----

----

|  [ x ]  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010 |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------|

|  [   ]  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _________ to ___________ |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| Utah                                                         | 87-0398877                           |
|--------------------------------------------------------------|--------------------------------------|
| State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |

| 5225 Wiley Post Way, Suite 500,  Salt Lake City, Utah | 84116      |
|-----------------------------------------------------------------|------------|
| (Address of principal executive offices)                        | (Zip Code) |

| Title of each class            | Name of each exchange on which registered |
|--------------------------------|-------------------------------------------|
| Common Stock, $0.001 par value | The NASDAQ Capital Market                 |

| Larger Accelerated Filer ¨                                            | Accelerated Filer ¨                |
|----------------------------------------------------------------------------|-----------------------------------------|
| Non-Accelerated Filer ¨ (Do not check if a smaller reporting company) | Smaller Reporting Company   x |

----

----

TABLE OF CONTENTS

|     |                                                                                                               | Page   |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|
|     |   PART I                                                                                                      |   |
| Item 1.  | Business                                                                                                           | 1      |
| Item 1A. | Risk Factors                                                                                                       | 14     |
| Item 1B. | Unresolved Staff Comments                                                                                          | 19     |
| Item 2.  | Properties                                                                                                         | 19     |
| Item 3.  | Legal Proceedings                                                                                                  | 19     |
| Item 4.  | Reserved                                                                                                           | 19     |
|     |   PART II                                                                                                |   |
| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 20     |
| Item 6.  | Selected Financial Data                                                                                            | 20     |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 21     |
| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk                                                         | 27     |
| Item 8.  | Financial Statements and Supplementary Data                                                                        | 28     |
| Item 9.  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               | 28     |
| Item 9A. | Controls and Procedures                                                                                            | 28     |
| Item 9B. | Other Information                                                                                                  | 28     |
|     |   PART III                                                                                                    |   |
| Item 10. | Directors , Executive Officers and Corporate Governance                                                            | 29     |
| Item 11. | Executive Compensation                                                                                             | 29     |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 29     |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence                                          | 29     |
| Item 14. | Principal Accountant Fees and Services                                                                             | 29     |
|     |   PART IV                                                                                                     |   |
| Item 15. | Exhibits and Financial Statement Schedules                                                                         | 29     |

----

Table of Contents

ITEM 1.  

----

Table of Contents

Note 3 – Business Combination, Goodwill and Intangibles

| ● | Professional audiovisual;                                                  |
|---------|----------------------------------------------------------------------------|
| ● | Unified communications including telephony;                                |
| ● | Commercial multimedia streaming and control including digital signage; and |
| ● | Home entertainment.                                                        |

| ● | Maintain our leading global market share leadership of professional audio conferencing products for large businesses and organizations; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------|
| ● | Focus on the small and medium business (SMB) market with scaled, lower cost and less complex products and solutions;                    |

| ● | Capitalize on the growing adoption of unified communications and introduce new products through entering Information Technology  channels;                                                                                                                |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Partner with large enterprise communications providers worldwide to bring value added products to their solution portfolios and channels; and                                                                                                                       |
| ● | Capitalize on the convergence of AV over IP by integrating NetStreams and ClearOne core technologies to provide new solutions that reach deeper into the enterprise infrastructure and bring clear, differentiated value to both the practitioner and the customer. |

----

Table of Contents

| ● | Distributed Echo Cancellation®                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | One of the challenges in delivering good sound quality during a conference call is eliminating acoustical echo. Acoustical echo results when sound from the far end phone device is sent into the local conference room, where it is picked up by the microphones on the conference phone and then sent back to the far-end phone device. Because of this process, far-end participants hear their voice echoed as they speak. Distributed Echo Cancellation® from ClearOne solves this problem. By assigning an acoustical echo canceller to each microphone, the echo canceller identifies the sound that would otherwise be returned to the far end as echo and eliminates it. ClearOne was the first to introduce Distributed Echo Cancellation® in 1998. We now incorporate it into every audio conferencing system, and are the worldwide leader in this technology.  |
| ● | Noise Cancellation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | Noise Cancellation stops ambient room noise from being picked up by the microphones on the conference phone. Examples of ambient noise sources include HVAC systems, laptop computers, projectors and fluorescent lights. Unlike competitive products which claim to have noise cancellation, ClearOne uses a spectral content analysis technique that discriminates a talker’s voice from ambient noise and only applies noise cancellation to ambient noise sources. This allows the voice signal to pass to the far-end phone device with pristine sound quality.                                                                                                                                                                                                                                                                                                                 |
| ● | First Microphone Priority                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    | When multiple microphones are active simultaneously in an audio conference phone, voice signals arrive at different microphones at different times due to the reflection of the sound from walls, ceilings or other surfaces. This causes sound distortion, which participants typically describe as a "hollow" or "tunnel" sound. ClearOne’s First Microphone Priority technology minimizes this distortion by using an intelligent voice detection method to activate only one microphone at a time based on its proximity to the person speaking.                                                                                                                                                                                                                                                                                                                                 |
| ● | Adaptive Modeling                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|    | In any conferencing environment, a number of factors can cause changes in the room’s ambient noise level, including the HVAC system cycling on and off, an increase or decrease in the number of people in the room, changes in seating arrangements and other similar acoustical events. These events can cause a variety of audio problems, such as feedback and residual echo. Adaptive Modeling monitors key acoustical elements to predict and adapt to such changes, ensuring high quality audio, regardless of varying room dynamics.                                                                                                                                                                                                                                                                                                                                         |
| ● | ClearEffect™                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|    | The vast majority of conference calls are conducted using narrow-band telephony signals, which eliminate the high and low tones from participants’ voices. This causes listener fatigue due to participants straining to hear what is being said. ClearEffect™ creates natural, full-sounding audio by simulating the high and low tones that were eliminated by the narrow-band signal. The result is similar to moving from a clock radio to a full-room entertainment system.                                                                                                                                                                                                                                                                                                                                                                                                    |

----

Table of Contents

| ● | Professional conferencing products that are used in large businesses and organizations such as enterprise, healthcare, education and distance learning, government, legal and finance that integrate with leading video and tele-presence systems; |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Premium conferencing products that are also scaled for smaller conferencing rooms and for small and medium businesses which integrate with leading video and web conferencing systems and applications;                                            |

| ● | Traditional tabletop conferencing phones used in conference rooms and offices; and                                                                                    |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Personal conferencing products that enable affordable hands-free audio communications in new ways such as through PCs and portable laptops, smartphones and handsets. |

----

Table of Contents

| ● | Availability of easy-to-use conferencing systems and applications;                                                                          |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Richer and clearer voice quality of  collaborative communications compared to the quality of telephone handset speakerphones; and |
| ● | Expansion of global, regional, and local corporate enterprises requiring increased use of collaboration tools and systems.                  |

| ● | Availability of affordable and portable audio conferencing solutions for small businesses and home offices; |
|---------|-------------------------------------------------------------------------------------------------------------|
| ● | Growth of distance learning and corporate training programs;                                                |
| ● | Increasing adoption of tele-working and home offices;                                                       |
| ● | Decreases in travel due to cost, inconvenience, and carbon footprint considerations;                        |

----

Table of Contents

| ● | Transition to Internet Protocol (IP) networks from traditional public switched telephone networks (PSTN) and the growing deployment of VoIP collaboration applications; and   |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Increased adoption of unified communication platforms that leverage the affordability and capability of personal computers as a central component of corporate communication. |

----

Table of Contents

| ● | Unified Communications Clients        | Avaya, Cisco, IBM, Microsft, Siemens, and others                                   |
|---------|---------------------------------------|------------------------------------------------------------------------------------|
| ● | Internet Telephony                    | Google Talk, Skype, Vonage, and others                                             |
| ● | Enterprise Telephony                  | Aastra, Avaya, Cisco, Inter-tel, and others                                        |
| ● | VoIP Softphones                       | Avaya, Cisco, Mirial, and others                                                   |
| ● | Web Conferencing                      | IBM Workplace/SameTime, Microsoft Live Meeting,  Cisco WebEx, and others |
| ● | Instant Messenger                     | AOL, Microsoft MSN, Yahoo, and others                                              |
| ● | Group Video Conferencing Codecs       | Cisco/Tandberg, Logitech, Polycom, Sony, and others                                |
| ● | Group Video Conferencing Soft Clients | Cisco/Tandberg, Logitech, Polycom, and others                                      |
| ● | Audio Playback                        | DVDs, VCRs, PCs, and audio sources                                                 |

