| R        | ANNUAL      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                         |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                   |
|     | For      the fiscal year ended December 29, 2007                                                                                                       |
| or  |
| £   | TRANSITION      REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                     |
|     |                                                                                                                                                   |
|     | For      the transition period      from                  to |

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

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

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|                                    |   |                                                                                                                         | PAGE   |
|-----------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------|--------|
| PART      1                             |   |                                                                                                                         |   |
|   Item                        |   |                                                                                                                         |   |
|       1.  |   | Business                                                                                                                     | 3      |
|       1A. |   | Risk      Factors                                                                                                            | 17     |
|       1B. |   | Unresolved      Staff Comments                                                                                               | 25     |
|       2.  |   | Properties                                                                                                                   | 26     |
|       3.  |   | Legal      Proceedings                                                                                                       | 27     |
|       4.  |   | Submission      of Matters to a Vote of Security Holders                                                                     | 28     |
|                                    |   |                                                                                                                         |   |
| PART      II                            |   |                                                                                                                         |   |
|   Item                        |   |                                                                                                                         |   |
|       5.  |   | Market      for Registrant’s Common Equity, Related Stockholder Matters and Issuer      Purchases of Equity Securities | 29     |
|       6.  |   | Selected      Financial Data                                                                                                 | 30     |
|       7.  |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                        | 32     |
|       7A. |   | Quantitative      and Qualitative Disclosures About Market Risk                                                              | 52     |
|       8.  |   | Financial      Statements and Supplementary Data                                                                             | 53     |
|       9.  |   | Changes      in and Disagreements With Accountants on Accounting and Financial      Disclosure                               | 91     |
|       9A. |   | Controls      and Procedures                                                                                                 | 91     |
|       9B. |   | Other      Information                                                                                                       | 96     |
|                                    |   |                                                                                                                         |   |
| PART      III                           |   |                                                                                                                         |   |
|   Item                        |   |                                                                                                                         |   |
|       10. |   | Directors,      Executive Officers and Corporate Governance                                                                  | 96     |
|       11. |   | Executive      Compensation                                                                                                  | 98     |
|       12. |   | Security      Ownership of Certain Beneficial Owners and Management and Related      Stockholder Matters                     | 118    |
|       13. |   | Certain      Relationships and Related Transactions, and Director      Independence                                          | 121    |
|       14. |   | Principal      Accountant Fees and Services                                                                                  | 122    |
|                                    |   |                                                                                                                         |   |
| PART      IV                            |   |                                                                                                                         |   |
|   Item                        |   |                                                                                                                         |   |
|       15. |   | Exhibits      and Financial Statement Schedules                                                                              | 123    |
|                                    |   |                                                                                                                         |   |
|                                    |   |                                                                                                                         |   |

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Item 1. 

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

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

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

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

| ·   | plan      to continue to innovate by providing high quality fully integrated digital      solutions and services that form an all-encompassing relationship with our      customers |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | 10%      of digital color work is versioned or  personalized |
|--------------------|--------------------------------------------------------------|

| ·   | A      27% growth in production digital color page volume is expected to occur by      2009 |
|--------------------|---------------------------------------------------------------------------------------------|

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

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

| ·   | CTP      Business Unit, responsible for digital platemaking systems, consumables      and workflow |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Traditional      Business Unit, consists of polyester CTP platemaking and pressroom      supplies |
|--------------------|---------------------------------------------------------------------------------------------------|

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

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

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

----

----

----

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

| b.   | Digital      printers and copy shops, facilities that primarily operate toner-based      digital printing equipment, are acquiring DI presses as complementary      devices. They are using DI presses for jobs that require run lengths      greater than 250 copies, a higher level of quality, or a substrate (coated      stock, thick stock, plastics, etc.) that can not be effectively produced      on a toner based device. |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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. |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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| c.   | Growth      of computer-to-plate (CTP) consumables. It is estimated that the worldwide      thermal printing plate market in 2006 was $2.22 billion.  This      market is expected to grow by as much as 53% to $3.41 billion based      on research from PIRA International and PRIMIR Research.  Presstek      plans to further penetrate this large consumables market by expanding its      range of CTP plates. These plates will work on both imaging systems sold      by Presstek and on third party imaging devices. Aurora Pro is an example      of a product that fits into this area ofgrowth |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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----

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 are subject tochanges in delivery schedules and are typically cancelable by our customersuntil a specified time prior to the scheduled delivery date. Accordingly, webelieve our 
backlog is not necessarily an accurateindication of future sales. 

| 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 |
|                           |                                                                                                                                                                                |
| Dimension                      | Presstek’s      product line of CTP off-press plate making equipment                                                                                                          |
|                           |                                                                                                                                                                                |
| 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                                                                                                                                                                                                                                                                                                                                                     |
|                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 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 (QMDI)                         | 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 dampeningsystem                                                                                                                                                                                                                                                                                                                                                                                                  |

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Item 1A

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

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|   | If      we are not current in our SEC filings, we will face several adverse      consequences. |
|--------|------------------------------------------------------------------------------------------------|

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

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

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

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

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

Item 1B

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Item 2

|  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                                                                               |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |
| Greenwich,      Connecticut                      |   | Executive      offices                                                                                                                                 |   | N/A                               |   | Services      agreement expires in September 2008                                   |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |
| Des      Plaines, Illinois                       |   | Distribution      center                                                                                                                               |   | 127,000                           |   | Lease      expires in February 2013                                                 |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |
| Des      Plaines, Illinois                       |   | Sales,      service                                                                                                                                    |   | 10,000                            |   | Lease      expires in April 2008                                                    |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |
| Mississauga,      Ontario                        |   | Sales,      service                                                                                                                                    |   | 28,000                            |   | Lease      expires in March 2010                                                    |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |
| Heathrow,      United Kingdom                    |   | European      headquarters, sales, service                                                                                                             |   | 20,000                            |   | Lease      expires in November 2020, with an option to cancel in November      2010 |
|                                             |   |                                                                                                                                                   |   |                              |   |                                                                                |

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Item 3

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Item 4.

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

|                                     |   | High   |   |   | Low    |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|
| Fiscal      year ended December 29, 2007 |   |   |   |   |   |   |
| First      quarter                       |   | $      | 6.53   |   |   | $      | 5.47 |   |
| Second      quarter                      |   | $      | 8.38   |   |   | $      | 5.88 |   |
| Third      quarter                       |   | $      | 8.70   |   |   | $      | 6.14 |   |
| Fourth      quarter                      |   | $      | 7.50   |   |   | $      | 4.60 |   |
|                                     |   |   |   |   |   |   |   |   |
| 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 |   |

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Item 6

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| (in      thousands, except per-share data)                                                                                                            |   |                   |    |   |              |   |    |              |   |   |            |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|---------|--------|-------------------|--------|---------|-------------------|--------|--------|-----------------|--------|--------|
|                                                                                                                                                  |   | Fiscal      year ended |    |
|                                                                                                                                                  |   | December      29,      |    |   | December      30, |   |    | December      31, |   |   | January      1, |   |   | January      3, |   |
|                                                                                                                                                  |   | 2007                   |    |   | 2006              |   |    | 2005              |   |   | 2005      (1)   |   |   | 2004      (2) |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |
| Revenue                                                                                                                                               |   | $                      | 254,843 |   |              | $      | 265,694 |              |   | $      | 259,134         |   |   | $ | 121,453 |   |   | $ | 87,232 |   |
| Cost      of revenue                                                                                                                                  |   |                   | 184,167 |   |              |   | 186,716 |              |   |   | 176,814         |   |   |   | 78,180 |   |   |   | 51,151 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                                                                     |   |                   | 70,676  |   |              |   | 78,978  |              |   |   | 82,320          |   |   |   | 43,273 |   |   |   | 36,081 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                                                                               |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|   Research      and development                                                                                                             |   |                   | 6,217   |   |              |   | 6,409   |              |   |   | 7,335           |   |   |   | 6,460 |   |   |   | 7,061 |   |
|   Sales,      marketing and customer support                                                                                                |   |                   | 39,870  |   |              |   | 39,970  |              |   |   | 40,241          |   |   |   | 17,574 |   |   |   | 12,272 |   |
|   General      and administrative                                                                                                           |   |                   | 34,211  |   |              |   | 19,938  |              |   |   | 20,970          |   |   |   | 12,399 |   |   |   | 8,399 |   |
|   Amortization      of intangible assets                                                                                                    |   |                   | 2,408   |   |              |   | 2,980   |              |   |   | 2,595           |   |   |   | 1,261 |   |   |   | 964 |   |
|   Restructuring      and special charges (credits)                                                                                          |   |                   | 2,714   |   |              |   | 5,481   |              |   |   | 874             |   |   |   | (392 | ) |   |   | 550 |   |
|     Total      operating expenses                                                                                                 |   |                   | 85,420  |   |              |   | 74,778  |              |   |   | 72,015          |   |   |   | 37,302 |   |   |   | 29,246 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                                                                          |   |                   | (14,744 | )      |              |   | 4,200   |              |   |   | 10,305          |   |   |   | 5,971 |   |   |   | 6,835 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Other      income (expense), net                                                                                                                      |   |                   | (2,424  | )      |              |   | (1,826  | )                 |   |   | (2,220          | )      |   |   | (870 | ) |   |   | (167 | ) |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                                                         |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |
|   before      income taxes                                                                                                                  |   |                   | (17,168 | )      |              |   | 2,374   |              |   |   | 8,085           |   |   |   | 5,101 |   |   |   | 6,668 |   |
| Provision      (benefit) for income taxes                                                                                                             |   |                   | (5,018  | )      |              |   | (10,643 | )                 |   |   | 1,164           |   |   |   | 166 |   |   |   | - |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                                                                         |   |                   | (12,150 | )      |              |   | 13,017  |              |   |   | 6,921           |   |   |   | 4,935 |   |   |   | 6,668 |   |
| Income      (loss) from discontinued operations, net of income tax                                                                                    |   |                   | (54     | )      |              |   | (3,273  | )                 |   |   | (835            | )      |   |   | (1,070 | ) |   |   | 1,429 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                                                                |   | $                      | (12,204 | )      |              | $      | 9,744   |              |   | $      | 6,086           |   |   | $ | 3,865 |   |   | $ | 8,097 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - basic                                                                                                                |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|   Income      (loss) from continuing operations                                                                                             |   | $                      | (0.34   | )      |              | $      | 0.36    |              |   | $      | 0.20            |   |   | $ | 0.14 |   |   | $ | 0.20 |   |
|   Income      (loss) from discontinued operations                                                                                           |   |                   | (0.00   | )      |              |   | (0.09   | )                 |   |   | (0.03           | )      |   |   | (0.03 | ) |   |   | 0.04 |   |
|                                                                                                                                                  |   | $                      | (0.34   | )      |              | $      | 0.27    |              |   | $      | 0.17            |   |   | $ | 0.11 |   |   | $ | 0.24 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per share - diluted                                                                                                              |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|   Income      (loss) from continuing operations                                                                                             |   | $                      | (0.34   | )      |              | $      | 0.36    |              |   | $      | 0.19            |   |   | $ | 0.14 |   |   | $ | 0.20 |   |
|   Income      (loss) from discontinued operations                                                                                           |   |                   | (0.00   | )      |              |   | (0.09   | )                 |   |   | (0.02           | )      |   |   | (0.03 | ) |   |   | 0.04 |   |
|                                                                                                                                                  |   | $                      | (0.34   | )      |              | $      | 0.27    |              |   | $      | 0.17            |   |   | $ | 0.11 |   |   | $ | 0.24 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                                                                              |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |
|   Basic                                                                                                                                     |   |                   | 36,199  |   |              |   | 35,565  |              |   |   | 35,153          |   |   |   | 34,558 |   |   |   | 34,167 |   |
|   Diluted                                                                                                                                   |   |                   | 36,199  |   |              |   | 35,856  |              |   |   | 35,572          |   |   |   | 35,357 |   |   |   | 34,400 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   | As      of             |    |
|                                                                                                                                                  |   | December      29,      |    |   | December      30, |   |    | December      31, |   |   | January      1, |   |   | January      3, |   |
|                                                                                                                                                  |   | 2007                   |    |   | 2006              |   |    | 2005              |   |   | 2005      (1)   |   |   | 2004      (2) |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| Working      capital                                                                                                                                  |   | $                      | 39,198  |   |              | $      | 47,498  |              |   | $      | 41,392          |   |   | $ | 41,117 |   |   | $ | 42,512 |   |
| Total      assets                                                                                                                                     |   | $                      | 192,827 |   |              | $      | 198,014 |              |   | $      | 181,487         |   |   | $ | 171,318 |   |   | $ | 106,528 |   |
| Total      debt and capital lease obligations                                                                                                         |   | $                      | 35,535  |   |              | $      | 37,572  |              |   | $      | 35,643          |   |   | $ | 41,822 |   |   | $ | 14,464 |   |
| Stockholders'      equity                                                                                                                             |   | $                      | 106,892 |   |              | $      | 111,237 |              |   | $      | 98,633          |   |   | $ | 89,402 |   |   | $ | 80,183 |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
| (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.                                                                                              |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |   |                   |    |   |              |   |    |              |   |   |            |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                  |

