31, 2003 (Previously filed as Exhibit 10(pp) to Presstek’s Form 10-K for                the fiscal year ended January 3, 2004, filed March 18, 2004, hereby                incorporated by reference.)                                                                                                                                                                                                          |
| 10(pp)    | Amendment                to Employment Agreement by and between Presstek, Inc. and Moosa E.                Moosa                dated January 10, 2004 (Previously filed as Exhibit 10(qq) to Presstek’s                Form 10-K for the fiscal year ended January 3, 2004, filed March                18, 2004,                hereby incorporated by reference.)                                                                                                                                                                               |
| 10(qq)    | Debtor-in-Possession                Revolving Credit Agreement by and among A.B. Dick Company, Paragon                Corporate Holdings, Inc., KeyBank National Association and Presstek,                Inc.                dated July 13, 2004 (Previously filed as Exhibit 10.1 to Presstek’s Form                8-K filed on July 13, 2004, hereby incorporated by reference)                                                                                                                                                               |
| 10(rr)    | Amended                and Restated Credit Agreement among the Company, the Guarantors,                Citizens                Bank New Hampshire, KeyBank National Association and Bank North N.A.                dated                November 5, 2004 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K                filed on November 12, 2004, hereby incorporated by reference)                                                                                                                                                    |
| 10(ss)**  | Employment                Agreement by and between Presstek, Inc. and Susan A. McLaughlin dated                January 24, 2005 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K,                filed January 28, 2005, hereby incorporated by reference.)                                                                                                                                                                                                                                                                               |
| 10(tt)**  | Employment                Agreement by and between Presstek, Inc. and Edward J. Marino dated                February 2, 2005 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K                , filed February 8, 2005, hereby incorporated by reference.)                                                                                                                                                                                                                                                                                 |
| 10(uu)**  | Employment                Agreement by and between Presstek, Inc. and Moosa E. Moosa dated                February                2, 2005 (Previously filed as Exhibit 99.2 to Presstek’s Form 8-K , filed                February 8, 2005, hereby incorporated by reference.)                                                                                                                                                                                                                                                                    |
| 10(vv)**  | Employment                Agreement by and between Presstek, Inc. and Michael McCarthy dated                February 2, 2005 (Previously filed as Exhibit 10.4 to Presstek’s Form                10-Q, filed May 12, 2005, hereby incorporated by reference.)                                                                                                                                                                                                                                                                                     |
| 10(ww)**  | Employment                Agreement by and between Presstek, Inc. and Peter E. Bouchard dated                July                1, 2005 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K, filed                July 8, 2005, hereby incorporated by reference.)                                                                                                                                                                                                                                                                          |
| 10(xx)**  | Employment                Agreement by and between Presstek, Inc. and William C. Keller dated                July                27, 2006 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K, filed                July 28, 2006, hereby incorporated by reference.)                                                                                                                                                                                                                                                                        |

----

| **Exhibit****Number** |  **Description**                                                                                                                                                                                                                                                  |
|-----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                  |                                                                                                                                                                                                                                                                   |
| 10(yy)**         | Employment                Agreement by and between Presstek, Inc. and Jeffrey Cook dated February                27, 2007 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K, filed                March 2, 2007, hereby incorporated by reference.)  |
| 21.1             | Subsidiaries                of the Registrant (filed herewith.)                                                                                                                                                                                                   |
| 23.1             | Consent                of KPMG LLP (filed herewith.)                                                                                                                                                                                                              |
| 23.2             | Consent                of BDO Seidman, LLP (filed herewith.)                                                                                                                                                                                                      |
| 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                herewith.)                                                   |
| 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                herewith.)                                                   |
| 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 herewith.)                                                                             |
| 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 herewith.)                                                                             |