----

Table of Contents

| ● | Unified Communications Clients | Avaya, Cisco, IBM, Microsft, Siemens, and others                                   |
|---------|--------------------------------|------------------------------------------------------------------------------------|
| ● | Internet Telephony             | Google Talk, Skype, Vonage, and others                                             |
| ● | Enterprise Telephony           | Aastra, Avaya, Cisco, Intertel, and others                                         |
| ● | VoIP Softphones                | Avaya, Cisco, Mirial, and others                                                   |
| ● | Smartphones and Cell Phones    | Compaq, Ericsson, LG Motorola, Nokia, Rim, Sony, and others                        |
| ● | Web Conferencing               | IBM Workplace/SameTime, Microsoft Live Meeting,  Cisco WebEx, and others |
| ● | Instant Messenger              | AOL, Microsoft MSN, Yahoo, and others                                              |
| ● | Desktop Video Conferencing     | Cisco/Tandberg, Logitech, Polycom, Sony, and others                                |
| ● | Audio Playback                 | iPOD, Quicktime, RealPlayer, Windows Media Player, and others                      |
| ● | PC-Based Gaming                | TeamSpeak, and others                                                              |

----

Table of Contents

----

Table of Contents

----

Table of Contents

----

Table of Contents

| ● | Quality, features and functionality, and ease of use of the products;                               |
|---------|-----------------------------------------------------------------------------------------------------|
| ● | Broad and deep global channel partnerships;                                                         |
| ● | Significant established history of successful worldwide installations for diverse vertical markets; |
| ● | Brand name recognition and acceptance;                                                              |
| ● | Quality of customer and partner sales and technical support services; and                           |
| ● | Effective sales and marketing.                                                                      |

----

Table of Contents

----

Table of Contents

ITEM 1A.  RISK FACTORS

| ● | meeting required specifications and regulatory standards; |
|---------|-----------------------------------------------------------|
| ● | meeting market expectations for performance;              |

----

Table of Contents

| ● | hiring and keeping a sufficient number of skilled developers;                            |
|---------|------------------------------------------------------------------------------------------|
| ● | obtaining prototype products at anticipated cost levels;                                 |
| ● | having the ability to identify problems or product defects in the development cycle; and |
| ● | achieving necessary manufacturing efficiencies.                                          |

----

Table of Contents

----

Table of Contents

| ● | unexpected changes in, or the imposition of, additional legislative or regulatory requirements;                                                                                  |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | unique or more onerous environmental regulations;                                                                                                                                |
| ● | fluctuating exchange rates;                                                                                                                                                      |
| ● | tariffs and other barriers;                                                                                                                                                      |
| ● | difficulties in staffing and managing foreign sales operations;                                                                                                                  |
| ● | import and export restrictions;                                                                                                                                                  |
| ● | greater difficulties in accounts receivable collection and longer payment cycles;                                                                                                |
| ● | potentially adverse tax consequences;                                                                                                                                            |
| ● | potential hostilities and changes in diplomatic and trade relationships; and                                                                                                     |
| ● | disruption in services due to natural disaster, economic or political difficulties,  transportation, quarantines or other restrictions associated with infectious diseases. |

----

Table of Contents

| ● | statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or relating to us specifically; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | disparity between our reported results and the projections of analysts;                                                                                                                       |
| ● | the shift in sales mix of products that we currently sell to a sales mix of lower-gross profit product offerings;                                                                             |
| ● | the level and mix of inventory levels held by our distributors;                                                                                                                               |
| ● | the announcement of new products or product enhancements by us or our competitors;                                                                                                            |
| ● | technological innovations by us or our competitors;                                                                                                                                           |
| ● | success in meeting targeted availability dates for new or redesigned products;                                                                                                                |
| ● | the ability to profitably and efficiently manage our supplies of products and key components;                                                                                                 |
| ● | the ability to maintain profitable relationships with our customers;                                                                                                                          |
| ● | the ability to maintain an appropriate cost structure;                                                                                                                                        |
| ● | quarterly variations in our results of operations;                                                                                                                                            |
| ● | general consumer confidence or general market conditions or market conditions specific to technology industries;                                                                              |
| ● | domestic and international economic conditions;                                                                                                                                               |
| ● | unexpected changes in regulatory requirements and tariffs;                                                                                                                                    |
| ● | our ability to report financial information in a timely manner; and                                                                                                                           |
| ● | the markets in which our stock is traded.                                                                                                                                                     |

----

Table of Contents

ITEM 1B.  

ITEM 2.  PROPERTIES

ITEM 3.  LEGAL PROCEEDINGS

Note 9 – Commitments and Contingencies

ITEM 4.  RESERVED

----

Table of Contents

ITEM 5.  

|              |   | Year ended December 31, 2010 |   |   | Six months ended December 31, 2009 |   |       | Year ended June 30, 2009 |   |
|-------------------|--------|----------------------------------------|--------|--------|-----------------------------------------|--------|------------|--------------------------|--------|
|              |   | High                                   |   |   | Low                                     |   |       | High                     |   |   | Low |   |   | High |   |   | Low |   |
| July 1 to Sep 30  |   | $                                      | 4.00   |   |                                    | $      | 2.97       |                     |   | $ | 2.93 |   |   | $ | 2.40 |   |   | $ | 5.00 |   |   | $ | 3.10 |   |
| Oct 1 to Dec 31   |   |                                   | 4.10   |   |                                    |   | 3.11       |                     |   |   | 3.49 |   |   |   | 2.63 |   |   |   | 4.74 |   |   |   | 3.27 |   |
| Jan 1 to Mar 31   |   |                                   | 3.33   |   |                                    |   | 2.90       |                     |   |   |   |   |   |   |   |   |   |   | 4.06 |   |   |   | 3.00 |   |
| April 1 to Jun 30 |   |                                   | 3.25   |   |                                    |   |  2.96 |                     |   |   |   |   |   |   |   |   |   |   | 3.25 |   |   |   | 2.47 |   |

Note 10 – Shareholders’ Equity

ITEM 6.  SELECTED 

----

Table of Contents

ITEM 7.  MANAGEMENT'S 

----

Table of Contents

|                              |   | Year ended December 31, 2010 Audited |         | Year ended December 31, 2009 Unaudited |   | Variance Favorable (Unfavorable) |
|-----------------------------------|--------|-------------------------------------------|--------------|----------------------------------------|--------|----------------------------------|
|                              |   | $ thousands                               |         | % of Revenue                           |   | $ thousands                      |   | % of Revenue |   | $ thousands |   | % |
| Revenue                           |   | $                                         | 41,284       |                                   |   |                             | 100.0 | % |   | $ | 31,499 |   |   |   | 100.0 | % |   | $ | 9,785 |   |   |   | 31.1 | % |
| Cost of goods sold                |   |                                      | 16,643       |                                   |   |                             | 40.3 | % |   |   | 14,712 |   |   |   | 46.7 | % |   |   | (1,931 | )  |   |   | -13.1 | % |
| Gross profit                      |   |                                      | 24,641       |                                   |   |                             | 59.7 | % |   |   | 16,787 |   |   |   | 53.3 | % |   |   | 7,854 |   |   |   | 46.8 | % |
| Operating Expenses:               |   |                                      |         |                                   |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing               |   |                                      | 8,685        |                                   |   |                             | 21.0 | % |   |   | 6,822 |   |   |   | 21.7 | % |   |   | (1,863 | ) |   |   | -27.3 | % |
| Research and product development  |   |                                      | 7,739        |                                   |   |                             | 18.7 | % |   |   | 7,414 |   |   |   | 23.5 | % |   |   | (325 | ) |   |   | -4.4 | % |
| General and administrative        |   |                                      | 6,420        |                                   |   |                             | 15.6 | % |   |   | 4,203 |   |   |   | 13.3 | % |   |   | (2,217 | ) |   |   | -52.7 | % |
| Insurance settlement proceeds     |   |                                      | —      |                                   |   |                             | — |   |   |   | (1,100 | ) |   |   |  -3.5 | %  |   |   |  (1,100 | ) |   |   | *  |   |
|  Total Operating Expenses    |   |                                      |  22,844 |                                   |   |                             |  55.3 | %  |   |   |  17,339 |   |   |   | 55.0 | %  |   |   |  (5,505 | )  |   |   |  -31.7 | %  |
| Operating income                  |   |                                      | 1,797        |                                   |   |                             | 4.4 | % |   |   | (552 | )  |   |   | -1.8 | % |   |   | 2,349 |   |   |   | 425.5 | % |
| Other expense, net                |   |                                      | (104         | )                                      |   |                             | -0.3 | % |   |   | 429 |   |   |   | 1.4 | % |   |   | (533 | )  |   |   | -124.2 | % |
| Income (loss) before income taxes |   |                                      | 1,693        |                                   |   |                             | 4.1 | % |   |   | (123 | )  |   |   | -0.4 | % |   |   | 1,816 |   |   |   | 1,476.4 | % |
| Benefit from income taxes         |   |                                      | 681          |                                   |   |                             | 1.6 | % |   |   | 507 |   |   |   | 1.6 | % |   |   | 174 |   |   |   | 34.3 | % |
| Net income                        |   | $                                         | 2,374        |                                   |   |                             | 5.8 | % |   | $ | 384 |   |   |   | 1.2 | % |   | $ | 1,990 |   |   |   | 518.2 | % |

----

Table of Contents

----

Table of Contents

Note 3 - Business Combinations, Goodwill and Intangible Assets

Note 2

 - Summary of Significant Accounting Policies

----

Table of Contents

|                        |   | As of December 31, 2010 |   |   | As of December 31, 2009 |    |
|-----------------------------|--------|-------------------------|--------|--------|------------------------------|---------|
| Deferred Revenue            |   | $                       | 4,306  |   |                         | $       | 4,707 |   |
| Deferred Cost of Goods Sold |   |                    | 1,742  |   |                         |    | 1,846 |   |
| Deferred Gross Profit       |   |  $                 | 2,564  |   |                         |  $ | 2,861 |   |

----

Table of Contents

Note 13 - Income Taxes

----

Table of Contents

ITEM 7A.  