----

Item 7

| ·   | 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 colorprinting; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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, as well as related      equipment and supplies for the graphic arts and printing      industries. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                      |   | Fiscal      year ended |    |
|-------------------------------------------------------------------------------------------|--------|------------------------|---------|
|                                                                                      |   | December      29, 2007 |    |   | December      30, 2006 |   |   | December      31, 2005 |   |
|                                                                                      |   |                   |    |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |   |   |   |   | %      ofrevenue |   |
| Revenue                                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                                                       |   | $                      | 215,875 |   |   |   | 84.7 |   |   | $ | 220,724 |   |   |   | 83.1 |   |   | $ | 210,613 |   |   |   | 81.3 |   |
|   Service      and parts                                                        |   |                   | 38,968  |   |   |   | 15.3 |   |   |   | 44,970 |   |   |   | 16.9 |   |   |   | 48,521 |   |   |   | 18.7 |   |
|           Total      revenue            |   |                   | 254,843 |   |   |   | 100.0 |   |   |   | 265,694 |   |   |   | 100.0 |   |   |   | 259,134 |   |   |   | 100.0 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                                                       |   |                   | 152,545 |   |   |   | 59.9 |   |   |   | 154,250 |   |   |   | 58.1 |   |   |   | 143,952 |   |   |   | 55.5 |   |
|   Service      and parts                                                        |   |                   | 31,622  |   |   |   | 12.4 |   |   |   | 32,466 |   |   |   | 12.2 |   |   |   | 32,862 |   |   |   | 12.7 |   |
|           Total      cost of revenue    |   |                   | 184,167 |   |   |   | 72.3 |   |   |   | 186,716 |   |   |   | 70.3 |   |   |   | 176,814 |   |   |   | 68.2 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                         |   |                   | 70,676  |   |   |   | 27.7 |   |   |   | 78,978 |   |   |   | 29.7 |   |   |   | 82,320 |   |   |   | 31.8 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                   |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research      and development                                                 |   |                   | 6,217   |   |   |   | 2.4 |   |   |   | 6,409 |   |   |   | 2.4 |   |   |   | 7,335 |   |   |   | 2.8 |   |
|   Sales,      marketing and customer support                                    |   |                   | 39,870  |   |   |   | 15.6 |   |   |   | 39,970 |   |   |   | 15.0 |   |   |   | 40,241 |   |   |   | 15.6 |   |
|   General      and administrative                                               |   |                   | 34,211  |   |   |   | 13.4 |   |   |   | 19,938 |   |   |   | 7.5 |   |   |   | 20,970 |   |   |   | 8.1 |   |
|   Amortization      of intangible assets                                        |   |                   | 2,408   |   |   |   | 1.0 |   |   |   | 2,980 |   |   |   | 1.1 |   |   |   | 2,595 |   |   |   | 1.0 |   |
|   Restructuring      and other charges                                          |   |                   | 2,714   |   |   |   | 1.1 |   |   |   | 5,481 |   |   |   | 2.1 |   |   |   | 874 |   |   |   | 0.3 |   |
|           Total      operating expenses |   |                   | 85,420  |   |   |   | 33.5 |   |   |   | 74,778 |   |   |   | 28.1 |   |   |   | 72,015 |   |   |   | 27.8 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                              |   |                   | (14,744 | ) |   |   | 5.8 |   |   |   | 4,200 |   |   |   | 1.6 |   |   |   | 10,305 |   |   |   | 4.0 |   |
| Interest      and other expense, net                                                      |   |                   | (2,424  | ) |   |   | 0.9 |   |   |   | (1,826 | ) |   |   | (0.7 | ) |   |   | (2,220 | ) |   |   | (0.9 | ) |
|    Income      (loss) from continuing operations before income taxes       |   |                   | (17,168 | ) |   |   | 6.7 |   |   |   | 2,374 |   |   |   | 0.9 |   |   |   | 8,085 |   |   |   | 3.1 |   |
| Provision      (benefit) for income taxes                                                 |   |                   | (5,018  | ) |   |   | 1.9 |   |   |   | (10,643 | ) |   |   | (4.0 | ) |   |   | 1,164 |   |   |   | 0.4 |   |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                             |   |                   | (12,150 | ) |   |   | 4.8 |   |   |   | 13,017 |   |   |   | 4.9 |   |   |   | 6,921 |   |   |   | 2.7 |   |
| Loss      from discontinued operations                                                    |   |                   | (54     | ) |   |   | 0.0 |   |   |   | (3,273 | ) |   |   | (1.2 | ) |   |   | (835 | ) |   |   | (0.3 | ) |
|                                                                                      |   |                   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                    |   | $                      | (12,204 | ) |   |   | 4.8 |   |   | $ | 9,744 |   |   |   | 3.7 |   |   | $ | 6,086 |   |   |   | 2.4 |   |

----

----

----

----

----

----

----

----

|                                                                                                                                |   | December      29, 2007 |     |   | December      30, 2006 |   |   | December      31, 2005 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|--------|------------------------|--------|--------|------------------------|--------|
| Revenue                                                                                                                             |   | $                      | 196      |   |                   | $      | 10,816 |                   |   | $ | 15,006 |   |
| Loss      before income taxes                                                                                                       |   |                   | (108     | )      |                   |   | (2,267 | )                      |   |   | (825 | ) |
|   Provision      (benefit) for income taxes                                                                               |   |                   | (54      | )      |                   |   | (771   | )                      |   |   | 10 |   |
| Loss      from discontinued operations                                                                                              |   |                   | (54      | )      |                   |   | (1,496 | )                      |   |   | (835 | ) |
| 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                                                                                          |   | $                      | (54      | )      |                   | $      | (3,273 | )                      |   | $ | (835 | ) |
|     Loss      per diluted share                                                                                 |   | $                      | (0.00    | )      |                   | $      | (0.09  | )                      |   | $ | (0.02 | ) |

----

----

----

|                                                                 |   |   |   |   | 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                                |   | $      | 35,500 |   |                        | $      | 27,000 |   |   | $ | 8,500 |   |   | $ | -- |   |   | $ | -- |   |
| Estimated      interest payments on Senior Secured Credit Facilities |   |   | 2,516  |   |                        |   | 1,986 |   |   |   | 530 |   |   |   | -- |   |   |   | -- |   |
| Capital      lease, including contractual interest                   |   |   | 35     |   |                        |   | 35 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Royalty      obligation                                              |   |   | 6,184  |   |                        |   | 976 |   |   |   | 1,516 |   |   |   | 1,464 |   |   |   | 2,228 |   |
| Executive      contractual obligations                               |   |   | 5,227  |   |                        |   | 1,915 |   |   |   | 3,312 |   |   |   | -- |   |   |   | -- |   |
| Operating      leases                                                |   |   | 6,421  |   |                        |   | 2,386 |   |   |   | 2,659 |   |   |   | 1,375 |   |   |   | -- |   |
|                                                                 |   |   |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total      contractual obligations                       |   | $      | 55,883 |   |                        | $      | 34,298 |   |   | $ | 16,517 |   |   | $ | 2,839 |   |   | $ | 2,228 |   |

----

----

----

----

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

----

----

----

Item 7A

----

Item 8

|                                                                                                                                                                                           | Page           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                                                                                                           |           |
| Reports      of Independent Registered Public Accounting Firms                                                                                                                                 |        54 |
| Consolidated      Balance Sheets as of December 29, 2007 and December 30,    2006                                                                                                              |   56      |
| Consolidated      Statements of Operations for the fiscal years ended December 29, 2007,      December 30, 2006 and December 31, 2005                                                          |   57      |
| Consolidated      Statements of Changes in Stockholders’ Equity and Comprehensive Income for      the fiscal years ended December 29, 2007, December 30, 2006 and December      31, 2005 |   58      |
| Consolidated      Statements of Cash Flows for the fiscal years ended December 29, 2007,      December 30, 2006 and December 31, 2005                                                          |   59      |
| Notes      to Consolidated Financial Statements                                                                                                                                                |   60      |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |
|                                                                                                                                                                                           |           |

----

Report of Independent Registered Public Accounting

----

----

| ITEM      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          |   |              |    |              |
|---------------------------------------------------------------------------------------------------|--------|-------------------|---------|-------------------|
|                                                                                              |   |              |    |              |   |   |
| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |   |
| CONSOLIDATED      BALANCE SHEETS                                                                  |   |
| (in      thousands, except share data)                                                            |   |
|                                                                                              |   |              |    |              |   |   |
|                                                                                              |   | December      29, |    | December      30, |   |
|                                                                                              |   | 2007              |    |              | 2006 |   |
|                                                                                              |   |              |    |              |   |   |
| ASSETS                                                                                            |   |              |    |              |   |   |
| Current      assets                                                                               |   |              |    |              |   |   |
| Cash      and cash equivalents                                                                    |   | $                 | 13,249  |              |   | $ | 9,449 |   |
| Accounts      receivable, net                                                                     |   |              | 42,879  |              |   |   | 53,158 |   |
| Inventories,      net                                                                             |   |              | 49,084  |              |   |   | 46,050 |   |
| Assets      of discontinued operations                                                            |   |              | 15      |              |   |   | 3,321 |   |
| Deferred      income taxes                                                                        |   |              | 6,740   |              |   |   | 4,162 |   |
| Other      current assets                                                                         |   |              | 4,666   |              |   |   | 2,600 |   |
| Total      current assets                                                                         |   |              | 116,633 |              |   |   | 118,740 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Property,      plant and equipment, net                                                           |   |              | 38,023  |              |   |   | 42,194 |   |
| Intangible      assets, net                                                                       |   |              | 6,287   |              |   |   | 8,741 |   |
| Goodwill                                                                                          |   |              | 19,891  |              |   |   | 20,280 |   |
| Deferred      income taxes                                                                        |   |              | 11,124  |              |   |   | 7,515 |   |
| Other      noncurrent assets                                                                      |   |              | 869     |              |   |   | 544 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Total      assets                                                                                 |   | $                 | 192,827 |              |   | $ | 198,014 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                         |   |              |    |              |   |   |   |   |
| Current      liabilities                                                                          |   |              |    |              |   |   |   |   |
| Current      portion of long-term debt and capital lease obligation                               |   | $                 | 7,035   |              |   | $ | 7,037 |   |
| Line      of credit                                                                               |   |              | 20,000  |              |   |   | 15,000 |   |
| Accounts      payable                                                                             |   |              | 18,603  |              |   |   | 27,126 |   |
| Accrued      expenses                                                                             |   |              | 23,713  |              |   |   | 10,471 |   |
| Deferred      revenue                                                                             |   |              | 7,196   |              |   |   | 7,901 |   |
| Liabilities      of discontinued operations                                                       |   |              | 888     |              |   |   | 3,707 |   |
| Total      current liabilities                                                                    |   |              | 77,435  |              |   |   | 71,242 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Long-term      debt and capital lease obligation, less current portion                            |   |              | 8,500   |              |   |   | 15,535 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Total      liabilities                                                                            |   |              | 85,935  |              |   |   | 86,777 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Commitments      and contingencies (See Note 19)                                                  |   |              |    |              |   |   |   |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Stockholders'      equity                                                                         |   |              |    |              |   |   |   |   |
| Preferred      stock, $0.01 par value, 1,000,000 shares authorized, no shares      issued         |   |              | -       |              |   |   | - |   |
| Common      stock, $0.01 par value, 75,000,000 shares authorized, 36,565,474      and             |   |
| 35,662,318      shares issued and outstanding at December 29, 2007 and                            |   |              |    |              |   |
| December      30, 2006, respectively                                                              |   |              | 366     |              |   |   | 357 |   |
| Additional      paid-in capital                                                                   |   |              | 115,884 |              |   |   | 108,769 |   |
| Accumulated      other comprehensive income                                                       |   |              | 1,032   |              |   |   | 297 |   |
| Retained      earnings (accumulated deficit)                                                      |   |              | (10,390 | )                 |   |   | 1,814 |   |
| Total      stockholders' equity                                                                   |   |              | 106,892 |              |   |   | 111,237 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| Total      liabilities and stockholders' equity                                                   |   | $                 | 192,827 |              |   | $ | 198,014 |   |
|                                                                                              |   |              |    |              |   |   |   |   |
|                                                                                              |   |              |    |              |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements. |   |
|                                                                                              |   |              |    |              |   |   |   |   |
|                                                                                                   |   |              |    |              |   |   |   |   |

----

| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |                                              |
|---------------------------------------------------------------------------------------------------|---------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF OPERATIONS                                                        |                                              |
| (in      thousands, except per-share data)                                                        |                                              |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                              |   | Fiscal      year ended |   |
|                                                                                              |                                              |   | December      29, |   |   | December      30, |   |   | December      31, |   |
|                                                                                              |                                              |   | 2007 |   |   | 2006 |   |   | 2005 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                           |                                              |   |   |   |   |   |   |   |   |
|                                                                                              | Product                                           |   | $ | 215,875 |   |   | $ | 220,724 |   |   | $ | 210,613 |   |
|                                                                                              | Service      and parts                            |   |   | 38,968 |   |   |   | 44,970 |   |   |   | 48,521 |   |
|                                                                                              | Total      revenue                                |   |   | 254,843 |   |   |   | 265,694 |   |   |   | 259,134 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost      of revenue                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Product                                           |   |   | 152,545 |   |   |   | 154,250 |   |   |   | 143,952 |   |
|                                                                                              | Service      and parts                            |   |   | 31,622 |   |   |   | 32,466 |   |   |   | 32,862 |   |
|                                                                                              | Total      cost of revenue                        |   |   | 184,167 |   |   |   | 186,716 |   |   |   | 176,814 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      profit                                                                                 |                                              |   | 70,676 |   |   |   | 78,978 |   |   |   | 82,320 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      expenses                                                                           |                                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Research      and development                     |   |   | 6,217 |   |   |   | 6,409 |   |   |   | 7,335 |   |
|                                                                                              | Sales,      marketing and customer support        |   |   | 39,870 |   |   |   | 39,970 |   |   |   | 40,241 |   |
|                                                                                              | General      and administrative                   |   |   | 34,211 |   |   |   | 19,938 |   |   |   | 20,970 |   |
|                                                                                              | Amortization      of intangible assets            |   |   | 2,408 |   |   |   | 2,980 |   |   |   | 2,595 |   |
|                                                                                              | Restructuring      and other charges              |   |   | 2,714 |   |   |   | 5,481 |   |   |   | 874 |   |
|                                                                                              | Total      operating expenses                     |   |   | 85,420 |   |   |   | 74,778 |   |   |   | 72,015 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                                                      |                                              |   | (14,744 | ) |   |   | 4,200 |   |   |   | 10,305 |   |
| Interest      and other income (expense), net                                                     |                                              |   | (2,424 | ) |   |   | (1,826 | ) |   |   | (2,220 | ) |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations before income taxes                                 |                                              |   | (17,168 | ) |   |   | 2,374 |   |   |   | 8,085 |   |
| Provision      (benefit) for income taxes                                                         |                                              |   | (5,018 | ) |   |   | (10,643 | ) |   |   | 1,164 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      (loss) from continuing operations                                                     |                                              |   | (12,150 | ) |   |   | 13,017 |   |   |   | 6,921 |   |
| Loss      from discontinued operations, net of income taxes                                       |                                              |   | (54 | ) |   |   | (3,273 | ) |   |   | (835 | ) |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                            |                                              | $ | (12,204 | ) |   | $ | 9,744 |   |   | $ | 6,086 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - basic                                                     |                                              |   |   |   |   |   |   |   |   |
|                                                                                              | Income      (loss) from continuing operations     |   | $ | (0.34 | ) |   | $ | 0.36 |   |   | $ | 0.20 |   |
|                                                                                              | Loss      from discontinued operations            |   |   | (0.00 | ) |   |   | (0.09 | ) |   |   | (0.03 | ) |
|                                                                                              |                                              |   | $ | (0.34 | ) |   | $ | 0.27 |   |   | $ | 0.17 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings      (loss) per common share - diluted                                                   |                                              |   |   |   |   |   |   |   |   |
|                                                                                              | Income      (loss) from continuing operations     |   | $ | (0.34 | ) |   | $ | 0.36 |   |   | $ | 0.19 |   |
|                                                                                              | Loss      from discontinued operations            |   |   | (0.00 | ) |   |   | (0.09 | ) |   |   | (0.02 | ) |
|                                                                                              |                                              |   | $ | (0.34 | ) |   | $ | 0.27 |   |   | $ | 0.17 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding                                                          |                                              |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Weighted      average shares outstanding - basic  |   |   | 36,199 |   |   |   | 35,565 |   |   |   | 35,153 |   |
|                                                                                              | Dilutive      effect of stock options             |   |   | - |   |   |   | 291 |   |   |   | 419 |   |
|                                                                                              | Weighed      average shares outstanding - diluted |   |   | 36,199 |   |   |   | 35,856 |   |   |   | 35,572 |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| 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 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 (loss)                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 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 (loss)                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9,744 |   |   |   | 9,744 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 30, 2006                                                                 |   |   | 35,662 |   |   |   | 357 |   |   |   | 108,769 |   |   |   | 297 |   |   |   | 1,814 |   |   |   | 111,237 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance      of common stock                                                                     |   |   | 903 |   |   |   | 9 |   |   |   | 3,126 |   |   |   | - |   |   |   | - |   |   |   | 3,135 |   |
| Foreign      currency translation adjustments                                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 735 |   |   |   | - |   |   |   | 735 |   |
| Share      based compensation under SFAS No. 123(R)                                               |   |   | - |   |   |   | - |   |   |   | 3,989 |   |   |   | - |   |   |   | - |   |   |   | 3,989 |   |
| Net      income (loss)                                                                            |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (12,204 | ) |   |   | (12,204 | ) |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 29, 2007                                                                 |   |   | 36,565 |   |   | $ | 366 |   |   | $ | 115,884 |   |   | $ | 1,032 |   |   | $ | (10,390 | ) |   | $ | 106,892 |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss) is calculated as follows:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   | Year      ended |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   | December      29, |   | December      30, |   |  December      31, |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   | 2007 |   |   | 2006 |   |   | 2005 |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                            |   |   |   |   |   | $ | (12,204 | ) |   | $ | 9,744 |   |   | $ | 6,086 |   |   |   |   |   |   |   |   |   |
| Adjustments      to accumulated other comprehensive income                                        |   |   | 735 |   |   |   | 356 |   |   |   | (166 | ) |   |   |   |   |   |   |   |   |
|   Comprehensive      income (loss)                                                      |   |   |   |   |   | $ | (11,469 | ) |   | $ | 10,100 |   |   | $ | 5,920 |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements. |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |

----

| PRESSTEK,      INC. AND SUBSIDIARIES                                                              |                                                                                                             |
|---------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
| CONSOLIDATED      STATEMENTS OF CASH FLOWS                                                        |                                                                                                             |
| (in      thousands)                                                                               |                                                                                                             |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                                                                                             |   | Fiscal      year ended |   |
|                                                                                              |                                                                                                             |   | December      29, |   | December      30, |   | December      31, |   |
|                                                                                              |                                                                                                             |   | 2007 |   |   | 2006 |   |   | 2005 |   |
| Operating activities                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |
|                                                                                              | Net      income (loss)                                                                                           |   | $ | (12,204 | ) |   | $ | 9,744 |   |   | $ | 6,086 |   |
|                                                                                              | Add      loss from discontinued operations                                                                       |   |   | 54 |   |   |   | 3,273 |   |   |   | 835 |   |
|                                                                                              | Income      (loss) from continuing operations                                                                    |   |   | (12,150 | ) |   |   | 13,017 |   |   |   | 6,921 |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Adjustments      to reconcile net income (loss) to net cash provided by operating      activities:               |   |   |   |   |   |
|                                                                                              | Depreciation                                                                                                     |   |   | 6,959 |   |   |   | 6,964 |   |   |   | 8,132 |   |
|                                                                                              | Amortization      of intangible assets                                                                           |   |   | 2,408 |   |   |   | 2,953 |   |   |   | 2,595 |   |
|                                                                                              | Restructuring      and other charges                                                                             |   |   | - |   |   |   | 5,481 |   |   |   | 874 |   |
|                                                                                              | Provision      for warranty costs                                                                                |   |   | 3,517 |   |   |   | 3,400 |   |   |   | 1,558 |   |
|                                                                                              | Provision      for accounts receivable allowances                                                                |   |   | 2,092 |   |   |   | 391 |   |   |   | 1,604 |   |
|                                                                                              | Stock      compensation expense                                                                                  |   |   | 3,989 |   |   |   | 374 |   |   |   | 148 |   |
|                                                                                              | Deferred      income taxes                                                                                       |   |   | (6,187 | ) |   |   | (11,677 | ) |   |   | 715 |   |
|                                                                                              | Loss      on disposal of assets                                                                                  |   |   | 572 |   |   |   | 72 |   |   |   | 153 |   |
|                                                                                              | Changes      in operating assets and liabilities, net of effects from business      acquisitions and divestures: |   |
|                                                                                              | Accounts      receivable                                                                                         |   |   | 7,690 |   |   |   | (10,947 | ) |   |   | (8,588 | ) |
|                                                                                              | Inventories                                                                                                      |   |   | (3,039 | ) |   |   | 2,214 |   |   |   | (7,707 | ) |
|                                                                                              | Other      current assets                                                                                        |   |   | (2,066 | ) |   |   | (1,445 | ) |   |   | 214 |   |
|                                                                                              | Other      noncurrent assets                                                                                     |   |   | 98 |   |   |   | 39 |   |   |   | (43 | ) |
|                                                                                              | Accounts      payable                                                                                            |   |   | (8,528 | ) |   |   | 9,163 |   |   |   | 7,516 |   |
|                                                                                              | Accrued      expenses                                                                                            |   |   | 7,482 |   |   |   | (6,522 | ) |   |   | (3,390 | ) |
|                                                                                              | Restructuring      and other charges                                                                             |   |   | 2,714 |   |   |   | - |   |   |   | - |   |
|                                                                                              | Deferred      revenue                                                                                            |   |   | (738 | ) |   |   | (692 | ) |   |   | (1,940 | ) |
|                                                                                              | Net      cash provided by operating activities                                                                   |   |   | 4,813 |   |   |   | 12,785 |   |   |   | 8,762 |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Investing      activities                                                                         |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Purchase      of property, plant and equipment                                                                   |   |   | (3,046 | ) |   |   | (4,033 | ) |   |   | (6,100 | ) |
|                                                                                              | Business      acquisitions, net of cash acquired                                                                 |   |   | (119 | ) |   |   | (832 | ) |   |   | (3,467 | ) |
|                                                                                              | Investment      in patents and other intangible assets                                                           |   |   | (204 | ) |   |   | (2,791 | ) |   |   | (2,176 | ) |
|                                                                                              | Proceeds      from the sale of long-lived assets                                                                 |   |   | - |   |   |   | - |   |   |   | 124 |   |
|                                                                                              | Net      cash used in investing activities                                                                       |   |   | (3,369 | ) |   |   | (7,656 | ) |   |   | (11,619 | ) |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Financing      activities                                                                         |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Net      proceeds from issuance of common stock                                                                  |   |   | 3,135 |   |   |   | 2,130 |   |   |   | 3,113 |   |
|                                                                                              | Repayments      of term loan and capital lease                                                                   |   |   | (7,037 | ) |   |   | (7,035 | ) |   |   | (5,503 | ) |
|                                                                                              | Net      borrowings (repayments) under line of credit agreement                                                  |   |   | 5,000 |   |   |   | 8,964 |   |   |   | (786 | ) |
|                                                                                              | Net      cash provided by (used in) financing activities                                                         |   |   | 1,098 |   |   |   | 4,059 |   |   |   | (3,176 | ) |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      provided by (used in) discontinued operations                                           |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Operating      activities                                                                                        |   |   | 434 |   |   |   | (4,531 | ) |   |   | 2,968 |   |
|                                                                                              | Investing      activities                                                                                        |   |   | - |   |   |   | (396 | ) |   |   | (29 | ) |
|                                                                                              | Financing      activities                                                                                        |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                              | Net      cash provided by (used in) discontinued operations                                                      |   |   | 434 |   |   |   | (4,927 | ) |   |   | 2,939 |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents                                 |                                                                                                             |   | 824 |   |   |   | (427 | ) |   |   | (30 | ) |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                         |                                                                                                             |   | 3,800 |   |   |   | 3,834 |   |   |   | (3,124 | ) |
| Cash      and cash equivalents, beginning of period                                               |                                                                                                             |   | 9,449 |   |   |   | 5,615 |   |   |   | 8,739 |   |
| Cash      and cash equivalents, end of period                                                     |                                                                                                             | $ | 13,249 |   |   | $ | 9,449 |   |   | $ | 5,615 |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosure of cash flow information                                             |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              | Cash      paid for interest                                                                                      |   | $ | 3,106 |   |   | $ | 2,364 |   |   | $ | 2,459 |   |
|                                                                                              | Cash      paid for income taxes                                                                                  |   | $ | 236 |   |   | $ | 1,252 |   |   | $ | 327 |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these consolidated financial      statements. |                                                                                                             |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |

----

1.  NATURE OF THE BUSINESS

----

----

----

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

----

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

----

----

|                                                                                                                                                   |   | December      31, 2005 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|--------|
|                                                                                                                                                   |   |                   |   |
| Net      income, as reported                                                                                                                           |   | $                      | 6,086  |   |
| 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 | ) |
| Pro      forma net income                                                                                                                              |   | $                      | 2,223  |   |
|                                                                                                                                                   |   |                   |   |   |
| Earnings      per common share, as reported:                                                                                                           |   |                   |   |   |
|    Basic                                                                                                                                |   | $                      | 0.17   |   |
|    Diluted                                                                                                                              |   | $                      | 0.17   |   |
|                                                                                                                                                   |   |                   |   |   |
| Pro      forma earnings per common share:                                                                                                              |   |                   |   |   |
|    Basic                                                                                                                                |   | $                      | 0.06   |   |
|    Diluted                                                                                                                              |   | $                      | 0.06   |   |

----

----

----

|                                                                                                                                |   | December      29, 2007 |     |   | December      30, 2006 |   |   | December      31, 2005 |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|----------|--------|------------------------|--------|--------|------------------------|--------|
| Revenue                                                                                                                             |   | $                      | 196      |   |                   | $      | 10,816 |                   |   | $ | 15,006 |   |
| Loss      before income taxes                                                                                                       |   |                   | (108     | )      |                   |   | (2,267 | )                      |   |   | (825 | ) |
|   Provision      (benefit) for income taxes                                                                               |   |                   | (54      | )      |                   |   | (771   | )                      |   |   | 10 |   |
| Loss      from discontinued operations                                                                                              |   |                   | (54      | )      |                   |   | (1,496 | )                      |   |   | (835 | ) |
| 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                                                                                          |   | $                      | (54      | )      |                   | $      | (3,273 | )                      |   | $ | (835 | ) |
|     Loss      per diluted share                                                                                 |   | $                      | (0.00    | )      |                   | $      | (0.09  | )                      |   | $ | (0.02 | ) |

----

|                                       |   | December      29, 2007 |   |   | December      30, 2006 |   |
|--------------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
|                                       |   |                   |   |   |                   |   |
| Receivables,      net                      |   | $                      | 15     |   |                   | $      | 1,875 |   |
| Inventories,      net                      |   |                   | --     |   |                   |   |  1,446 |   |
|   Total      current assets      |   | $                      | 15     |   |                   | $      | 3,321 |   |
|                                       |   |                   |   |   |                   |   |   |   |
| Accounts      payable                      |   | $                      | 189    |   |                   | $      | 2,126 |   |
| Accrued      expenses                      |   |                   | 699    |   |                   |   |  1,581 |   |
|   Total      current liabilities |   | $                      | 888    |   |                   | $      | 3,707 |   |
|                                       |   |                   |   |   |                   |   |   |   |

|                     |   | December      29,2007 |   |   | December      30,2006 |   |
|--------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                     |   |                  |   |   |                  |   |
| Accounts      receivable |   | $                     | 45,812 |   |                  | $      | 56,152 |   |
| Less      allowances     |   |                  | (2,933 | )      |                  |   | (2,994 | ) |
|                     |   | $                     | 42,879 |   |                  | $      | 53,158 |   |

|                                             |   | Fiscal2007 |   |   | Fiscal2006 |   |   | Fiscal2005 |   |
|--------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                             |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of period              |   | $          | 2,994  |   |       | $      | 3,294  |       |   | $ | 4,304 |   |
| Charged      to costs and expenses               |   |       | 2,092  |   |       |   | 391    |       |   |   | 1,604 |   |
| Charged      to other accounts:                  |   |       |   |   |       |   |   |       |   |   |   |   |
|   Purchase      accounting adjustments |   |       | --     |   |       |   | --     |       |   |   | (30 | ) |
| Deductions      and write-offs                   |   |       | (2,153 | )      |       |   | (691   | )          |   |   | (2,584 | ) |
| Balance      at end of period                    |   | $          | 2,933  |   |       | $      | 2,994  |       |   | $ | 3,294 |   |

----

|                 |   | December      29,2007 |   |   | December      30,2006 |   |
|----------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                 |   |                  |   |   |                  |   |
| Raw      materials   |   | $                     | 5,083  |   |                  | $      | 3,434 |   |
| Work      in process |   |                  | 6,615  |   |                  |   | 7,102 |   |
| Finished      goods  |   |                  | 37,386 |   |                  |   | 35,514 |   |
|                 |   | $                     | 49,084 |   |                  | $      | 46,050 |   |

|                                                           |   | December      29,2007 |    |   | December      30,2006 |   |
|----------------------------------------------------------------|--------|-----------------------|---------|--------|-----------------------|--------|
|                                                           |   |                  |    |   |                  |   |
| Land      and improvements                                     |   | $                     | 2,286   |   |                  | $      | 2,286 |   |
| Buildings      and leasehold improvements                      |   |                  | 29,968  |   |                  |   | 29,428 |   |
| Production      and other equipment                            |   |                  | 57,197  |   |                  |   | 56,462 |   |
| Office      furniture and equipment                            |   |                  | 7,615   |   |                  |   | 7,263 |   |
| Construction      in process                                   |   |                  | 2,930   |   |                  |   | 1,886 |   |
|   Total      property, plant and equipment, at cost  |   |                  | 99,996  |   |                  |   | 97,325 |   |
| Accumulated      depreciation and amortization                 |   |                  | (61,973 | )      |                  |   | (55,131 | ) |
|     Net      property, plant and equipment |   | $                     | 38,023  |   |                  | $      | 42,194 |   |