----

Table of Contents

ITEM 8.  FINANCIAL 

ITEM 9.  CHANGES 

ITEM 9A.  CO

ITEM 9B. 

----

Table of Contents

ITEM 10.  

ITEM 11.  

ITEM 12.  SECURITY 

ITEM 13.  CERTAIN 

ITEM 14.  PRINCIPAL 

ITEM 15. 

| 1. | Financial Statements: Financial statements set forth under Part II, Item 8 of this Annual Report on Form 10-K are filed in a separate section of this Form 10-K. See "Index to Consolidated Financial Statements" on page F-1.   |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Financial Statement Schedules: All schedules are omitted since they either are not required, not applicable or the information is presented in the accompanying consolidated financial statements and notes thereto.  |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Exhibits: The exhibits listed under the Index of exhibits in the next page are filed or incorporated by reference as part of this Form 10-K. |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------|

----

Table of Contents

|           |   |                                                                                                                                                                                                             |   |                 |   | Incorporated by Reference |
|----------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|---------------------------|
| Exhibit Number |   | Exhibit Description                                                                                                                                                                                              |   |  Filed Herewith |   |  Form                |   |  File Number |   |  Exhibit |   |  Filing Date |
| 2.2            |   | Agreement and Plan of Merger, dated as of November 3, 2009, by and among ClearOne Communications, Inc., Alta-Wasatch Acquisition Corporation, NetStreams, Inc., Austin Ventures VIII, L.P., and Kevin A. Reinis. |   |                 |   |  8-K                 |   |  001-33660 |   |  2.2 |   |  11/09/2009 |
| 3.1            |   | Articles of Incorporation and amendments thereto                                                                                                                                                                 |   |                 |   |  10-K                |   |  001-33660 |   |  3.1 |   |  09/10/2008 |
| 3.2            |   | Bylaws                                                                                                                                                                                                           |   |  X              |   |                      |   |   |   |   |   |   |
| 10.1           |   | Employment Separation Agreement between ClearOne Communications, Inc. and Frances Flood, dated December 5, 2003*                                                                                                 |   |                 |   |  10-K                |   |  000-17219 |   |  10.1 |   |  08/18/2005 |
| 10.2           |   | Employment Termination Agreement between ClearOne Communications, Inc. and Susie Strohm, dated December 5, 2003*                                                                                            |   |                 |   |  10-K                |   |  000-17219 |   |  10.1 |   |  08/18/2005 |
| 10.3           |   | Joint Prosecution and Defense Agreement dated April 1, 2004 between ClearOne Communications, Inc., Parsons Behle & Latimer, Edward Dallin Bagley and Burbidge & Mitchell, and amendment thereto          |   |                 |   |  10-K                |   |  000-17219 |   |  10.1 |   |  08/18/2005 |
| 10.4           |   | 1997 Employee Stock Purchase Plan                                                                                                                                                                                |   |                 |   |  S-8                 |   |  333-137859 |   |  4.9 |   |  10/06/2006 |
| 10.5           |   | 1998 Stock Option Plan                                                                                                                                                                                           |   |                 |   |  S-8                 |   |  333-137859 |   |  4.8 |   |  10/06/2006 |
| 10.6           |   | 2007 Equity Incentive Plan                                                                                                                                                                                       |   |                 |   |  S-8                 |   |  333-148789 |   |  4.7 |   |  01/22/2008 |
| 10.8           |   | Office Lease between Edgewater Corporate Park, LLC and ClearOne Communications, Inc. dated June 5, 2006                                                                                                          |   |                 |   |  10-K                |   |  000-17219 |   |  10.19 |   |  09/14/2006 |
| 10.11          |   | Compromise Agreement between ClearOne Communications UK Limited and Martin Offwood dated August 13, 2007*                                                                                                        |   |                 |   |  10-Q                |   |  001-33660 |   |  10.1 |   |  11/13/2007 |
| 10.14          |   | Consulting Agreement between Edward D. Bagley and ClearOne Communications, Inc. dated July 6, 2007                                                                                                               |   |                 |   |  10-K                |   |  001-33660 |   |  10.14 |   |  09/17/2007 |
| 10.15          |   | Severance Agreement between ClearOne Communications, Inc. and Edward D. Bagley dated July 6, 2007*                                                                                                               |   |                 |   |  10-K                |   |  001-33660 |   |  10.15 |   |  09/17/2007 |
| 10.20          |   | Margin Loan Agreement between ClearOne Communications, Inc. and UBS Financial Services, Inc. dated September 10, 2008                                                                                            |   |                 |   |  8-K                 |   |  001-33660 |   |  10.20 |   |  09/11/2008 |
| 10.21          |   | Manufacturing Services Agreement between Flextronics Industrial, Ltd. and ClearOne Communications, Inc. dated November 3, 2008                                                                                   |   |                 |   |  10-K                |   |  001-33660 |   |  10.21 |   |  10/13/2009 |
| 10.22          |   | Settlement and Release Agreement between ClearOne Communications, Inc. and Edward Dallin Bagley dated October 7, 2009                                                                                            |   |                 |   |  10-K                |   |  001-33660 |   |  10.22 |   |  10/13/2009 |
| 10.23          |   | Joinder to Loan and Security Agreement, dated as of November 3, 2009, by and between ClearOne Communications, Inc. and Square 1 Bank.                                                                            |   |                 |   |  8-K                 |   |  001-33660 |   |  10.23 |   |  11/09/2009 |
| 10.24          |   | Seventh Amendment to Loan and Security Agreement, dated as of November 3, 2009, by and between Square 1 Bank, ClearOne Communications, Inc., NetStreams Inc., and NetStreams, LLC.                               |   |                 |   |  8-K                 |   |  001-33660 |   |  10.24 |   |  11/09/2009 |
| 14.1           |   | Code of Ethics, approved by the Board of Directors on August 23, 2006                                                                                                                                            |   |                 |   |  10-K                |   | 000-17219  |   |  14.1 |   |  09/14/2006 |
| 21.1           |   | Subsidiaries of the registrant                                                                                                                                                                                   |   |  X              |   |                      |   |   |   |   |   |   |
| 23.1           |   | Consent of Jones Simkins P.C., Independent Registered Public Accounting Firm                                                                                                                                     |   |  X              |   |                      |   |   |   |   |   |   |
| 31.1           |   | Section 302 Certification of Chief Executive Officer                                                                                                                                                             |   |  X              |   |                      |   |   |   |   |   |   |
| 31.2           |   | Section 302 Certification of Chief Financial Officer                                                                                                                                                             |   |  X              |   |                      |   |   |   |   |   |   |
| 32.1           |   | Section 906 Certification of Chief Executive Officer                                                                                                                                                             |   |  X              |   |                      |   |   |   |   |   |   |
| 32.2           |   | Section 906 Certification of Chief Financial Officer                                                                                                                                                             |   |  X              |   |                      |   |   |   |   |   |   |

----

Table of Contents

SIGNA

|                                                                                                     |
|----------------------------------------------------------------------------------------------------------|
|                                                                                                     |
| /s/ Zeynep Hakimoglu                                                                                     |
| Zeynep Hakimoglu                                                                                         |
| President, Chief Executive Officer (Principal Executive Officer), and Chairman of the Board and Director |
| March 30, 2011                                                                                           |
|                                                                                                     |

|  /s/ Zeynep Hakimoglu                                                                                             |    | /s/ Narsi Narayanan                                                                  |
|------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------|
| Zeynep Hakimoglu                                                                                                       |         | Narsi Narayanan                                                                      |
| President, Chief Executive Officer (Principal Executive Officer), and Chairman of the Board and DirectorMarch 30, 2011 |         | Vice President of Finance (Principal Financial and Accounting Officer)March 30, 2011 |
|                                                                                                              |         |                                                                                 |
| /s/ E. Bryan Bagley                                                                                                    |         | /s/ Brad R. Baldwin                                                                  |
|  E.Bryan Bagley                                                                                                   |         | Brad R. Baldwin                                                                      |
| DirectorMarch 30, 2011                                                                                                 |         | DirectorMarch 30, 2011                                                               |
|                                                                                                              |         |                                                                                 |
| /s/ Larry R. Hendricks                                                                                                 |         | /s/ Scott M. Huntsman                                                                |
| Larry R. Hendricks                                                                                                     |         | Scott M. Huntsman                                                                    |
| DirectorMarch 30, 2011                                                                                                 |         | DirectorMarch 30, 2011                                                               |
|                                                                                                                   |         |                                                                                 |

----

Table of Contents

INDEX TO 

|                                                                                                                                                                                  | Page  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Report of Independent Registered Public Accounting Firm – Jones Simkins, P.C.                                                                                                   | F-2        |
| Consolidated Balance Sheets as of December 31, 2010 and December 31, 2009                                                                                                        | F-3        |
| Consolidated Statements of Operations and Comprehensive Income for the year ended December 31, 2010, six months ended December 31, 2009 and fiscal year ended June 30, 2009 | F-4        |
| Consolidated Statements of Shareholders' Equity for the year ended December 31, 2010, six months ended December 31, 2009 and fiscal year ended June 30, 2009           | F-5        |
| Consolidated Statements of Cash Flows for the year ended December 31, 2010, six months ended December 31, 2009 and fiscal year ended June 30, 2009                     | F-6        |
| Notes to Consolidated Financial Statements                                                                                                                                            | F-8        |

----

Table of Contents

Report of Independent 

----

Table of Contents

CLEARONE COMMUNICATIONS

|                                                                                                                              |   | December 31, 2010 |    |   | December 31, 2009 |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|-------------------|--------|--------|
| ASSETS                                                                                                                            |   |              |    |   |              |   |   |
| Current assets:                                                                                                                   |   |              |    |   |              |   |   |
| Cash and cash equivalents                                                                                                         |   | $                 | 11,431  |   |              | $      | 9,494  |   |   |
| Receivables, net of allowance for doubtful accounts of $206 and $103, respectively                                           |   |              | 9,951   |   |              |   | 6,571  |   |   |
| Inventories, net                                                                                                                  |   |              | 8,780   |   |              |   | 6,236  |   |   |
| Deferred income taxes                                                                                                             |   |              | 3,389   |   |              |   | 3,128  |   |   |
| Prepaid expenses and other assets                                                                                                 |   |              | 446     |   |              |   | 1,609  |   |   |
| Total current assets                                                                                                              |   |              | 33,997  |   |              |   | 27,038 |   |   |
|                                                                                                                              |   |              |    |   |              |   |   |   |   |
| Long-term inventory                                                                                                               |   |              | 2,617   |   |              |   | 6,412  |   |   |
| Property and equipment, net                                                                                                       |   |              | 2,965   |   |              |   | 3,246  |   |   |
| Intangibles                                                                                                                       |   |              | 2,745   |   |              |   | 3,095  |   |   |
| Goodwill                                                                                                                          |   |              | 726     |   |              |   | 726    |   |   |
| Long-term deferred income taxes                                                                                                   |   |              | 913     |   |              |   | 1,037  |   |   |
| Other assets                                                                                                                      |   |              | 18      |   |              |   | 21     |   |   |
| Total assets                                                                                                                      |   | $                 | 43,981  |   |              | $      | 41,575 |   |   |
|                                                                                                                              |   |              |    |   |              |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                              |   |              |    |   |              |   |   |   |   |
| Current liabilities:                                                                                                              |   |              |    |   |              |   |   |   |   |
| Accounts payable                                                                                                                  |   | $                 | 2,362   |   |              | $      | 2,304  |   |   |
| Accrued liabilities                                                                                                               |   |              | 4,573   |   |              |   | 1,768  |   |   |
| Current maturities of long term-debt                                                                                              |   |              | — |   |              |   | 2,000  |   |   |
| Deferred product revenue                                                                                                          |   |              | 4,306   |   |              |   | 4,707  |   |   |
| Total current liabilities                                                                                                         |   |              | 11,241  |   |              |   | 10,779 |   |   |
|                                                                                                                              |   |              |    |   |              |   |   |   |   |
| Deferred rent                                                                                                                     |   |              | 584     |   |              |   | 466    |   |   |
| Other long-term liabilities                                                                                                       |   |              | 421     |   |              |   | 1,232  |   |   |
| Total liabilities                                                                                                                 |   |              | 12,246  |   |              |   | 12,477 |   |   |
|                                                                                                                              |   |              |    |   |              |   |   |   |   |
| Shareholders' equity:                                                                                                             |   |              |    |   |              |   |   |   |   |
| Common stock, par value $0.001, 50,000,000 shares authorized, 8,929,439 and 8,929,134 shares issued and outstanding, respectively |   |              | 9       |   |              |   | 9      |   |   |
| Additional paid-in capital                                                                                                        |   |              | 39,073  |   |              |   | 38,810 |   |   |
| Accumulated deficit                                                                                                               |   |              | (7,347  | )      |              |   | (9,721 | ) |   |
| Total shareholders' equity                                                                                                        |   |              | 31,735  |   |              |   | 29,098 |   |   |
| Total liabilities and shareholders' equity                                                                                        |   | $                 | 43,981  |   |              | $      | 41,575 |   |   |

See accompanying notes to consolidated financial statements

----

Table of Contents

CLEARONE COMMUNICATIONS

|                                                                                            |   |  Year ended December 31, 2010 |            |    | Six Months endedDecember 31, 2009 |   |      | Year endedJune 30, 2009 |   |   |
|-------------------------------------------------------------------------------------------------|--------|------------------------------------|-----------------|---------|-----------------------------------|--------|-----------|-------------------------|--------|--------|
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |
| Revenue                                                                                         |   | $                             | 41,284          |    |                              | $      | 16,836    |                    |   | $      | 35,700 |   |   |
| Cost of goods sold                                                                              |   |                               | 16,643          |    |                              |   | 7,276     |                    |   |   | 15,323 |   |   |
| Gross profit                                                                                    |   |                               | 24,641          |    |                              |   | 9,560     |                    |   |   | 20,377 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Operating expenses:                                                                             |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Sales and marketing                                                                             |   |                               | 8,685           |    |                              |   | 3,204     |                    |   |   | 7,529 |   |   |
| Research and product development                                                                |   |                               | 7,739           |    |                              |   | 3,493     |                    |   |   | 7,541 |   |   |
| General and administrative                                                                      |   |                               | 6,420           |    |                              |   | 2,900     |                    |   |   | 3,631 |   |   |
| Insurance settlement proceeds                                                                   |   |                               | —    |    |                              |   | —   |                    |   |   | (1,100 | ) |   |
| Total operating expenses                                                                        |   |                               | 22,844          |    |                              |   | 9,597     |                    |   |   | 17,601 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Operating income (loss)                                                                         |   |                               | 1,797           |    |                              |   | (37       | )                       |   |   | 2,776 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Other income (expense), net:                                                                    |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Interest income                                                                                 |   |                               |  43        |    |                              |   | 76        |                    |   |   | 474 |   |   |
| Interest expense                                                                                |   |                               |  (51       | )  |                              |   | (35       | )                       |   |   | (1 | ) |   |
| Other, net                                                                                      |   |                               |  (96       | )  |                              |   | 100       |                    |   |   | (27 | ) |   |
| Total other income (expense), net                                                               |   |                               |  (104      | )  |                              |   | 141       |                    |   |   | 446 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Income before income taxes                                                                 |   |                               |  1,693     |    |                              |   | 104       |                    |   |   | 3,222 |   |   |
| Benefit from (provision for) income taxes                                                       |   |                               |  681       |    |                              |   | 320       |                    |   |   | (995 | ) |   |
| Net income                                                                                      |   | $                             |  2,374     |    |                              | $      | 424       |                    |   | $      | 2,227 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Comprehensive income:                                                                           |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Net income                                                                                      |   | $                             |  2,374     |    |                              | $      | 424       |                    |   | $      | 2,227 |   |   |
| Unrealized gain (loss) on marketable securities, net of taxes of 0, 2, and ($415), respectively |   |                               | —    |    |                              |   | (6        | )                       |   |   | 700 |   |   |
| Comprehensive income                                                                            |   | $                             | 2,374           |    |                              | $      | 418       |                    |   | $      | 2,927 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Basic earnings per common share                                                                 |   | $                             | 0.27            |    |                              | $      | 0.05      |                    |   | $      | 0.24 |   |   |
| Diluted earnings per common share                                                               |   | $                             | 0.27            |    |                              | $      | 0.05      |                    |   | $      | 0.24 |   |   |
|                                                                                            |   |                               |            |    |                              |   |      |                    |   |   |   |   |   |
| Basic weighted average shares outstanding                                                       |   |                               |  8,929,305 |    |                              |   | 8,928,970 |                    |   |   | 9,213,731 |   |   |
| Diluted weighted average shares outstanding                                                     |   |                               |  8,942,929 |    |                              |   | 9,045,842 |                    |   |   | 9,338,320 |   |   |