----

|                                                               |   |   |   |
|--------------------------------------------------------------------|--------|--------|--------|
| Balance      at December 31, 2005                                  |   | $      | 23,089 |   |
| Purchase      accounting adjustments for prior period acquisitions |   |   | --     |   |
| Impairment      adjustments                                        |   |   | (2,089 | ) |
| Balance      at December 30, 2006                                  |   | $      | 20,280 |   |
| Purchase      accounting adjustments for prior period acquisitions |   |   | (389   | ) |
| Impairment      adjustments                                        |   |   | --     |   |
| Balance      at December 29, 2007                                  |   | $      | 19,891 |   |

|                                   |   | December      29, 2007 |   |   | December      30, 2006  |   |
|----------------------------------------|--------|------------------------|--------|--------|-------------------------|--------|
|                                   |   | Cost                   |   |   | Accumulatedamortization |   |   | Cost |   |   | Accumulatedamortization |   |
|                                   |   |                   |   |   |                    |   |   |   |   |   |   |   |
| Patents      and intellectual property |   | $                      | 11,038 |   |                    | $      | 7,923 |   |   | $ | 11,277 |   |   | $ | 7,206 |   |
| Trade      names                       |   |                   | 2,360  |   |                    |   | 2,360 |   |   |   | 2,360 |   |   |   | 1,776 |   |
| Customer      relationships            |   |                   | 4,583  |   |                    |   | 1,986 |   |   |   | 4,583 |   |   |   | 1,443 |   |
| Software      licenses                 |   |                   | 450    |   |                    |   | 450 |   |   |   | 450 |   |   |   | 325 |   |
| License      agreements                |   |                   | 750    |   |                    |   | 296 |   |   |   | 750 |   |   |   | 169 |   |
| Non-compete      covenants             |   |                   | 100    |   |                    |   | 100 |   |   |   | 100 |   |   |   | 48 |   |
| Loan      origination fees             |   |                   | 332    |   |                    |   | 211 |   |   |   | 332 |   |   |   | 144 |   |
|                                   |   | $                      | 19,613 |   |                    | $      | 13,326 |   |   | $ | 19,852 |   |   | $ | 11,111 |   |

| Fiscal      2008 |   | $      | 1,385 |   |
|------------------|--------|--------|-------|--------|
| Fiscal      2009 |   |   | 1,251 |   |
| Fiscal      2010 |   |   | 1,127 |   |
| Fiscal      2011 |   |   | 838   |   |
| Fiscal      2012 |   |   | 511   |   |
| Thereafter       |   |   | 697   |   |

----

|                                  |   | December      29, 2007 |    |   | December      30,2006 |   |
|---------------------------------------|--------|------------------------|---------|--------|-----------------------|--------|
|                                  |   |                   |    |   |                  |   |
| Term      loan                        |   | $                      | 15,500  |   |                  | $      | 22,500 |   |
| Line      of credit                   |   |                   | 20,000  |   |                  |   | 15,000 |   |
| Capital      lease                    |   |                   | 35      |   |                  |   | 72 |   |
|                                  |   |                   | 35,535  |   |                  |   | 37,572 |   |
|   Less      current portion |   |                   | (27,035 | )      |                  |   | (22,037 | ) |
|                                  |   |                   |    |   |                  |   |   |   |
| Long-term      debt                   |   | $                      | 8,500   |   |                  | $      | 15,535 |   |

----

| 2008   |   | $      | 27,035 |   |
|--------|--------|--------|--------|--------|
| 2009   |   |   | 8,500  |   |
|   |   |   |   |   |

|                                         |   | December      29,2007 |   |   | December      30,2006 |   |
|----------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                         |   |                  |   |   |                  |   |
| Accrued      payroll and employee benefits   |   | $                     | 5,809  |   |                  | $      | 5,642 |   |
| Accrued      warranty                        |   |                  | 3,534  |   |                  |   | 1,729 |   |
| Accrued      integration costs               |   |                  | --     |   |                  |   | 511 |   |
| Accrued      restructuring and other charges |   |                  | 1,592  |   |                  |   | 233 |   |
| Accrued      royalties                       |   |                  | 432    |   |                  |   | 276 |   |
| Accrued      income taxes                    |   |                  | 569    |   |                  |   | -- |   |
| Accrued      legal                           |   |                  | 5,815  |   |                  |   | 284 |   |
| Accrued      professional fees               |   |                  | 2,545  |   |                  |   | 306 |   |
| Other                                        |   |                  | 3,417  |   |                  |   | 1,490 |   |
|                                         |   | $                     | 23,713 |   |                  | $      | 10,471 |   |

----

|                                           |   | Fiscal2007 |   |   | Fiscal2006 |   |   | Fiscal2005 |   |
|------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                           |   |       |   |   |       |   |   |       |   |
| Balance      at beginning of year              |   | $          | 1,729  |   |       | $      | 1,481  |       |   | $ | 1,466 |   |
| Accruals      for warranties                   |   |       | 3,517  |   |       |   | 3,400  |       |   |   | 1,558 |   |
| Utilization      of accrual for warranty costs |   |       | (1,712 | )      |       |   | (3,152 | )          |   |   | (1,543 | ) |
| Balance      at end of year                    |   | $          | 3,534  |   |       | $      | 1,729  |       |   | $ | 1,481 |   |

|                          |   | December      29,2007 |   |   | December      30,2006 |   |
|-------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                          |   |                  |   |   |                  |   |
| Deferred      service revenue |   | $                     | 6,718  |   |                  | $      | 7,505 |   |
| Deferred      product revenue |   |                  | 478    |   |                  |   | 396 |   |
|                          |   | $                     | 7,196  |   |                  | $      | 7,901 |   |

----

|                                                                                     |   | December      29,2007 |   |   | December      30,2006 |   |   | December      31,2005 |   |
|------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                                                                     |   |                  |   |   |                  |   |   |                  |   |
| Asset      impairment – goodwill                                                   |   | $                     | --     |   |                  | $      | 2,809  |                  |   | $ | -- |   |
| Impairment      of intangible assets - patent defense costs                              |   |                  | --     |   |                  |   | 2,297  |                  |   |   | -- |   |
| Impairment      of other assets                                                          |   |                  | --     |   |                  |   | 260    |                  |   |   | -- |   |
| Severance      and fringe benefits                                                       |   |                  | 1,210  |   |                  |   | 115    |                  |   |   | 592 |   |
| Executive      contractual obligations                                                   |   |                  | 1,466  |   |                  |   | --     |                  |   |   | 282 |   |
| Other      exit costs                                                                    |   |                  | 38     |   |                  |   | --     |                  |   |   | -- |   |
|        Total      net restructuring and other charges |   | $                     | 2,714  |   |                  | $      | 5,481  |                  |   | $ | 874 |   |

----

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

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

|                                   |   | 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 |   |

|                             |   | Fiscal2007 |   |   | Fiscal2006 |   |   | Fiscal2005 |   |
|----------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                             |   |       |   |   |       |   |   |       |   |
| Interest      expense            |   | $          | (3,282 | )      |       | $      | (2,364 | )          |   | $ | (2,459 | ) |
| Interest      income             |   |       | 105    |   |       |   | 119    |       |   |   | 130 |   |
| Other      income (expense), net |   |       | 753    |   |       |   | 419    |       |   |   | 109 |   |
|                             |   | $          | (2,424 | )      |       | $      | (1,826 | )          |   | $ | (2,220 | ) |

----

|    |   | Fiscal2007 |    |   | Fiscal2006 |   |   | Fiscal2005 |   |
|---------|--------|------------|---------|--------|------------|--------|--------|------------|--------|
|    |   |       |    |   |       |   |   |       |   |
| U.S.    |   | $          | (18,823 | )      |       | $      | 3,198  |       |   | $ | 7,603 |   |
| Foreign |   |       | 1,655   |   |       |   | (824   | )          |   |   | 482 |   |
|    |   | $          | (17,168 | )      |       | $      | 2,374  |       |   | $ | 8,085 |   |

|                                      |   | Fiscal2007 |   |   | Fiscal2006 |   |    | Fiscal2005 |   |
|-------------------------------------------|--------|------------|--------|--------|------------|--------|---------|------------|--------|
|                                      |   |       |   |   |       |   |    |       |   |
| Current:                                  |   |       |   |   |       |   |    |       |   |
| Federal                                   |   | $          | 138    |   |       | $      | 129     |       |   | $ | 175 |   |
| State                                     |   |       | 456    |   |       |   | 545     |       |   |   | 176 |   |
| Foreign                                   |   |       | 507    |   |       |   | 37      |       |   |   | 218 |   |
|                                      |   | $          | 1,101  |   |       | $      | 711     |       |   | $ | 569 |   |
|                                      |   |       |   |   |       |   |    |       |   |   |   |   |
| Deferred:                                 |   |       |   |   |       |   |    |       |   |   |   |   |
| Federal                                   |   |       | (5,382 | )      |       |   | (10,274 | )          |   |   | 475 |   |
| State                                     |   |       | (737   | )      |       |   | (802    | )          |   |   | 120 |   |
| Foreign                                   |   |       | --     |   |       |   | (278    | )          |   |   | -- |   |
|                                      |   |       | (6,119 | )      |       |   | (11,354 | )          |   |   | 595 |   |
| Provision      (benefit) for income taxes |   | $          | (5,018 | )      |       | $      | (10,643 | )          |   | $ | 1,164 |   |

|                                            |   | Fiscal2007 |   |   | Fiscal2006 |   |   | Fiscal2005 |   |
|-------------------------------------------------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                                            |   |       |   |   |       |   |   |       |   |
| Federal      statutory tax rate                 |   |       | 34.0   | %      |       |   | 34.0   | %          |   |   | 34.0 | % |
| Nondeductible      Officer’s compensation |   |       | (3.8   | )      |       |   | --     |       |   |   | -- |   |
| State      tax, net of federal benefit          |   |       | 1.1    |   |       |   | (7.2   | )          |   |   | 3.6 |   |
| Alternative      minimum tax                    |   |       | --     |   |       |   | --     |       |   |   | 2.2 |   |
| Other                                           |   |       | (2.1   | )      |       |   | (2.5   | )          |   |   | 0.7 |   |
| Change      in valuation allowance              |   |       | --     |   |       |   | (472.6 | )          |   |   | (26.1 | ) |
|                                            |   |       | 29.2   | %      |       |   | (448.3 | )%         |   |   | 14.4 | % |

----

|                                                                                                                                           |   | December      29,2007 |   |   | December      30,2006 |   |   | December      31,2005 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|
|                                                                                                                                           |   |                  |   |   |                  |   |   |                  |   |
| Deferred      tax assets                                                                                                                       |   |                  |   |   |                  |   |   |                  |   |
| Net      operating loss carryforwards                                                                                                          |   | $                     | 7,439  |   |                  | $      | 5,751  |                  |   | $ | 26,500 |   |
| Tax      credits                                                                                                                               |   |                  | 3,875  |   |                  |   | 3,757  |                  |   |   | 5,300 |   |
| Warranty      provisions, litigation and other accruals                                                                                        |   |                  | 6,940  |   |                  |   | 4,162  |                  |   |   | 5,900 |   |
| Accumulated      depreciation and amortization                                                                                                 |   |                  | 712    |   |                  |   | --     |                  |   |   | -- |   |
| Gross      deferred tax assets                                                                                                                 |   |                  | 18,966 |   |                  |   | 13,670 |                  |   |   | 37,700 |   |
|            Valuation      allowance                                                     |   |                  | (250   | )      |                  |   | (261   | )                     |   |   | (35,700 | ) |
|                    Total      assets            |   |                  | 18,716 |   |                  |   | 13,409 |                  |   |   | 2,000 |   |
|                                                                                                                                           |   |                  |   |   |                  |   |   |                  |   |   |   |   |
| Deferred      tax liabilities                                                                                                                  |   |                  |   |   |                  |   |   |                  |   |   |   |   |
| Amortizable      and depreciable assets                                                                                                        |   |                  | (852   | )      |                  |   | (136   | )                     |   |   | (715 | ) |
| Accumulated      depreciation and amortization                                                                                                 |   |                  | --     |   |                  |   | (1,596 | )                     |   |   | (2,000 | ) |
|                     Total      liabilities |   |                  | (852   | )      |                  |   | (1,732 | )                     |   |   | (2,715 | ) |
|                                                                                                                                           |   |                  |   |   |                  |   |   |                  |   |   |   |   |
|      Net      deferred tax assets (liabilities)                                                                       |   | $                     | 17,864 |   |                  | $      | 11,677 |                  |   | $ | (715 | ) |

----

| Balance      at December 30, 2006                        |   | $      | 1,800     |   |
|----------------------------------------------------------|--------|--------|-----------|--------|
|  Increases      related to prior year tax positions |   |   | 400  |   |
| Decreases      related to prior year tax positions       |   |   | (400      | )      |
| Balance      at December 29, 2007                        |   | $      | 1,800     |   |