See accompanying notes to consolidated financial statements

----

Table of Contents

CLEARONE COMMUNICATIONS

|                                                 |   |         |       |   |    |    |    |          |   |    | Accumulated   |   |   |          |    |   |   |    |
|------------------------------------------------------|--------|--------------|------------|--------|---------|---------|---------|---------------|--------|---------|---------------|--------|--------|---------------|---------|--------|--------|---------|
|                                                 |   |         |       |   |    |    |    | Additional    |   |    | Other         |   |   |          |    |   | Total  |    |
|                                                 |   | Common Stock |       |   | Paid-In |    |    | Comprehensive |   |    | Accumulated   |   |   | Shareholders' |    |
|                                                 |   | Shares       |       |   | Amount  |    |    | Capital       |   |    | Income (loss) |   |   | Deficit       |    |   | Equity |    |
|                                                 |   |         |       |   |    |    |    |          |   |    |          |   |   |          |    |   |   |    |
| Balances at June 30, 2008                            |   |         | 10,228,902 |   |    | $  | 10      |          |   | $  | 44,618        |   |   | $        | (694    | )      |   | $  | (12,372 | ) |   | $  | 31,562 |   |
| Stock buy back program                               |   |         | (1,342,620 | )      |    |    | (1      | )             |   |    | (6,767        | )      |   |          | — |   |   |    | — |   |   |   | (6,768 | ) |
| Exercise of stock options                            |   |         | 40,799     |   |    |    | — |          |   |    | 134           |   |   |          | — |   |   |    | — |   |   |   | 134 |   |
| Compensation cost associated with ASC Topic 718      |   |         | —    |   |    |    | — |          |   |    | 625           |   |   |          | — |   |   |    | — |   |   |   | 625 |   |
| Employee Stock Purchase Plan                         |   |         | 1,721      |   |    |    | — |          |   |    | 6             |   |   |          | — |   |   |    | — |   |   |   | 6 |   |
| Unrealized gain on marketable securities, net of tax |   |         | —    |   |    |    | — |          |   |    | —       |   |   |          | 700     |   |   |    | — |   |   |   | 700 |   |
| Net income                                           |   |         | —    |   |    |    | — |          |   |    | —       |   |   |          | — |   |   |    | 2,227 |   |   |   | 2,227 |   |
| Balances at June 30, 2009                            |   |         | 8,928,802  |   |    | $       | 9       |          |   | $       | 38,616        |   |   | $             | 6       |   |   | $       | (10,145 | ) |   | $ | 28,486 |   |
| Compensation cost associated with ASC Topic 718      |   |         | —    |   |    |    | — |          |   |    | 193           |   |   |          | — |   |   |    | — |   |   |   | 193 |   |
| Employee Stock Purchase Plan                         |   |         | 332        |   |    |    | — |          |   |    | 1             |   |   |          | — |   |   |    | — |   |   |   | 1 |   |
| Unrealized loss on marketable securities, net of tax |   |         | —    |   |    |    | — |          |   |    | —       |   |   |          | (6      | )      |   |    | — |   |   |   | (6 | ) |
| Net income                                           |   |         | —    |   |    |    | — |          |   |    | —       |   |   |          | — |   |   |    | 424 |   |   |   | 424 |   |
| Balances at December 31, 2009                        |   |         | 8,929,134  |   |    | $       | 9       |          |   | $       | 38,810        |   |   | $             | — |   |   | $       | (9,721 | ) |   | $ | 29,098 |   |

| Compensation cost associated with ASC Topic 718 |   |   | —   |   |   |   | — |   |   |   | 262     |   |   |   | — |   |   |   | — |   |   |   | 262    |   |
|-------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|--------|
| Employee Stock Purchase Plan                    |   |   | 305       |   |   |   | — |   |   |   | 1       |   |   |   | — |   |   |   | — |   |   |   | 1      |   |
| Net income                                      |   |   | —   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 2,374   |   |   |   | 2,374  |   |
| Balances at December 31, 2010                   |   |   | 8,929,439 |   |   | $      | 9       |   |   | $      | 39,073  |   |   | $      | — |   |   | $      | (7,347  | )      |   | $      | 31,735 |   |

See accompanying notes to consolidated financial statements

----

Table of Contents

 

|                                                                                   |   |   Year endedDecember 31, 2010 |          |    | Six months endedDecember 31, 2009 |   |          | Year EndedJune 30, 2009 |   |
|----------------------------------------------------------------------------------------|--------|-----------------------------------------|---------------|---------|-----------------------------------|--------|---------------|-------------------------|--------|
| Cash flows from operating activities:                                                  |   |                                    |          |    |                              |   |          |                    |   |   |
| Net income                                                                             |   | $                                  | 2,374    |    |                              | $      | 424           |                    |   | $ | 2,227 |   |
| Adjustments to reconcile net income to net cash provided by (used in) operations: |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Depreciation and amortization expense                                                  |   |                                    | 1,201         |    |                              |   | 453           |                    |   |   | 720 |   |
| Stock-based compensation                                                               |   |                                    | 263      |    |                              |   | 194           |                    |   |   | 631 |   |
| Provision for doubtful accounts                                                        |   |                                    |  103     |    |                              |   | —       |                    |   |   | 16 |   |
| Increase (decrease) in reserves against inventory                                      |   |                                    | (104          | )  |                              |   | (153          | )                       |   |   | 2,293 |   |
| Write-off of note receivable                                                           |   |                                    |  — |    |                              |   | —       |                    |   |   | 5 |   |
| Gain on sale of marketable securities                                             |   |                                    | —       |    |                              |   | (95           | )                       |   |   | — |   |
| Loss (gain) on disposal of assets                                                      |   |                                    |  111     |    |                              |   | (5            | )                       |   |   | — |   |
| Changes in operating assets and liabilities:                                           |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Accounts receivable                                                                    |   |                                    |  (3,483  | )  |                              |   | (1,502        | )                       |   |   | 1,248 |   |
| Deposit, bond for preliminary injunction                                               |   |                                    |  — |    |                              |   | —       |                    |   |   | 908 |   |
| Inventories                                                                            |   |                                    |  1,355   |    |                              |   | 4,343         |                    |   |   | (9,798 | ) |
| Deferred income taxes                                                                  |   |                                    |  (137    | )  |                              |   | (306          | )                       |   |   | 262 |   |
| Prepaid expenses                                                                       |   |                                    |  520     |    |                              |   | 209           |                    |   |   | (592 | ) |
| Accounts payable                                                                       |   |                                    |  351     |    |                              |   | (2,550        | )                       |   |   | 2,402 |   |
| Accrued liabilities                                                                    |   |                                    |  3,041   |    |                              |   | (1,188        | )                       |   |   | (1,292 | ) |
| Deferred product revenue                                                               |   |                                    |  (401    | )  |                              |   | (2            | )                       |   |   | (1,086 | ) |
| Other long-term liabilities                                                            |   |                                    |  (808    | )  |                              |   | 42            |                    |   |   | 135 |   |
| Net cash provided by (used in) operating activities                               |   |                                    | 4,386         |    |                              |   | (136          | )                       |   |   | (1,921 | ) |
|                                                                                   |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Cash flows from investing activities:                                                  |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Acquisition of NetStreams, Inc. (net of cash acquired)                                 |   |                                    | —       |    |                              |   | (1,643        | )                       |   |   | — |   |
| Escrow proceeds received pursuant to NetStreams acquisition                            |   |                                    | 350           |    |                              |   |  — |                    |   |   |  — |   |
| Purchase of property and equipment                                                     |   |                                    |  (799    | )  |                              |   | (745          | )                       |   |   | (1,074 | ) |
| Proceeds from sale of property and equipment                                           |   |                                    | —       |    |                              |   | 24            |                    |   |   | — |   |
| Purchase of marketable securities                                                      |   |                                    |  — |    |                              |   | —       |                    |   |   | (1,253 | ) |
| Sale of marketable securities                                                          |   |                                    | —       |    |                              |   | 2,192         |                    |   |   | 17,356 |   |
| Net cash (used in) provided by investing activities                                    |   |                                    |  (449    | )  |                              |   | (172          | )                       |   |   | 15,029 |   |
|                                                                                   |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Cash flows from financing activities:                                                  |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Proceeds from the issuance of common stock - options                                   |   |                                    |  — |    |                              |   | 1             |                    |   |   | 134 |   |
| Common stock purchased and retired                                                     |   |                                    | —       |    |                              |   | —       |                    |   |   | (6,768 | ) |
| Principal payments on long-term debt                                                   |   |                                    |  (2,000  | )  |                              |   | —       |                    |   |   | — |   |
| Net cash (used in) provided by financing activities                               |   |                                    | (2,000        | )  |                              |   | 1             |                    |   |   | (6,634 | ) |
|                                                                                   |   |                                    |          |    |                              |   |          |                    |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                   |   |                                    |  1,937   |    |                              |   | (307          | )                       |   |   | 6,474 |   |
| Cash and cash equivalents at the beginning of the year                                 |   |                                    |  9,494   |    |                              |   | 9,801         |                    |   |   | 3,327 |   |
| Cash and cash equivalents at the end of the year                                       |   | $                                  |  11,431  |    |                              | $      | 9,494         |                    |   | $ | 9,801 |   |

See accompanying notes to consolidated financial statements

----

Table of Contents

|                                                                                                      |   | Year endedDecember 31, 2010 |      |   | Six months endedDecember 31, 2009 |   |          | Year EndedJune 30, 2009 |   |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|-----------------------------------|--------|---------------|-------------------------|--------|
| Supplemental disclosure of cash flow information:                                                         |   |                        |      |   |                              |   |          |                    |   |
| Cash paid for interest                                                                                    |   | $                           | 51        |   |                              | $      | 35            |                    |   | $ | 1 |   |
| Cash paid for income taxes                                                                                |   |                        | 3         |   |                              |   | —       |                    |   |   | 1,637 |   |
|                                                                                                      |   |                        |      |   |                              |   |          |                    |   |   |   |   |
| Supplemental disclosure of non-cash activities:                                                      |   |                        |      |   |                              |   |          |                    |   |   |   |   |
| Exchanged accounts receivable and prepaid expenses from a vendor with accounts payable to the same vendor |   | $                           | 293       |   |                              | $      | 74            |                    |   | $ | 1,044 |   |
| Unrealized gain (loss) on marketable securities, net of tax of $0, $2 and ($415)                     |   |                        | —   |   |                              |   | (6            | )                  |   |   | 700 |   |
| Current liabilities reclassed to deferred rent                                                            |   |                        |  176 |   |                              |   |  — |                    |   |   |  — |   |

| Cash                                 |   | $      | 161    |   |
|--------------------------------------|--------|--------|--------|--------|
| Accounts receivable                  |   |   | 175    |   |
| Inventories                          |   |   | 1,204  |   |
| Other current assets                 |   |   | 72     |   |
| Accounts payable                     |   |   | (1,384 | )      |
| Accrued expenses                     |   |   | (576   | )      |
| Property and equipment               |   |   | 227    |   |
| Intangible assets                    |   |   | 3,120  |   |
| Goodwill                             |   |   | 726    |   |
| Current maturities of long-term debt |   |   | (2,000 | )      |
| Deferred tax liability               |   |   | (271   | )      |
| Total purchase price                 |   | $      | 1,454  |   |
| Additional cash placed in escrow     |   |   | 350    |   |
| Less: Cash acquired                  |   |   | (161   | )      |
| Net cash paid in acquisition         |   | $      | 1,643  |   |

----

Table of Contents

CLEARON

2.  Summary 

----

Table of Contents

|                           |   | Year endedDecember 31, 2010 |    |   | Six months endedDecember 31, 2009 |   |    | Year EndedJune 30, 2009 |   |
|--------------------------------|--------|-----------------------------|---------|--------|-----------------------------------|--------|---------|-------------------------|--------|
| Balance at beginning of period |   | $                           | 103     |   |                              | $      | 103     |                    |   | $ | 87 |   |
| Charged to costs and expenses  |   |                        | 103     |   |                              |   | — |                    |   |   | 173 |   |
| Deductions                     |   |                        | — |   |                              |   | — |                    |   |   | (157 | )  |
| Balance at end of period       |   | $                           | 206     |   |                              | $      | 103     |                    |   | $ | 103 |   |

Note 3 – Business Combinations, Goodwill and Intangibles

----

Table of Contents

|                        |   | As of December 31, 2010 |   |   | As of December 31, 2009 |    |
|-----------------------------|--------|-------------------------|--------|--------|------------------------------|---------|
| Deferred Revenue            |   | $                       | 4,306  |   |                         | $       | 4,707 |   |
| Deferred Cost of Goods Sold |   |                    | 1,742  |   |                         |    | 1,846 |   |
| Deferred Gross Profit       |   |  $                 | 2,564  |   |                         |  $ | 2,861 |   |

----

Table of Contents

|                           |   | Year endedDecember 31, 2010 |   |    | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |
|--------------------------------|--------|-----------------------------|--------|---------|-----------------------------------|--------|--------|-------------------------|--------|
| Balance at beginning of period |   | $                           | 133    |    |                              | $      | 149    |                    |   | $ | 211 |   |
| Accruals/additions             |   |                        | 543    |    |                              |   | 106    |                    |   |   | 262 |   |
| Usage                          |   |                        | (313   | )  |                              |   | (122   | )                       |   |   | (324 | )  |
| Balance at end of period       |   | $                           | 363    |    |                              | $      | 133    |                    |   | $ | 149 |   |

----

Table of Contents

|                                                          |   |   Year endedDecember 31, 2010 |        | Six months endedDecember 31, 2009 |   |      | Year EndedJune 30, 2009 |   |
|---------------------------------------------------------------|--------|-----------------------------------------|-------------|-----------------------------------|--------|-----------|-------------------------|--------|
| Numerator:                                                    |   |                                    |        |                              |   |      |                    |   |   |
| Net income                                                    |   | $                                  | 2,374  |                              | $      | 424       |                    |   | $ | 2,227 |   |
| Denominator:                                                  |   |                                    |        |                              |   |      |                    |   |   |   |   |
| Basic weighted average shares                                 |   |                                    | 8,929,305   |                              |   | 8,928,970 |                    |   |   | 9,213,731 |   |
| Dilutive common stock equivalents using treasury stock method |   |                                    | 13,624      |                              |   | 116,872   |                    |   |   | 124,589 |   |
| Diluted weighted average shares                               |   |                                    | 8,942,929   |                              |   | 9,045,842 |                    |   |   | 9,338,320 |   |
| Basic earnings per common share                               |   | $                                  | 0.27        |                              | $      | 0.05      |                    |   | $ | 0.24 |   |
| Diluted earnings per common share                             |   | $                                  | 0.27        |                              | $      | 0.05      |                    |   | $ | 0.24 |   |

Note 11 – Share Based Payment 

----

Table of Contents

3.  Business Combinations, Goodwill and Intangibles

| Cash                                 |   | $      | 161    |   |
|--------------------------------------|--------|--------|--------|--------|
| Accounts Receivable                  |   |   | 175    |   |
| Inventories                          |   |   | 1,204  |   |
| Other Current Assets                 |   |   | 72     |   |
| Accounts payable                     |   |   | (1,384 | )      |
| Accrued Expenses                     |   |   | (576   | )      |
| Property and Equipment               |   |   | 227    |   |
| Intangible Assets                    |   |   | 3,120  |   |
| Goodwill                             |   |   | 726    |   |
| Current maturities of long-term debt |   |   | (2,000 | )      |
| Deferred tax liability               |   |   | (271   | )      |
| Total purchase price                 |   | $      | 1,454  |   |

----

Table of Contents

| Decrease in receivables                         |   | $      | (91 | )  |
|-------------------------------------------------|--------|--------|-----|---------|
| Decrease in deferred income taxes - current     |   |   | (1  | )  |
| Increase in deferred income taxes - non current |   |   | 35  |    |
| Increase in goodwill                            |   | $      | 57  |    |

|                                                         |   | EstimatedUseful lives (Years) |   |   | Amount |    |   | AccumulatedAmortization |   |    | Net      |   |
|--------------------------------------------------------------|--------|------------------------------------|--------|--------|--------|---------|--------|-------------------------|--------|---------|----------|--------|
| Intangibles acquired through acquisition of NetStreams, Inc. |   |                               |   |   |   |    |   |                    |   |    |     |   |
| Tradename                                                    |   |                               | 7      |   |   | $       | 435    |                    |   | $       | 72       |   |   | $ | 363 |   |
| Patents and Technological Know-how                           |   |                               | 10     |   |   |    | 2,070  |                    |   |    | 241      |   |   |   | 1,829 |   |
| Proprietary Software                                         |   |                               | 3      |   |   |    | 215    |                    |   |    |  84 |   |   |   | 131 |   |
|                                                         |   |                               |   |   |   |    | 2,720  |                    |   |    | 397      |   |   |   | 2,323 |   |
| In-process Research and Development                          |   | Indefinite                         |   |   |   | 400     |   |                    |   | — |     |   |   | 400 |   |
| Total acquired through acquisition of NetStreams, Inc.       |   |                               |   |   |   |    | 3,120  |                    |   |    | 397      |   |   |   | 2,723 |   |
| Other                                                        |   |                               | 5      |   |   |    | 49     |                    |   |    | 27       |   |   |   |  22 |   |
| Total                                                        |   |                               |   |   |   |  $ | 3,169  |                    |   |  $ | 424      |   |   |  $ | 2,745 |   |

| Years ending December 31, |   |   |      |
|---------------------------|--------|--------|-----------|
| 2011                      |   | $      |  351 |   |
| 2012                      |   |   | 339       |   |
| 2013                      |   |   | 272       |   |
| 2014                      |   |   | 269       |   |
| 2015                      |   |   | 269       |   |
| Thereafter                |   |   | 845       |   |
|                      |   | $      | 2,345     |   |