----

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

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

----

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

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

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

----

|                                |   | Twelve      months ended |   |
|-------------------------------------|--------|--------------------------|--------|
|  Stock option plan             |   | December      29, 2007   |   |   | December      30, 2006 |   |
|                                |   |                     |   |   |   |   |
| 2003      Plan                      |   | $                        | 1,379  |   |   | $ | 268 |   |
| 1998      Plan                      |   |                     | 7      |   |   |   | -- |   |
| ESPP                                |   |                     | 71     |   |   |   | 106 |   |
| Restricted      Stock               |   |                     | 1,500  |   |   |   | -- |   |
| Non-plan,      non-qualified        |   |                     | 1,032  |   |   |   | -- |   |
|                                |   |                     |   |   |   |   |   |   |
|      Total |   | $                        | 3,989  |   |   | $ | 374 |   |
|                                |   |                     |   |   |   |   |   |   |

|                                  |   |   Shares |      |   | Weighted      averageexercise      price |   | Weighted      average remaining contractual term |   Aggregate      intrinsic value |
|---------------------------------------|--------|--------------------|-----------|--------|------------------------------------------|--------|--------------------------------------------------|--------------------------------------------|
|                                  |   |               |      |   |                                     |   |                                             |                                       |
| 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                                             |                                       |   |   |
| Granted                               |   |               | 2,203,333 |   |                                     | $      | 5.40                                             |                                       |   |   |
| Exercised                             |   |               | (836,950  | )      |                                     | $      | 3.36                                             |                                       |   |   |
| Canceled/expired                      |   |               | (506,166  | )      |                                     | $      | 8.29                                             |                                       |   |   |
| Outstanding      at December 29, 2007 |   |               | 3,816,567 |   |                                     | $      | 8.26                                             |                                       | 6.08      years |  $      0.1 million |
| Exercisable      at December 29, 2007 |   |               | 2,203,650 |   |                                     | $      | 9.71                                             |                                       | 4.79      years | $      0.1 million |

----

|                           |   |   | Outstanding  |   |   | Exercisable                                                      |   |
|--------------------------------|--------|--------|--------------|--------|--------|------------------------------------------------------------------|--------|
|  Range of exercise prices |   |   |  Shares |   |   | Weighted      averageremaining      contractuallife      (years) |   |   | Weighted      average exercise price |   |   |   Shares |   |   | Weightedaverageexercise      price |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 2.88 |   |   |   | 12,500 |   |   |   | 4.66 |   |   | $ | 2.88 |   |   |   | 12,500 |   |   | $ | 2.88 |   |
| $                              | 2.89   |   |         |   | -      |                                                             |   | $ | 5.22 |   |   |   | 86,667 |   |   |   | 4.49 |   |   |   | 4.40 |   |   |   | 86,667 |   |   |   | 4.40 |   |
| $                              | 5.23   |   |         |   | -      |                                                             |   | $ | 6.00 |   |   |   | 120,500 |   |   |   | 6.55 |   |   |   | 5.80 |   |   |   | 20,500 |   |   |   | 5.90 |   |
| $                              | 6.01   |   |         |   | -      |                                                             |   | $ | 6.75 |   |   |   | 1,766,400 |   |   |   | 7.15 |   |   |   | 6.17 |   |   |   | 381,816 |   |   |   | 6.18 |   |
| $                              | 6.76   |   |         |   | -      |                                                             |   | $ | 8.00 |   |   |   | 309,925 |   |   |   | 6.51 |   |   |   | 7.56 |   |   |   | 181,592 |   |   |   | 7.39 |   |
| $                              | 8.01   |   |         |   | -      |                                                             |   | $ | 10.00 |   |   |   | 765,775 |   |   |   | 6.91 |   |   |   | 8.99 |   |   |   | 765,775 |   |   |   | 8.99 |   |
| $                              | 10.01  |   |         |   | -      |                                                             |   | $ | 15.00 |   |   |   | 546,800 |   |   |   | 2.80 |   |   |   | 12.65 |   |   |   | 546,800 |   |   |   | 12.65 |   |
| $                              | 15.01  |   |         |   | -      |                                                             |   | $ | 23.00 |   |   |   | 208,000 |   |   |   | 2.36 |   |   |   | 16.12 |   |   |   | 208,000 |   |   |   | 16.12 |   |
| $                              | 0.00   |   |         |   | -      |                                                             |   | $ | 23.00 |   |   |   | 3,816,567 |   |   |   | 6.08 |   |   | $ | 8.26 |   |   |   | 2,203,650 |   |   | $ | 9.71 |   |

|                                                  |   |  Shares |          |   | Weighted      averageexercise      price |   | Weighted      average remaining contractual term |  Aggregate      intrinsic value |
|-------------------------------------------------------|--------|--------------|---------------|--------|------------------------------------------|--------|--------------------------------------------------|--------------------------------------|
|                                                  |   |         |          |   |                                     |   |                                             |                                 |
| 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      at December 30, 2006                 |   |         | 237,200       |   |                                     | $      | 0.20                                             |                                 |   |   |
| Granted                                               |   |         | --            |   |                                     | $      | --                                               |                                 |   |   |
| Exercised                                             |   |         | --            |   |                                     | $      | --                                               |                                 |   |   |
| Canceled/expired                                      |   |         | (72,550       | )      |                                     | $      | 0.17                                             |                                 |   |   |
| Outstanding      and exercisable at December 29, 2007 |   |         |  164,650 |   |                                     | $      | 0.21                                             |                                 |  4.4      years |   $0.03      million |

----

|                                                                                           |   | Fiscal2007 |    |   | Fiscal2006 |   |    | Fiscal2005 |   |
|------------------------------------------------------------------------------------------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|                                                                                           |   |       |    |   |       |   |    |       |   |
| Revenue                                                                                        |   |       |    |   |       |   |    |       |   |
| Presstek                                                                                       |   | $          | 246,573 |   |       | $      | 258,936 |       |   | $ | 255,344 |   |
| Lasertel                                                                                       |   |       | 12,495  |   |       |   | 11,469  |       |   |   | 7,760 |   |
| Total      revenue, including inter-segment                                                    |   |       | 259,068 |   |       |   | 270,405 |       |   |   | 263,104 |   |
| Inter-segment      revenue                                                                     |   |       | (4,225  | )      |       |   | (4,711  | )          |   |   | (3,970 | ) |
|                                                                                           |   | $          | 254,843 |   |       | $      | 265,694 |       |   | $ | 259,134 |   |
|                                                                                           |   |       |    |   |       |   |    |       |   |   |   |   |
| Revenues      from external customers                                                          |   |       |    |   |       |   |    |       |   |   |   |   |
| Presstek                                                                                       |   | $          | 246,573 |   |       | $      | 258,936 |       |   | $ | 255,344 |   |
| Lasertel                                                                                       |   |       | 8,270   |   |       |   | 6,758   |       |   |   | 3,790 |   |
|                                                                                           |   | $          | 254,843 |   |       | $      | 265,694 |       |   | $ | 259,134 |   |
|                                                                                           |   |       |    |   |       |   |    |       |   |   |   |   |
| Operating      income (loss)                                                                   |   |       |    |   |       |   |    |       |   |   |   |   |
| Presstek                                                                                       |   | $          | (12,990 | )      |       | $      | 5,310   |       |   | $ | 13,965 |   |
| Lasertel                                                                                       |   |       | (1,754  | )      |       |   | (1,110  | )          |   |   | (3,660 | ) |
|                                                                                           |   | $          | (14,744 | )      |       | $      | 4,200   |       |   | $ | 10,305 |   |
|                                                                                           |   |       |    |   |       |   |    |       |   |   |   |   |
| Depreciation      and amortization                                                             |   |       |    |   |       |   |    |       |   |   |   |   |
| Presstek                                                                                       |   | $          | 7,732   |   |       | $      | 8,288   |       |   | $ | 8,374 |   |
| Lasertel                                                                                       |   |       | 1,635   |   |       |   | 1,629   |       |   |   | 2,353 |   |
|                                                                                           |   | $          | 9,367   |   |       | $      | 9,917   |       |   | $ | 10,727 |   |
|                                                                                           |   |       |    |   |       |   |    |       |   |   |   |   |
| Capital      expenditures and other additions to  property,      plant and equipment |   |       |    |   |       |   |    |       |   |   |   |   |
| Presstek                                                                                       |   |       |    |   |       |   |    |       |   |   |   |   |
|   Capital      expenditures                                                          |   | $          | 2,514   |   |       | $      | 3,391   |       |   | $ | 3,416 |   |
|   Equipment      obtained under capital lease                                        |   |       | --      |   |       |   | --      |       |   |   | 110 |   |
|     Total      Presstek                                                    |   |       | 2,514   |   |       |   | 3,391   |       |   |   | 3,526 |   |
| Lasertel                                                                                       |   |       | 532     |   |       |   | 642     |       |   |   | 2,684 |   |
|                                                                                           |   | $          | 3,046   |   |       | $      | 4,033   |       |   | $ | 6,210 |   |

----

|     |   | December      29,2007 |    |   | December      30,2006 |   |
|----------|--------|-----------------------|---------|--------|-----------------------|--------|
|     |   |                  |    |   |                  |   |
| Presstek |   | $                     | 180,023 |   |                  | $      | 184,510 |   |
| Lasertel |   |                  | 12,804  |   |                  |   | 13,504 |   |
|     |   | $                     | 192,827 |   |                  | $      | 198,014 |   |

|                |   | Fiscal2007 |    |   | Fiscal2006 |   |    | Fiscal2005 |   |
|---------------------|--------|------------|---------|--------|------------|--------|---------|------------|--------|
|                |   |       |    |   |       |   |    |       |   |
| United      States  |   | $          | 153,888 |   |       | $      | 173,585 |       |   | $ | 159,907 |   |
| United      Kingdom |   |       | 29,074  |   |       |   | 29,744  |       |   |   | 34,726 |   |
| Canada              |   |       | 15,410  |   |       |   | 14,699  |       |   |   | 14,543 |   |
| Germany             |   |       | 6,284   |   |       |   | 8,775   |       |   |   | 13,138 |   |
| Japan               |   |       | 5,694   |   |       |   | 6,168   |       |   |   | 8,096 |   |
| All      other      |   |       | 44,493  |   |       |   | 32,723  |       |   |   | 28,724 |   |
|                |   | $          | 254,843 |   |       | $      | 265,694 |       |   | $ | 259,134 |   |

|                |   | December      29,2007 |   |   | December      30,2006 |   |
|---------------------|--------|-----------------------|--------|--------|-----------------------|--------|
|                |   |                  |   |   |                  |   |
| United      States  |   | $                     | 77,872 |   |                  | $      | 78,077 |   |
| United      Kingdom |   |                  | 752    |   |                  |   | 894 |   |
| Canada              |   |                  | 220    |   |                  |   | 303 |   |
|                |   | $                     | 78,844 |   |                  | $      | 79,274 |   |

----

| Fiscal      2008             |   | $      | 2,386     |   |
|------------------------------|--------|--------|-----------|--------|
| Fiscal      2009             |   |   | 1,608     |   |
| Fiscal      2010             |   |   | 1,052     |   |
|  Fiscal      2011  |   |   |  626 |   |
|  Fiscal      2012       |   |   | 642       |   |
|  Thereafter             |   |   | 107       |   |

----

----

|                                                                                    |   | FirstQuarter |   |   | SecondQuarter |   |   |   | ThirdQuarter      (2) |   | FourthQuarter(3)(4)(5)(6) |
|-----------------------------------------------------------------------------------------|--------|--------------|--------|--------|---------------|--------|--------|--------|-----------------------|--------|---------------------------|
| (in      thousands, except per-share data)                                              |   |         |
| Fiscal      2007                                                                        |   |         |   |   |          |   |   |   |                  |
| Revenue                                                                                 |   | $            | 65,152 |   |          | $      | 68,751 |   |                  |   | $                         | 59,612 |   |   | $ | 61,328 |   |
| Gross      profit                                                                       |   | $            | 18,508 |   |          | $      | 18,597 |   |                  |   | $                         | 14,756 |   |   | $ | 18,815 |   |
|   Income      (loss) from continuing operations                               |   |         | (866   | )      |          |   | (4,854 | )      |                  |   |                      | (3,626 | ) |   |   | (2,804 | ) |
|   Income      (loss) from discontinued operations                             |   |         | (112   | )      |          |   | 24     |   |                  |   |                      | 10 |   |   |   | 24 |   |
| Net      income (loss)                                                                  |   | $            | (978   | )      |          | $      | (4,830 | )      |                  |   | $                         | (3,616 | ) |   | $ | (2,780 | ) |
|   Earnings      (loss) per share from continuing operations - basic           |   |         | (0.03  | )      |          |   | (0.13  | )      |                  |   |                      | (0.10 | ) |   |   | (0.08 | ) |
|   Earnings      (loss) per share from discontinued operations – basic   |   |         | (0.00  | )      |          |   | (0.00  | )      |                  |   |                      | (0.00 | ) |   |   | (0.00 | ) |
| Earnings      (loss) per share – basic (1)                                        |   | $            | (0.03  | )      |          | $      | (0.13  | )      |                  |   | $                         | (0.10 | ) |   | $ | (0.08 | ) |
|   Earnings      (loss) per share from continuing operations – diluted   |   |         | (0.03  | )      |          |   | (0.13  | )      |                  |   |                      | (0.10 | ) |   |   | (0.08 | ) |
|   Earnings      (loss) per share from discontinued operations – diluted |   |         | (0.00  | )      |          |   | (0.00  | )      |                  |   |                      | (0.00 | ) |   |   | (0.00 | ) |
| Earnings      (loss) per share – diluted (1)                                      |   | $            | (0.03  | )      |          | $      | (0.13  | )      |                  |   | $                         | (0.10 | ) |   | $ | (0.08 | ) |
|                                                                                    |   |         |   |   |          |   |   |   |                  |   |                      |   |   |   |   |   |   |
| Fiscal      2006                                                                        |   |         |   |   |          |   |   |   |                  |   |                      |   |   |   |   |   |   |
| Revenue                                                                                 |   | $            | 67,327 |   |          | $      | 70,882 |   |                  |   | $                         | 61,419 |   |   | $ | 66,066 |   |
| Gross      profit                                                                       |   | $            | 20,785 |   |          | $      | 20,763 |   |                  |   | $                         | 18,044 |   |   | $ | 19,386 |   |
|   Income      (loss) from continuing operations                               |   |         | 2,978  |   |          |   | 2,579  |   |                  |   |                      | (40 | ) |   |   | 7,500 |   |
|   Income      (loss) from discontinued operations                             |   |         | (254   | )      |          |   | 167    |   |                  |   |                      | (383 | ) |   |   | (2,803 | ) |
| Net      income (loss)                                                                  |   | $            | 2,724  |   |          | $      | 2,746  |   |                  |   | $                         | (423 | ) |   | $ | 4,697 |   |
|   Earnings      (loss) per share from continuing operations - basic           |   |         | 0.09   |   |          |   | 0.07   |   |                  |   |                      | 0.00 |   |   |   | 0.21 |   |
|   Earnings      (loss) per share from discontinued operations – basic   |   |         | (0.01  | )      |          |   | 0.01   |   |                  |   |                      | (0.01 | ) |   |   | (0.08 | ) |
| Earnings      (loss) per share – basic (1)                                        |   | $            | 0.08   |   |          | $      | 0.08   |   |                  |   | $                         | (0.01 | ) |   | $ | 0.13 |   |
|   Earnings      (loss) per share from continuing operations – diluted   |   |         | 0.09   |   |          |   | 0.07   |   |                  |   |                      | 0.00 |   |   |   | 0.21 |   |
|   Earnings      (loss) per share from discontinued operations – diluted |   |         | (0.01  | )      |          |   | 0.01   |   |                  |   |                      | (0.01 | ) |   |   | (0.08 | ) |
| Earnings      (loss) per share – diluted (1)                                      |   | $            | 0.08   |   |          | $      | 0.08   |   |                  |   | $                         | (0.01 | ) |   | $ | 0.13 |   |

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

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

|   |  (3)  In      the fourth quarter of fiscal 2006, the Company recognized an expense of      $2.8 million associated with the impairment of goodwill as a result of      applying SFAS 144 and 142. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (4)  In      the fourth quarter of fiscal 2006, the Company recorded an expense of $2.3      million relating to the impairment of intangible assets relating to patent      defense costs as the Company determined that the future economic benefits      of the patent were not assured of being  increased. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5)   In      the fourth quarter of fiscal 2007, the Company recorded $2.5 million of      legal expenses relating to pending and threatened    litigation. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6)   In      the fourth quarter of fiscal 2007, the Company recorded approximately $1.7      million of accounting fees related primarily to the fiscal 2007 audit and      European review. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| PRESSTEK,      INC. AND SUBSIDIARIES                              |   |
|-------------------------------------------------------------------|--------|
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| SCHEDULE      II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |   |   |   | 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                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                              |   | $ | 2,994 |   |   | $ | 2,092 |   |   | $ | - |   |   |   |   |   | $ | (2,153 | ) |   | $ | 2,933 |   |
| 2006                                                              |   | $ | 3,294 |   |   | $ | 391 |   |   | $ | - |   |   |   |   |   | $ | (691 | ) |   | $ | 2,994 |   |
| 2005                                                              |   | $ | 4,304 |   |   | $ | 1,604 |   |   | $ | (30 | ) | (1)  |   |   |   | $ | (2,584 | ) |   | $ | 3,294 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reserves      for excess and obsolete inventory                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Fiscal      year                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                                                              |   | $ | 13,995 |   |   | $ | 5,216 |   |   | $ | - |   |   |   |   |   | $ | (5,593 | ) |   | $ | 13,618 |   |
| 2006                                                              |   | $ | 16,507 |   |   | $ | 1,346 |   |   | $ | - |   |   |   |   |   | $ | (3,858 | ) |   | $ | 13,995 |   |
| 2005                                                              |   | $ | 17,707 |   |   | $ | 2,912 |   |   | $ | (3,074 | ) | (1)  |   |   |   | $ | (1,038 | ) |   | $ | 16,507 |   |
|                                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)      Purchase accounting adjustments                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

Item 9.

Item9A

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

----

| ·   | On      February 28, 2007, the Company announced the appointment of a new Chief      Financial Officer. |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | Effective      April 3, 2007, the Audit Committee of the Board of Directors established a      Financial Reporting Task Force to develop and implement a corrective      action plan to ensure full remediation of the material      weaknesses.  This Task Force, which reports directly to the      Audit Committee, is led by the Chief Financial  Officer. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| ·   | In      the first quarter of 2007, the Company undertook a review to ensure that      the finance, accounting and tax functions are staffed in accordance with      the required competencies.  Since that time, the Finance      organization has been strengthened by the addition of personnel,      (including revenue analysts, tax manager, senior accountants, and a      Director of Accounting) to address complex accounting and financial      reporting requirements and has substantially filled its hiring      objectives. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      May 23, 2007, the Company appointed a Director of Internal      Audit.  The Director of Internal Audit reports directly to the      Audit Committee and has responsibility for directing the internal audit      function and leading Sarbanes-Oxley compliance monitoring      activities. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Beginning      in the third quarter of fiscal 2007, additional training has been provided      to finance, accounting and tax professionals regarding new and evolving      areas in U.S. GAAP. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      the fourth quarter of fiscal 2007, the Company implemented a process      designed to ensure the timely documentation, review, and approval of      complex accounting transactions by qualified accounting      personnel. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Beginning      in the third quarter of fiscal 2007, the Company requires that analysis of      all significant or non-routine transactions must be documented, reviewed,      and approved by senior financialmanagement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | During      the first quarter of fiscal 2008, the Company expanded the staffing of      their internal audit department. In addition, during the second quarter of      fiscal 2008, the Director of Internal Audit took the position of      VP-Corporate Controller and the Company hired a new European Finance      Director. The Company is continuing to evaluate their staffing      requirements. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Supported      by the services of subject matter experts and consultants, the Company’s      revenue recognition policy was strengthened  to      include: |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| o   | Tightening      of necessary approvals on any departures from standard terms and      conditions on sales and service agreements to include senior financial and      legal management; |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| ·   | Additional      training regarding revenue recognition practices was provided to all sales      personnel worldwide.  Special training to communicate and      strengthen understanding of the revised revenue recognition policy will be      conducted in fiscal 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Internal      controls, as they relate to our European operation, have been strengthened      and reinforced through additional training and supervision, the addition      of a full-time European revenue analyst, changes to credit practices, and      other control measures. In addition, certain personnel changes and      realignment of work responsibilities will be  implemented. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| ·   | Review      and monitoring controls at Corporate-Finance on equipment transactions      involving foreign operations have been enhanced, including periodic      confirmation of key terms withcustomers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| ·   | An      independent review, by appropriate management personnel, will be performed      and documented in a detailed manner to determine that these complex      calculations are performedaccurately. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

Item 9B

Item 10.

The Company’s directors and their ages are thefollowing:

| John      W.  Dreyer       | 70 | Chairman      of the Board                             |
|--------------------------------------|----|--------------------------------------------------------|
| Jeffrey      Jacobson                | 48 | President,      Chief Executive Officer and a Director |
| Daniel      S.  Ebenstein  | 65 | Director                                               |
| Dr.      Lawrence Howard             | 55 | Director                                               |
| Michael      D.  Moffitt   | 68 | Director                                               |
| Brian      F.  Mullaney    | 48 | Director                                               |
| Steven      N.  Rappaport  | 59 | Director                                               |
| Frank      D.  Steenburgh  | 64 | Director                                               |
| Donald      C.  Waite, III | 66 | Director                                               |

----

| Name              |   | Age    |     | Position |
|------------------------|--------|--------|----------|----------|
|                   |   |   |     |     |
| Jeffrey      Jacobson  |   |   | 48       |     | President,      Chief Executive Officer and a Director |
|                   |   |   |     |     |   |
| Jeffrey      A. Cook   |   |   | 53       |     | Executive      Vice President, Chief Financial Officer, and Treasurer |
|                   |   |   |     |     |   |
| Mark      J. Levin     |   |   | 51       |     | President,      Americas Region |
|                   |   |   |     |     |   |
| James      R. Van Horn |   |   | 52  |     | Vice      President, General Counsel andSecretary |

----

Item 11.  Executive Compensation

----

----

----

| ·   | the      Board’s strong desire to hire Mr. Jacobson due to his reputation for      successfully leading other businesses in the industry to significantly      improved financial performance, |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mr.      Jacobson’s then current compensation level, as well as the components of      his compensation, |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | the      competitive market information provided to the Committee by Pearl Meyer      & Partners, and |
|--------------------|-----------------------------------------------------------------------------------------------------------|

| ·   | the      desire of the Committee to provide Mr. Jacobson with a competitive total      compensation and benefit package that would attract him to accept the      Company’s offer of employment, and that would align strongly align his      interests to those of the Company’s stockholders by providing a      significant incentive to enhance stockholder  wealth. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      starting base salary of $600,000 per year which will increase over the      four-year term of his employmentagreement, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·   | guaranteed      annual bonus of $400,000 for 2007, |
|--------------------|----------------------------------------------------|

| ·   | a      target annual cash incentive opportunity of  66.7% of base      salary for 2008 which will increase over the four-year period of his      employment agreement, |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      signing bonus of 300,000 shares of the Company’s Common Stock,      and |
|--------------------|--------------------------------------------------------------------------------------|

| ·   | and      a non-qualified stock option to purchase 1,000,000 shares of Common Stock      with an exercise price of $6.14 per share, with an option for 200,000      shares vesting immediately and options for the remaining 800,000 shares      vesting ratably over the four-year term of the employment      agreement. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|  Name      and PrincipalPosition                                                                       |    Year                                                                                   |    Salary ($)                                                                                                                                                                                   |    Bonus ($)(1) |    Stock Awards      ($)(2) |    Option      Awards($)(2)  |   Non-Equity Incentive Plan Compensation      ($)(3)  |    All Other Compensation      ($)(4)  |      Total ($)                                                                                                                                                                        |
|-------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|--------------------------------------------|--------------------------------------------------|----------------------------------------------------------------------|------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Jeffrey      Jacobson, President and Chief Executive Officer (5)                                      |  2007                                                                                               |  362,306                                                                                                                                                                                                  |  400,000                  |  1,500,000                            | 1,031,640                                   | --                                                              |  14,047                                               |                     3,307,993                                                                                                            |
|  Jeffrey      A.  Cook,Executive      Vice President and Chief Financial Officer (6)         |  2007                                                                                               |  219,997                                                                                                                                                                                                  |  137,500                  |  --                                   |  270,857                                    |  --                                                             |  24,219                                               |                  652,573                                                                                                  |
| Edward      J.  Marino, Former President and Chief Executive Officer      (7)                     |  20072006                                                                                           |  225,004 450,008                                                                                                                                                                                     |  -- --               |  -- --                           |  -- --                                 |  -- --                                                     |  713,689 116,877                                 | 938,693 566,885                                                                                                                                                                                      |
|  Moosa      E.  Moosa, Former Executive Vice President and Chief Financial      Officer (8)  |  20072006                                                                                           |  84,621 261,555                                                                                                                                                                                      |  -- --               |  -- --                           |  -- --                                 |  -- --                                                     |  396,887 16,532                                  |                      481,508                     278,087 |
|  Peter      A.  Bouchard, Former Vice President, International Business      Development (9) | 2007             2006                                                 |                      185,016                     185,016 |  --       --         |  --       --                     |  -- --                                 |  64,750 --                                                 |  219,761 17,339                                  |                469,527                    202,355             |
|  Quentin      C. Baum, Former Managing Director, Europe (10)                                           |              2007        2006 |  120,788 171,087                                                                                                                                                                                     |  -- 25,000           |  -- --                           |  -- --                                 |  26,346 25,662                                             |  64,405 39,259                                   |                     211,539                    261,008             |

----

|   Name                  |   | 401(k)      SavingsPlan ($)(a) |   |   | GroupTerm      Life Insurance ($)(b) |   |   | Tax-QualifiedU.K.      RetirementPlan ($)(c) |   |   | AutomobileAllowance($)(d) |   |   |  Other Benefits ($)(e) |   |   | TerminationPayments andBenefits ($)(f) |   |
|-----------------------------------|--------|--------------------------------|--------|--------|-------------------------------------------|--------|--------|----------------------------------------------|--------|--------|---------------------------|--------|--------|----------------------------------|--------|--------|----------------------------------------|--------|
| Jeffrey      Jacobson             |   |                           | --     |   |                                      |   | 952    |                                         |   |   | --                        |   |   |                             | 7,385  |   |                                   |   | 5,710 |   |   |   | -- |   |
| Jeffrey      A.  Cook   |   |                           | 4,050  |   |                                      |   | 1,093  |                                         |   |   | --                        |   |   |                             | 9,692  |   |                                   |   | 9,384 |   |   |   | -- |   |
| Edward      J.  Marino  |   |                           | 2,031  |   |                                      |   | 1,935  |                                         |   |   | --                        |   |   |                             | 13,000 |   |                                   |   | 2,450 |   |   |   | 694,273 |   |
| Moosa      E.  Moosa    |   |                           | 1,946  |   |                                      |   | 308    |                                         |   |   | --                        |   |   |                             | 13,000 |   |                                   |   | 1,883 |   |   |   | 379,750 |   |
| Peter      A.  Bouchard |   |                           | 4,050  |   |                                      |   | 356    |                                         |   |   | --                        |   |   |                             | 13,000 |   |                                   |   | 3,163 |   |   |   | 199,192 |   |
| Quentin      C. Baum              |   |                           | --     |   |                                      |   | --     |                                         |   |   | 23,855                    |   |   |                             | 11,278 |   |                                   |   | -- |   |   |   | 29,272 |   |