----

Table of Contents

|           |   | As ofDecember 31, 2010 |   |   | As of December 31, 2009 |   |
|----------------|--------|------------------------|--------|--------|------------------------------|--------|
| Current:       |   |                   |   |   |                         |   |
| Raw materials  |   | $                      | 776    |   |                         | $      | 453 |   |
| Finished goods |   |                   | 8,004  |   |                         |   | 5,783 |   |
|           |   | $                      | 8,780  |   |                         | $      | 6,236 |   |
|           |   |                   |   |   |                         |   |   |   |
| Long-term:     |   |                   |   |   |                         |   |   |   |
| Raw materials  |   | $                      | 569    |   |                         | $      | 1,056 |   |
| Finished goods |   |                   | 2,048  |   |                         |   | 5,356 |   |
|           |   | $                      | 2,617  |   |                         | $      | 6,412 |   |

|                                          | Estimateduseful lives |   | As ofDecember 31, 2010 |        |   | As ofDecember 31, 2009 |   |
|-----------------------------------------------|-----------------------|--------|------------------------|-------------|--------|------------------------|--------|
| Office furniture and equipment                | 3 to 10 years         |   | $                      | 9,583  |   |                   | $      | 9,346 |   |
| Leasehold improvements                        | 1 to 6 years          |   |                   | 1,381  |   |                   |   | 1,333 |   |
| Manufacturing and test equipment              | 2 to 10 years         |   |                   | 2,417  |   |                   |   | 2,281 |   |
|                                          |                  |   |                   | 13,381      |   |                   |   | 12,960 |   |
| Accumulated depreciation and amortization     |                  |   |                   | (10,416     | )      |                   |   | (9,714 | ) |
|    Property and equipment, net |                  |   | $                      | 2,965       |   |                   | $      | 3,246 |   |

----

Table of Contents

6.  Unrealized Holding Gains

|                                                                                             |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |   |
|--------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|--------|
| Unrealized holding gains (losses) at beginning of year                                           |   | $                                 | 6       |   |                    | $      | (694   | ) |   |
|   Unrealized holding  gains (losses), in marketable securities, before taxes |   |                              | (8      | )      |                    |   | 1,115  |   |   |
|   Income tax (provision) benefit                                                       |   |                              | 2       |   |                    |   | (415   | ) |   |
| Unrealized holding gains (losses) at end of year                                                 |   | $                                 | — |   |                    | $      | 6      |   |   |

| Years ending December 31,    |   |   |      |
|------------------------------|--------|--------|-----------|
| 2011                         |   | $      | 669       |   |
| 2012                         |   |   | 636       |   |
| 2013                         |   |   | 639       |   |
| 2014                         |   |   | 557       |   |
| 2015                         |   |   |  574 |   |
| Thereafter                   |   |   |  242 |   |
| Total minimum lease payments |   | $      | 3,317     |   |

----

Table of Contents

|                                    |   | As ofDecember 31, 2010 |   |   | As ofDecember 31, 2009 |   |
|-----------------------------------------|--------|------------------------|--------|--------|------------------------|--------|
| Accrued salaries and other compensation |   | $                      | 989    |   |                   | $      | 672 |   |
| Accrued taxes                           |   |                   | 49     |   |                   |   | 4 |   |
| Other accrued liabilities               |   |                   | 3,535  |   |                   |   | 1,092 |   |
| Total                                   |   | $                      | 4,573  |   |                   | $      | 1,768 |   |

Note 9 – Commitments and Contingencies – Former Officer Indemnification

9.  Commitments and 

----

Table of Contents

----

Table of Contents

----

Table of Contents

10.  Shareholders’ 

11.  Share-Based Payment

----

Table of Contents

|                               |   | Year endedDecember 31, 2010 | Six months endedDecember 31, 2009 | Year EndedJune 30, 2009 |
|------------------------------------|--------|-----------------------------|-----------------------------------|-------------------------|
| Risk-free interest rate, average   |   | 2.3%                        | 2.2%                              | 2.4%                    |
| Expected option life, average      |   | 4.8 years              | 3.9 years                         | 3.9 years          |
| Expected price volatility, average |   | 51.5%                       | 51.6%                             | 54.1%                   |
| Expected dividend yield            |   | 0.0%                        | 0.0%                              | 0.0%                    |
| Expected annual forfeiture rate    |   | 10.0%                       | 10.0%                             | 10.0%                   |

|                             |   | Number of Shares |           |   | Weighted Average Exercise Price |    |
|----------------------------------|--------|------------------|----------------|--------|---------------------------------|---------|
|                             |   |             |           |   |                            |    |
| Outstanding at June 30, 2008     |   |             | 1,199,046      |   |                            |  $ | 5.85 |   |
| Granted                          |   |             | 263,500        |   |                            |    | 3.79 |   |
| Expired and canceled             |   |             | (29,047        | )      |                            |    | 6.31 |   |
| Forfeited prior to vesting       |   |             | (149,614       | )      |                            |    | 4.69 |   |
| Exercised                        |   |             | (40,799        | )      |                            |    | 3.29 |   |
| Outstanding at June 30, 2009     |   |             | 1,243,086      |   |                            |    | 5.62 |   |
| Granted                          |   |             | 102,500        |   |                            |    | 2.70 |   |
| Expired and canceled             |   |             | (68,499        | )      |                            |    | 6.68 |   |
| Forfeited prior to vesting       |   |             | (50,970        | )      |                            |    | 2.84 |   |
| Exercised                        |   |             | —        |   |                            |    | - |   |
| Outstanding at December 31, 2009 |   |             | 1,226,117      |   |                            |    | 5.44 |   |
| Granted                          |   |             | 159,750        |   |                            |    | 3.04 |   |
| Expired and canceled             |   |             |  (145,041 | )      |                            |    |  12.33 |   |
| Forfeited prior to vesting       |   |             | (22,000        | )      |                            |    |  2.93 |   |
| Exercised                        |   |             | —        |   |                            |    |  — |   |
| Outstanding at December 31, 2010 |   |             | 1,218,826      |   |                            |    | 4.35 |   |
| Exercisable                      |   |             | 966,735        |   |                            |  $ | 4.66 |   |

----

Table of Contents

|                 |          |   | Options Outstanding |      |    | Options Exercisable             |   |
|----------------------|---------------|--------|---------------------|-----------|---------|---------------------------------|--------|
| Exercise Price Range |          |   | Number of Shares    |      |    | Weighted Average Exercise Price |   |   | Weighted Average Contractual Term (Years) |   |   | Options Exercisable |   |   | Weighted Average Exercise Price |   |
| $                    | 2.05 to $4.09 |   |                |      | 786,326 |                            |   |   | 3.39 |   |   |   | 6.5 |   |   |   | 535,174 |   |   |   | 3.51 |   |
| $                    | 4.10 to $6.13 |   |                |      | 108,500 |                            |   |   | 5.53 |   |   |   | 3.6 |   |   |   | 107,666 |   |   |   | 5.53 |   |
| $                    | 6.14 to $8.18 |   |                |      | 324,000 |                            |   |   | 6.27 |   |   |   | 5.1 |   |   |   | 323,895 |   |   |   | 6.27 |   |
| Total                |          |   |                | 1,218,826 |    |                            | $      | 4.35 |   |   |   | 5.9 |   |   |   | 966,735 |   |   | $ | 4.66 |   |

|   Non-vested Shares   |   | Number of Shares |     |   | Weighted Average Grant-Date Fair Value |   |
|---------------------------------|--------|------------------|----------|--------|----------------------------------------|--------|
| Non-vested at December 31, 2009 |   |             | 242,909  |   |                                   | $      | 2.07 |   |
| Granted                         |   |             | 159,750  |   |                                   |   | 1.37 |   |
| Vested                          |   |             | (128,568 | )      |                                   |   | 2.68 |   |
| Forfeited prior to vesting      |   |             | (22,000  | )      |                                   |   | 1.25 |   |
| Non-vested at December 31, 2010 |   |             | 252,091  |   |                                   | $      | 1.39 |   |

|       |   |  Year endedDecember 31, 2010 |   | Six months endedDecember 31, 2009 |   | Year endedJune 30, 2009 |
|------------|--------|----------------------------------------|--------|-----------------------------------|--------|-------------------------|
| Customer A |   | 21.2%                                  |   | 26.5%                             |   | 31.0%                   |
| Customer B |   | 11.3%                                  |   | 12.6%                             |   | 15.0%                   |
| Customer C |   | *                                      |   | 10.9%                             |   | 12.0%                   |
| Total      |   | 32.5%                                  |   | 50.0%                             |   | 58.0%                   |

|       |   |  As atDecember 31, 2010 |   | As atDecember 31, 2009 |   |
|------------|--------|------------------------------|--------|------------------------|--------|
| Customer A |   | 22.9%                        |   | 24.2%                  |   |
| Customer B |   | 8.7%                         |   | 12.2%                  |   |
| Customer C |   | 8.6%                         |   | 10.6%                  |   |
| Total      |   | 40.2%                        |   | 47.0%                  |   |

----

Table of Contents

13.  Income Taxes

|     |   | Year endedDecember 31, 2010 |   |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |
|----------|--------|-----------------------------|--------|--------|-----------------------------------|--------|--------|-------------------------|--------|
| U.S.     |   | $                           | 1,381  |   |                              | $      | (36    | )                       |   | $ | 3,166 |   |
| Non U.S. |   |                        | 312    |   |                              |   | 140    |                    |   |   | 56 |   |
| Total    |   | $                           | 1,693  |   |                              | $      | 104    |                    |   | $ | 3,222 |   |

|                                          |   | Year endedDecember 31, 2010 |   |   | Six months endedDecember 31, 2009 |   |    | Year EndedJune 30, 2009 |   |   |
|-----------------------------------------------|--------|-----------------------------|--------|--------|-----------------------------------|--------|---------|-------------------------|--------|--------|
| Current:                                      |   |                        |   |   |                              |   |    |                    |   |   |   |
| U.S. Federal                                  |   | $                           | 695    |   |                              | $      | 52      |                    |   | $      | (236 | ) |   |
| U.S. State                                    |   |                        | (29    | )      |                              |   | (38     | )                       |   |   | (405 | ) |   |
| Non-U.S.                                      |   |                        | (49    | )      |                              |   | — |                    |   |   | (5 | )  |   |
| Total current                                 |   |                        | 617    |   |                              |   | 14      |                    |   |   | (646 | ) |   |
|                                          |   |                        |   |   |                              |   |    |                    |   |   |   |   |   |
| Deferred:                                     |   |                        |   |   |                              |   |    |                    |   |   |   |   |   |
| U.S. Federal                                  |   |                        | 83     |   |                              |   | 264     |                    |   |   | 16 |   |   |
| U.S. State                                    |   |                        | 45     |   |                              |   | (6      | )                       |   |   | 562 |   |   |
| Change in deferred before valuation allowance |   |                        | 128    |   |                              |   | 258     |                    |   |   | 578 |   |   |
| Change in valuation allowance                 |   |                        | (64    | )      |                              |   | 48      |                    |   |   | (927 | ) |   |
| Total deferred                                |   |                        | 64     |   |                              |   | 306     |                    |   |   | (349 | ) |   |
| Benefit (provision) for income taxes          |   | $                           | 681    |   |                              | $      | 320     |                    |   | $      | (995 | ) |   |

|                                                                   |   | Year endedDecember 31, 2010  |   |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |   |
|------------------------------------------------------------------------|--------|-----------------------------------|--------|--------|-----------------------------------|--------|--------|-------------------------|--------|--------|
| U.S. federal statutory income tax rate at 34.0 percent                 |   | $                                 | (576   | )      |                              | $      | (36    | )                       |   | $      | (1,096 | ) |   |
| State income tax (provision) benefit, net of federal income tax effect |   |                              | (44    | )      |                              |   | (21    | )                       |   |   | (454 | ) |   |
| Non-deductible ASC Topic 718 compensation expense                      |   |                              | (42    | )      |                              |   | (20    | )                       |   |   | — |   |   |
| Research and development credit                                        |   |                              | 331    |   |                              |   | 152    |                    |   |   | 343 |   |   |
| Foreign earnings or losses taxed at different rates                    |   |                              | 57     |   |                              |   | 48     |                    |   |   | 14 |   |   |
| Uncertain tax positions                                                |   |                              | 811    |   |                              |   | (42    | )                       |   |   | (53 | ) |   |
| Non-deductible items and other                                         |   |                              | 124    |   |                              |   | 211    |                    |   |   | 334 |   |   |
| Change in valuation allowance                                          |   |                              | 20     |   |                              |   | 28     |                    |   |   | (83 | ) |   |
| Tax (provision) benefit                                                |   | $                                 | 681    |   |                              | $      | 320    |                    |   | $      | (995 | ) |   |

----

Table of Contents

|                                                  |   | As ofDecember 31, 2010 |           |   | As ofDecember 31, 2009 |   |
|-------------------------------------------------------|--------|------------------------|----------------|--------|------------------------|--------|
|                                                  |   | Current                |           |   |  Long-term        |   |   |   | Current |   |   | Long-term |   |
| Deferred revenue                                      |   | $                      | 1,000          |   |                   | $      | — |   |   |   | $ | 1,116  |   |   | $ | — |   |
| Basis difference in intangible assets                 |   |                   | —        |   |                   |   | (649 | )  |   |   |   | — |   |   |   | (672 | )  |
| Inventory reserve                                     |   |                   | 1,537          |   |                   |   | — |   |   |   |   | 1,697  |   |   |   | — |   |
| Net operating loss carryforwards                      |   |                   | —        |   |                   |   | 460 |   |   |   |   | — |   |   |   | 885 |   |
| Accumulated research and development credits          |   |                   | —        |   |                   |   | 1,317 |   |   |   |   | — |   |   |   | 1,145  |   |
| Alternative minimum tax credits                       |   |                   | —        |   |                   |   | 409 |   |   |   |   | — |   |   |   | 409  |   |
| Accrued liabilities                                   |   |                   | 597            |   |                   |   |  — |   |   |   |   | 256  |   |   |   | — |   |
| Deductible ASC 718 compensation expense               |   |                   | —        |   |                   |   | 744 |   |   |   |   | — |   |   |   | 691  |   |
| Allowance for sales returns and doubtful accounts     |   |                   | 73             |   |                   |   |   — |   |   |   |   | 36  |   |   |   | — |   |
| Difference in property and equipment basis            |   |                   |   — |   |                   |   | (450 | )  |   |   |   |  — |   |   |   | (527 | )  |
| Other                                                 |   |                   | 182            |   |                   |   | 26 |   |   |   |   | 23  |   |   |   | (14 | )  |
|    Total net deferred income tax asset |   |                   | 3,389          |   |                   |   | 1,857 |   |   |   |   | 3,128  |   |   |   | 1,917 |   |
|    Less: Valuation allowance           |   |                   | —        |   |                   |   | (944 | )  |   |   |   | — |   |   |   | (880 | )  |
|    Net deferred income tax asset       |   | $                      | 3,389          |   |                   | $      | 913 |   |   |   | $ | 3,128  |   |   | $ | 1,037 |   |

----

Table of Contents

|                                              |   |   | Year endedDecember 31, 2010 |     |    | Six months endedDecember 31, 2009 |   | Year endedJune 30, 2009 |    |
|---------------------------------------------------|--------|--------|-----------------------------|----------|---------|-----------------------------------|--------|-------------------------|---------|
| Unrecognized tax benefits, beginning balance |   |   | $                           | 1,220    |    |                              | $      | 1,199                   |    |   | $ | 1,152 |   |
| Tax positions taken in a prior period:            |   |   |                        |     |    |                              |   |                    |    |   |   |   |   |
| Gross increases                                   |   |   |                        | —  |    |                              |   | —                 |    |   |   | 163 |   |
| Gross decreases                                   |   |   |                        | —  |    |                              |   | (28                     | )  |   |   | — |   |
| Tax positions taken in the current period:        |   |   |                        |     |    |                              |   |                    |    |   |   |   |   |
| Gross increases                                   |   |   |                        | 220      |    |                              |   | 49                      |    |   |   | 97 |   |
| Settlements with taxing authorities               |   |   |                        | (937     | )  |                              |   | —                 |    |   |   | — |   |
| Lapse of applicable statute of limitations        |   |   |                        | (99      | )  |                              |   |   —          |    |   |   | (213 | ) |
| Unrecognized tax benefits, ending balance         |   |   |                        | 404      |    |                              |   | 1,220                   |    |   |   | 1,199 |   |
| Add: Accrual for interest and penalties           |   |   |                        |  17 |    |                              |   |  84                |    |   |   | 63 |   |
| Total Liability                                   |   |   | $                           | 421      |    |                              | $      | 1,304                   |    |   | $ | 1,262 |   |

----

Table of Contents

|                |   |    |   Year endedDecember 31, 2010 |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |
|---------------------|--------|---------|------------------------------------|--------|-----------------------------------|--------|--------|-------------------------|--------|
| United States       |   | $  | 26,123                             |   | $                                 | 10,774 |   |                    | $      | 24,214 |   |
| All other countries |   |    | 15,161                             |   |                              | 6,062  |   |                    |   | 11,486 |   |
| Total               |   | $  | 41,284                             |   | $                                 | 16,836 |   |                    | $      | 35,700 |   |

----