----

| Name                              |   | Grant      Date                    |   |   | Estimated      Possible Payouts UnderNon-Equity      Incentive Plan Awards (1) |   |   | Stock      Awards: Number of Shares of Stock or Units (#) |   |   | Option      Awards: Number of Securities Underlying Options (#) |   |   | Exercise      or Base Price of Option Awards($/Sh)(2) |   |   | Grant      Date Fair Value of Stock and Options Awards ($)(3) |        |
|-----------------------------------|--------|------------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|--------|---------------------------------------------------------------|-------------|
|                              |   |                               |   |   | Target                                                                         |   |   | Maximum                                                   |   |   |                                                            |   |   |                                                  |   |   |                                                          |        |   |   |   |
| Jeffrey      Jacobson             |   | May      10, 2007May      10, 2007 |   |   |                                                                           | --     |   |                                                      |   | --     |                                                            |   |   | 300,000--                                             |   |   |                                                          | --1,000,000 | (4) |   |   | --6.14 |   |   |   | 1,500,0002,579,100 |   |
| Jeffrey      A.  Cook   |   | February      27, 2007             |   |   |                                                                           | --     |   |                                                      |   | --     |                                                            |   |   | --                                                    |   |   |                                                          | 250,000     | (5) |   |   | 6.01 |   |   |   | 886,450 |   |
| Edward      J.  Marino  |   |                               | --     |   |                                                                           |   | --     |                                                      |   |   | --                                                              |   |   |                                                  | --     |   |                                                          |        | -- |   |   |   | -- |   |   |   | -- |   |
| Moosa      E.  Moosa    |   |                               | --     |   |                                                                           |   | --     |                                                      |   |   | --                                                              |   |   |                                                  | --     |   |                                                          |        | -- |   |   |   | -- |   |   |   | -- |   |
| Peter      A.  Bouchard |   | March      1, 2007                 |   |   |                                                                           | 74,000 |   |                                                      |   | 92,500 |                                                            |   |   | --                                                    |   |   |                                                          | --          |   |   |   | -- |   |   |   | -- |   |
| Quentin      C. Baum              |   | March 1,      2007            |   |   |                                                                           | 26,346 |   |                                                      |   | --     |                                                            |   |   | --                                                    |   |   |                                                          | --          |   |   |   | -- |   |   |   | -- |   |

|  (1) | Messrs.      Bouchard and Baum each participated in a performance-based bonus      plan.  Under Mr. Bouchard’s bonus plan, he was eligible to      receive a target bonus equal to 40% of his base salary if certain      performance goals were met and a maximum bonus equal to 50% of his base      salary if the performance goals were exceeded.  This bonus was      paid to him on a quarterly basis.  Under Mr. Baum’s bonus plan,      he was eligible to receive a target bonus equal to 30% of his base salary      if certain performance goals were met.  This bonus was paid to      him on a semi-annual basis.  Each executive had to be employed      by the Company on the date the bonus was paid in order to receive payment      under the plan.  The performance goals under the bonus plans for      both executives related to achievement of certain revenue and margin      targets.  The amounts in the table represent the target bonus      amount payable with respect to the entire 2007 fiscal year for each      executive and, in the case of Mr. Bouchard, the maximum bonus payable with      respect to the entire 2007 fiscal year.  The actual amounts paid      to Messrs. Bouchard and Baum with respect to these bonus programs is      included in the “Non-Equity Incentive Plan Compensation” column in the      Summary Compensation Table. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Under      the terms of Mr. Jacobson’s employment agreement, the exercise price of      the option granted to Mr. Jacobson was determined by the average closing      price of a share of Common Stock for the five days immediately prior to      the date he commenced employment and was granted the      option.  The closing price of a share of Common Stock on May 10,      2007 was $6.05.  The exercise price for Mr. Cook’s option was      the closing price of a share of Common Stock on the date the option was      granted. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | The      grant date fair values of awards have been determined in accordance with      SFAS No. 123R, using the assumptions included in Note 15 to our audited      financial statements included in this Annual Report on Form      10-K. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (4) | The      shares of Common Stock subject to this option vest as follows: 20% of the      shares subject to this option vested on the date of grant, and an      additional 20% will vest on each of January 1, 2008, 2009, 2010 and 2011,      subject to Mr. Jacobson remaining employed on each such date, except as      provided as follow.  The option will vest in full upon a      termination of Mr. Jacobson’s employment without cause, a termination of      his employment by Mr. Jacobson with good reason or due to his disability      or death, a change in control of the Company or the giving of a notice of      non-renewal of the employment term by either party.  Each      portion of the option that vests will remain exercisable for five years      after the applicable vesting date. |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (5)  |  The      shares of Common Stock subject to this option vest as follows: 41,666 were      vested on the date of grant and the remaining 208,334 shares subject to      the option will vest in equal annual installments on the first five      anniversaries of the date of grant, subject to Mr. Cook remaining employed      on each such date, except that the option will vest in full upon a change      in control of the Company or upon his death or disability, or the giving      of a notice of non-renewal of the initial employment term by the      Company. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | The      agreement sets forth an initial base salary of $600,000 for the first year      of the term of the agreement.  The base salary will be increased      to no less than $633,000 in the second year of the term, no less than      $667,000 in the third year of the term and no less than $700,000 in the      fourth year of the term.  Once increased, the base salary cannot      be decreased without Mr. Jacobson’sconsent. |
|--------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | The      agreement provides that Mr. Jacobson will be entitled to a guaranteed cash      bonus of $400,000 for 2007, which would be pro-rated if his employment      commenced after May 15, 2007.  Beginning with calendar year      2008, Mr. Jacobson is eligible to receive an annual discretionary bonus      targeted at 66.67% of his annual base salary (which target bonus      percentage will be increased to 75% and 100% in 2009 and 2010,      respectively).  The target bonus will be paid based on Mr.      Jacobson’s achievement of certain goals and objectives to be determined by      the Board in consultation with Mr.Jacobson. |
|--------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | Pursuant      to the agreement, on the effective date, Mr. Jacobson was granted as a      signing bonus 300,000 shares of Common Stock and, on this same date, an      option to purchase 1,000,000 shares of Common Stock, subject to the terms      set forth in note (3) to the Grants Of Plan-Based Awards In Fiscal      2007 table      above. |
|--------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | Mr.      Jacobson is also entitled to participate in the Company’s benefit plans,      including pension, retirement, life insurance and medical insurance plans      (if so adopted by the Company).  He is also entitled to a car      allowance in the amount of $1,000 per month and, by subsequent agreement,      reimbursement for gasoline, tolls andparking. |
|--------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·         | The      agreement sets forth an initial base salary of $275,000, which will be      reviewed at least annually.  The base salary cannot be decreased      without Mr. Cook’s consent. |
|--------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | The      agreement provides that Mr. Cook will be entitled to a guaranteed cash      bonus of $165,000 for 2007, which is pro-rated based on the number of full      months he was employed during 2007.  Beginning with calendar      year 2008, Mr. Cook is eligible to receive an annual discretionary target      bonus of up to 60% of his annual base salary.  The actual amount      of the bonus will be based on Mr. Cook’s achievement of certain goals and      objectives to be determined by theBoard. |
|--------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | Pursuant      to the agreement, Mr. Cook was granted an option to purchase 250,000      shares of Common Stock, subject to the terms set forth in note (5) to the      Grants Of Plan-Based Awards In Fiscal 2007 table      above. |
|--------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | Mr.      Cook is also entitled to participate in the Company’s benefit plans,      including pension, retirement, life insurance and medical insurance plans      (if so adopted by the Company).  He is also entitled to a car      allowance in the amount of $1,000 per month and reimbursement for      gasoline, tolls and parking. |
|--------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|        ·        | Mr.      Moosa would be paid cash severance and other payments within 10 days of      the agreement in the aggregate amount of $298,500, $275,000 of which      represents 12 months of Mr. Moosa’s base salary at the rate in effect at      the time of his termination and an additional payment to release all      potential claims against the Company equal to  $23,500. |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·        | Mr.      Moosa would be entitled to continued coverage under the Company’s health      and benefit plans and the continued provision of an automobile allowance      through February 2, 2008, the end of the original term of the employment      agreement. |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·        | We      would make all payments otherwise payable by Mr. Moosa under the      Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for the      period from March 1, 2007 through February 29,  2008. |
|--------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·        | The      Company and Mr. Moosa would each release the other from any      claims. |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------|

|        ·        | Except      as provided for in the agreement, all other benefits under any Company      benefit plan, program, contract or practice would terminate as of February      27, 2008. |
|--------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Option      Awards                |
|-----------------------------------|
| Name                              | Number      of Securities Underlying Unexercised Options      (#) Exercisable | Number      of Securities Underlying Unexercised Options      (#) Unexercisable | OptionExercise      Price ($) | OptionExpiration      Date |
| Jeffrey      Jacobson             |  200,000 | --200,000      (1)200,000      (1)200,000      (1)200,000      (1) | 6.14 6.14 6.14 6.14 6.14 | May      10, 2012 (1)January      1, 2013 (1)January      1, 2014 (1)January      1, 2015 (1)January      1, 2016 (1) |
| Jeffrey      A.  Cook   |   41,666 | 208,334      (2) |  6.01 | February      27, 2017 |
| Edward      J.  Marino  | 50,00050,00050,000 | ------ |  8.39 8.39 9.04 | February      2, 2015February      3, 2015December      31, 2015 |
| Moosa      E.  Moosa    | 25,00025,00030,000 | ------ |  8.39 8.39 9.04 | February      2, 2015February      3, 2015December      31, 2015 |
| Peter      A.  Bouchard |   10,000   2,700 25,000 25,000 15,000 | ---------- | 13.75 6.30 9.91 9.91 9.04 | January      27, 2008January      27, 2008November      30, 2015November      30, 2015December      31, 2015 |
| Quentin      C. Baum              | 25,000 | -- |  9.04 | December      31, 2015 |

----

|                              |   | Option      Awards                             |    |
|-----------------------------------|--------|------------------------------------------------|---------|
| Name                              |   | Number      of Shares Acquired on Exercise (#) |    |   | Value Realized      on Exercise ($)(1) |   |
| Jeffrey      Jacobson             |   |                                           | --      |   |   |   | -- |   |
| Jeffrey      A.  Cook   |   |                                           | --      |   |   |   | -- |   |
| Edward      J.  Marino  |   |                                           | 507,500 |   |   |   | 884,439 |   |
| Moosa      E.  Moosa    |   |                                           | --      |   |   |   | -- |   |
| Peter      A.  Bouchard |   |                                           | --      |   |   |   | -- |   |
| Quentin      C. Baum              |   |                                           | --      |   |   |   | -- |   |

|   | (1)  Value      represents the closing price of a share of Common Stock on the applicable      date of exercise minus the exercise price per share of the option,      multiplied by the number of shares acquired on  exercise. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                             |   | Executive      Contribution in Fiscal 2007 ($) |   |   | Presstek      Contributions in Fiscal 2007 ($) |   |   | Aggregate      Earnings in Fiscal 2007 ($) |   |   | Aggregate      Withdrawal / Distributions ($) |   |   | Aggregate      Balance at End of Fiscal 2007 ($) |    |
|----------------------------------|--------|------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|--------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|--------------------------------------------------|---------|
| Edward      J.  Marino |   |                                           | 10,576 |   |                                           |   | --     |                                       |   |   | 25,929                                        |   |   |                                             | 154,973 |   |   |   | 11,621 |   |

----

Potential Payments Upon Termination or Change InControl

|                                                   |   | Non-Renewal      of Term of Employment by Executive |      |   | Non-Renewal      of Employment Term by Company; Without Cause or Good Reason Termination      (Non-Change in Control) |   |      | Death      or Disability (Non-Change in Control) |   |   | Termination      for Good Reason or Due to Death or Disability in Connection with Change in      Control (1) |   |   |     Voluntary      TerminationFor      Cause |      |   | Change      in Control |   |
|--------------------------------------------------------|--------|-----------------------------------------------------|-----------|--------|-----------------------------------------------------------------------------------------------------------------------|--------|-----------|--------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------|-----------|--------|------------------------|--------|
| Severance      (2)                                     |   | $                                                   | 1,000,000 |   |                                                                                                                  | $      | 1,500,000 |                                             |   | $      | 1,500,000                                                                                                    |   |   | $                                                                | 2,990,000 |   |                   |   | -- |   |   |   | -- |   |
| Continued      benefits (3)                            |   |                                                | 26,699    |   |                                                                                                                  |   | 40,049    |                                             |   |   | 40,049                                                                                                       |   |   |                                                             | 40,049    |   |                   |   | -- |   |   |   | -- |   |
| Accelerated      vesting  of      equity (4) |   |                                                | --(4      | )      |                                                                                                                  |   | --(4      | )                                                |   |   | --(4                                                                                                         | )      |   |                                                             | --(4      | )      |                   |   | --(4 | ) |   |   | --(4 | ) |
| Total      (5)                                         |   | $                                                   | 1,026,699 |   |                                                                                                                  | $      | 1,540,049 |                                             |   | $      | 1,540,049                                                                                                    |   |   | $                                                                | 3,030,049 |   |                   |   | -- |   |   |   | --(4 | ) |

----

|                                      |   | Non-Renewal      of Term of Employment; Without Cause Termination (Non-Change in      Control) |    |   | Termination      without Cause or for Good Reason in Connection with Change in      Control |   |    |     Voluntary      Termination/For Cause/Death/ Disability |   |   |       Death/      Disability |   |   | Change      in Control |   |
|-------------------------------------------|--------|------------------------------------------------------------------------------------------------|---------|--------|---------------------------------------------------------------------------------------------|--------|---------|--------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|------------------------|--------|
| Severance                                 |   | $                                                                                              | 229,167 | (1)    |                                                                                        | $      | 825,000 | (2)                                                                            |   |   | --                                                         |   |   |                   | --     |   |   |   | -- |   |
| Accelerated      vesting of stock options |   |                                                                                           | --(3    | )(4)   |                                                                                        |   | --(4    | )                                                                              |   |   | --(4                                                       | )      |   |                   | --(4   | ) |   |   | --(4 | ) |
| Total                                     |   | $                                                                                              | 229,167 |   |                                                                                        | $      | 825,000 |                                                                           |   |   | --                                                         |   |   |                   | --(4   | ) |   |   | --(4 | ) |

|        ·   | full      vesting of all unvested stock options, restricted stock and other equity      awards; |
|--------------------------------|-------------------------------------------------------------------------------------------------|

|        ·   | 1.5      times (or one times in the case of a termination due to non-renewal of the      employment term by Mr. Jacobson) the sum of Mr. Jacobson’s then annual      base salary, target annual bonus for the year of termination (assuming      that 100% of the performance goals are achieved) and discretionary bonus      (if any) paid during the year immediately preceding the year in which such      termination occurs, payable in equal monthly installments over the      18-month period following employment termination;  and |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | continued      coverage under the Company’s medical plans, car allowance and      reimbursement of fuel expenses during the period that he is receiving      severance, with the Company continuing to pay its portion of the      applicable premiums during thisperiod. |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | conviction      of a felony or theft from theCompany; |
|--------------------|-------------------------------------------------------|

| ·   | breach      of fiduciary duty involving personal profit;or |
|--------------------|------------------------------------------------------------|

| ·   | sustained      and continuous conduct which adversely affects the Company’s reputation or      his failure to comply with the lawful directions of the board of      directors, in each case that is not remedied within 30 days after notice      is given to him by the Company of suchact. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ·   | any      material diminution in his duties, title, authority or reporting line, or      failure to reelect or reappoint him to the board of    directors; |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      reduction in or failure to pay compensation when  due; |
|--------------------|---------------------------------------------------------------|

| ·   | a      change in control; |
|--------------------|---------------------------|

|  ·   | a      relocation without consent to a principal work place that is more than 50      miles from the Company’s headquarters in New Hampshire or the Westchester      County Airport; or |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      reduction of his benefits under the Company’s benefit plans to less than      the benefits of 90% of the Company’s other employees, except if initiated      by Mr. Jacobson or approved in his capacity as a board    member. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | individuals      who constitute the board of directors of the Company cease to constitute a      majority of the board as a result of any cash tender or exchange offer,      merger or other similartransaction; |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | the      consummation of a merger if more than 50% of the combined voting power      after such transaction is not owned by the Company’s shareholders as of      immediately prior to such transaction;or |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | the      sale or disposition of all or substantially all the Company’s      assets. |
|--------------------------------|-------------------------------------------------------------------------------------------|

|        ·   | One      year of base salary, payable in 12 equal monthly installments (or, in the      case of a termination that occurs before Mr. Cook has completed 12 months      of service, one month of base salary for each completed full month of      service, with a minimum payment equal to six months of base salary);      and |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | Full      vesting of unvested stock options (upon a non-renewal of the initial      employment term by theCompany). |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------|

----

|        ·   | Three      times Mr. Cook’s average annual base salary over the five most recent      years immediately prior to the change in control, payable in a lump sum;      and |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | Full      vesting of unvested stock options upon a change of  control. |
|--------------------------------|------------------------------------------------------------------------|

|        ·   | the      assignment of duties and responsibilities that are not at least      substantially equivalent to his duties and responsibilities before the      change in control or a failure to continue him in a position and title      that is substantially equivalent (other than as a result of a termination      without cause or due to hisdisability); |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | a      reduction in or failure to pay total annual cash compensation in an amount      equal to or greater than the sum of his salary at the highest annual rate      in effect during the 12-month period immediately before the change in      control and the bonus paid to similarly situated employees under the      acquiring Company’s bonus plan for the year ending immediately prior to      the change in control (with the bonus not to be less than 60% of the bonus      provided in the employmentagreement); |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | a      reduction in benefits to less than benefits of similarly situated      employees under any benefit plan of the acquiring employer immediately      prior to the change in control; |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        ·   | a      relocation to a location that is more than 35 miles from the Company’s      current headquarters; or |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------|

|        ·   | a      material breach of the employment agreement by the  Company. |
|--------------------------------|---------------------------------------------------------------------|

| ·   | A      $22,500 annual retainer paid on the first day of July, or a pro-rata      portion thereof for directors appointed after July 1 of a given      year; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Compensation      for attendance at meetings in the amount of: (i) $1,500 for each in-person      meeting of the Board; (ii) $500 for each telephonic meeting of the Board;      (iii) $1,000 for each meeting of the Compensation Committee and Nominating      and Corporate Governance Committee; (iv) $1,500 for each meeting of the      Audit Committee; and (v) $500 for each meeting of other committees of the      Board.  The Chairman of the Audit Committee also receives an      annual retainer of $7,500, paid on the first day of July each year during      his term.  Compensation for meeting attendance is paid to      non-employee directors on a quarterlybasis; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Upon      joining the Board, each new non-employee director is granted an option to      purchase 25,000 shares of the Company’s Common Stock at an exercise price      per share equal to the closing price of our Common Stock on the date the      option is granted.  These options are fully exercisable on the      first anniversary of the date of grant;and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On      the Company’s first business day of July, each non-employee director is      granted an option to purchase 15,000 shares of Common Stock at an exercise      price per share equal to the closing price of our Common Stock on that      date.  These options are fully exercisable on the first      anniversary of the date of grant. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Director                                                                                                                                                                                                                                                                                                                                                                                         |   | Fees      Earned or Paid in Cash ($)(1) |    |   | Options      Awards ($) (2) |   |    | Total      ($) |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|---------|--------|-----------------------------|--------|---------|----------------|--------|
| John      W.      Dreyer                                                                  |   |                                    | 181,500 |   |                        |   | 571,176 |           |   |   | 752,676 |   |
| Daniel      S.      Ebenstein                                                             |   |                                    | 31,000  |   |                        |   | 69,722  |           |   |   | 100,722 |   |
| Dr.      Lawrence      Howard                                                             |   |                                    | 53,500  |   |                        |   | 69,722  |           |   |   | 123,222 |   |
| Michael      D.      Moffitt                                                              |   |                                    | 32,500  |   |                        |   | 69,722  |           |   |   | 102,222 |   |
| Brian      F.      Mullaney                                                               |   |                                    | 34,000  |   |                        |   | 69,722  |           |   |   | 103,722 |   |
| Steven      N.      Rappaport                                                             |   |                                    | 61,000  |   |                        |   | 69,722  |           |   |   | 130,722 |   |
| Donald      C. Waite,      III                                                            |   |                                    | 50,000  |   |                        |   | 69,722  |           |   |   | 119,722 |   |

| (1) | This      column reports the amount of cash compensation earned in 2007 for Board      and Committee service. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (2) | The      dollar amounts in this column represent the compensation cost, adjusted as      described below, recorded in our audited financial statements for fiscal      2007 of Common Stock option awards made to the directors.  These      amounts have been calculated in accordance with SFAS No. 123R disregarding      the estimates of forfeiture and using the Black Scholes option-pricing      model.  Assumptions used in the calculation of these amounts are      included in Note 15 to our audited financial statements included in this      Annual Report on Form 10-K.  The grant date fair value of      options granted in 2007 was $69,015 for each of the non-employee directors      in the table, except for Mr. Dreyer for whom the aggregate grant date fair      value of all options granted in 2007 was $792,815.   The      aggregate number of shares subject to all options outstanding held by the      respective non-employee directors in the table at December 29, 2007      were 360,092 for Mr. Dreyer, 80,000 for Mr. Ebenstein, 80,000 for Dr.      Howard, 62,500 for Mr. Moffitt, 55,000 for Mr. Mullaney, 77,500 for Mr.      Rappaport and 75,000 for Mr. Waite. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | each      person known by the Company to be the beneficial owner of more than five      percent of the outstanding shares of Common  Stock; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | each      of the named executive officers included in the Summary Compensation Table      in the Executive Compensation section of this proxy    statement; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | each      of our current directors; and |
|--------------------|-----------------------------------------|

| ·   | all      current executive officers and directors as a  group. |
|--------------------|----------------------------------------------------------------|

| Name      and Address of Beneficial Owner                                                                                              |   | Shares      Beneficially Owned(1) |      |   | Percentage      of Shares Beneficially Owned(2) |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------|-------------------------------------------------|--------|
| Peter      Kellogg and IAT Reinsurance Company Ltdc/o      IAT Reinsurance Company Ltd.48      Wall StreetNew      York, NY 10005 |   |                              | 9,000,000 | (3)    |                                            |   | 24.6 | % |
| Dr.      Lawrence Howard                                                                                                               |   |                              | 1,349,828 | (4)    |                                            |   | 3.7 |   |
| Jeffrey      Jacobson                                                                                                                  |   |                              | 700,000   | (5)    |                                            |   | 1.9 |   |
| John      W. Dreyer                                                                                                                    |   |                              | 320,092   | (6)    |                                            |   | * |   |
| Daniel      S. Ebenstein                                                                                                               |   |                              | 65,500    | (7)    |                                            |   | * |   |
| Michael      D. Moffitt                                                                                                                |   |                              | 52,340    | (8)    |                                            |   | * |   |
| Brian      F. Mullaney                                                                                                                 |   |                              | 40,000    | (9)    |                                            |   | * |   |
| Frank      D. Steenburgh                                                                                                               |   |                              | --        |   |                                            |   | -- |   |
| Steven      N. Rappaport                                                                                                               |   |                              | 92,500    | (10)   |                                            |   | * |   |
| Donald      C. Waite, III                                                                                                              |   |                              | 62,500    | (11)   |                                            |   | * |   |
| Jeffrey      A. Cook                                                                                                                   |   |                              | 83,333    | (12)   |                                            |   | * |   |
| Edward      J. Marino                                                                                                                  |   |                              | 155,000   | (13)   |                                            |   | * |   |
| Moosa      E. Moosa                                                                                                                    |   |                              | 80,000    | (14)   |                                            |   | * |   |
| Peter      A. Bouchard                                                                                                                 |   |                              | 80,000    | (15)   |                                            |   | * |   |
| Quentin      C. Baum                                                                                                                   |   |                              | 25,000    | (16)   |                                            |   | * |   |
| All      current executive officers and directors as a group (12      persons)                                                         |   |                              | 2,766,093 | (17)   |                                            |   | 7.3 | % |

----

----

 COMPENSATION PLAN INFORMATION

|                                                                |   | Number      of securities to be issued upon exercise of outstanding options,      warrants and rights (a) |      |   | Weighted-average      exercise price of outstanding options, warrants and rights    (b) |   |   | Number      of securities remaining available for future issuance under equity      compensation plans (excluding securities) reflected in column      (c) |   |
|---------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|-----------|--------|-----------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                |   |                                                                                                           |      |   |                                                                                    |   |   |                                                                                                                                                            |   |
| Plan      Category                                                  |   |                                                                                                           |      |   |                                                                                    |   |   |                                                                                                                                                            |   |
| Equity      compensation plans approved by security holders (3)     |   |                                                                                                           | 2,760,892 | (1)    |                                                                                    | $      | 8.95   | (1)                                                                                                                                                             |   |   | 2,397,012 | (2) |
| Equity      compensation plans not approved by security holders (4) |   |                                                                                                           | 1,055,675 |   |                                                                                    |   | 6.44   |                                                                                                                                                            |   |   | -- |   |
| Total                                                               |   |                                                                                                           | 3,816,567 |   |                                                                                    | $      | 8.26   |                                                                                                                                                            |   |   | 2,397,012 | (2) |

----

Item 13

----

Item 14

|                    |   | Fiscal 2007  |      |   | Fiscal 2006  |   |
|-------------------------|--------|-------------------|-----------|--------|-------------------|--------|
| Audit      Fees (1)(2)  |   | $                 | 1,800,000 |   |              | $      | 1,418,000 |   |
| Audit-Related      Fees |   |              | --        |   |              |   | -- |   |
| Tax      Fees (3)  |   |              | --        |   |              |   | 12,000 |   |
| All      Other Fees     |   |              | --        |   |              |   | -- |   |
|                    |   |              |      |   |              |   |   |   |
| Total      Fees         |   | $                 | 1,800,000 |   |              | $      | 1,430,000 |   |
|                    |   |              |      |   |              |   |   |   |

|   | (1)   Audit      Fees consist of fees for professional services provided in connection with      the integrated audit of the Company’s financial statements and internal      control over financial reporting, and review of financial statements      included in Forms 10-Q, and includes services that generally only the      external auditor can reasonably provide, such as attest services, consents      and assistance with and review of documents filed with the      SEC. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (2)  Fiscal      2006 fees have been adjusted for billings that were finalized and billed      during 2007 for approximately$530,000. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |  (3)  Tax      Fees include fees for the review of the annual income tax returns for      fiscal 2006. |
|--------|-----------------------------------------------------------------------------------------------------------------------|

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

----

Item 15.

----

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

| /s/ Jeffrey      Jacobson                |                                                            |
|------------------------------------------|-----------------------------------------------------------------|
|  Jeffrey      Jacobson              | President, Chief      Executive Officer and Director       |
|                                     |  (Principal      Executive Officer)                        |
| /s/ Jeffrey A.      Cook                 |                                                            |
|  Jeffrey A.      Cook               |  Executive Vice      President and Chief Financial Officer |
|                                     |  (Principal      Financial Officer)                        |
|  /s/ Wayne L.      Parker           |                                                            |
| Wayne L.      Parker                |  Vice President      - Corporate Controller                |
|                                     |  (Principal      Accounting Officer)                       |
|  /s/ John W.      Dreyer            |                                                            |
|  John W.      Dreyer                |  Chairman of      the Board                                |
|                                     |                                                            |
|  /s/ Daniel S.      Ebenstein, Esq. |                                                            |
|  Daniel S.      Ebenstein, Esq.     |  Director                                                  |
|                                     |                                                            |
|  /s/ Dr.      Lawrence Howard       |                                                            |
|  Dr. Lawrence      Howard           |  Director                                                  |
|                                     |                                                            |
|  /s/ Michael D.      Moffitt        |                                                            |
|  Michael D.      Moffitt            |  Director                                                  |
|                                     |                                                            |
|  /s/ Steven N.      Rappaport       |                                                            |
|  Steven N.      Rappaport           |  Director                                                  |
|                                     |                                                            |
|  /s/ Donald C.      Waite, III      |                                                            |
|  Donald C.      Waite, III          |  Director                                                  |

----

| ExhibitNumber |  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)**       | 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.)                                                                                                                                              |

| 10(b)** | 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(c)** | 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(d)** | 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(e)*  | 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(f)*  | 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(g)   | 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 byreference.) |

----

| ExhibitNumber |  Description                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10(h)         | 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(i)         | 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(j)         | 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(k)         | 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(l)         | 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(m)         | 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(n)         | 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.)                                                                                                       |
| 10(o)         | 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(p)         | 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(q)         | 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(r)         | 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(s)         | 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(t)         | 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)                                                                                              |

----

| ExhibitNumber              |  Description                                                                                                                                                                                                                                               |
|----------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |                                                                                                                                                                                                                                                            |
| 10(u)**                    | Employment      Agreement by and between Presstek, Inc. and Jeffrey Cook dated February      27, 2007 (Filed herewith.)                                                                                                                                         |
| 10(v)**                    | Nonqualified      Stock Option Agreement by and between Presstek, Inc. and Jeffrey Cook      dated February 27, 2007 (Previously filed as Exhibit 99.2 to Presstek’s      Form 8-K, filed March 2, 2007, hereby incorporated by      reference.)          |
| 10(w)**                    | Employment      Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated May 10,      2007 (Previously filed as Exhibit 10.2 to Presstek’s Form 10-Q, filed May      14, 2007, hereby incorporated by reference.)                               |
| 10(x)**                    | Non      Plan, Nonqualified Stock Option Agreement by and between Presstek, Inc.      and Jeffrey Jacobson dated May 10, 2007 (Previously filed as Exhibit 10.3      to Presstek’s Form 10-Q, filed May 15, 2007, hereby incorporated by      reference.) |
| 10(y)**                    | Letter      Agreement by and between Presstek, Inc. and Moosa E. Moosa dated July 13,      2007. (Filed herewith.)                                                                                                                                              |
| 10(z)**                    | Form      of Stock Option Agreement under 2003 Stock Option and Incentive Plan of      Presstek, Inc. (Filed herewith.)                                                                                                                                         |
| 10(aa)**    | Letter      Agreement by and between Presstek, Inc. and Peter Bouchard dated December      7, 2007. (Filed herewith.)                                                                                                                                           |
| 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 (filedherewith.)                                                                                                               |

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

| ** | Denotes      management employment contracts or compensatory  plans. |
|----|----------------------------------------------------------------------|