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| For the transition period from July 1, 2009  to December 31, 2009 |   | Commission file number:  001-33660 |
|-----------------------------------------------------------------------------|--------|----------------------------------------------|

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

| 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 |

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INDEX

|  Item Number |                                                                                                               | Page No. |
|-------------------|--------------------------------------------------------------------------------------------------------------------|----------|
|              |                                                                                                               |     |
| PART I            |                                                                                                               |     |
| Item 1.           | Business                                                                                                           | 1        |
| Item 1A.          | Risk Factors                                                                                                       | 14       |
| Item 1B.          | Unresolved Staff comments                                                                                          | 20       |
| Item 2.           | Properties                                                                                                         | 20       |
| Item 3.           | Legal Proceedings                                                                                                  | 20       |
| Item 4.           | Reserved                                                                                                           | 20       |
|              |                                                                                                               |     |
| PART II           |                                                                                                               |     |
| Item 5.           | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 21       |
| Item 6.           | Selected Financial Data                                                                                            | 21       |
| Item 7.           | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 22       |
| Item 7A.          | Quantitative and Qualitative Disclosures about Market Risk                                                         | 33       |
| Item 8.           | Financial Statements and Supplementary Data                                                                        | 33       |
| Item 9.           | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                               | 33       |
| Item 9A(T).       | Controls and Procedures                                                                                            | 34       |
| Item 9B.          | Other Information                                                                                                  | 35       |
|              |                                                                                                               |     |
| PART III          |                                                                                                               |     |
| Item 10.          | Directors , Executive Officers and Corporate Governance                                                            | 36       |
| Item 11.          | Executive Compensation                                                                                             | 38       |
| Item 12.          | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 42       |
| Item 13.          | Certain Relationships and Related Transactions, and Director Independence                                          | 44       |
| Item 14.          | Principal Accountant Fees and Services                                                                             | 45       |
|              |                                                                                                               |     |
| PART IV           |                                                                                                               |     |
| Item 15.          | Exhibits and Financial Statement Schedules                                                                         | 46       |
|              |                                                                                                               |     |
| SIGNATURES        | 48                                                                                                                 |

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ITEM 1.  

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Note 3 – Business Combination, Goodwill and Intangibles 

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| ● | maintain our market leadership in the professional conferencing category                                                                                              |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | continue building on our leadership in premium conferencing category (a category we created)                                                                          |
| ● | further penetrate the tabletop conferencing and personal conferencing markets                                                                                         |
| ● | capitalize on the convergence of AV over IP                                                                                                                           |
| ● | provide solutions that are new and reach deeper into the enterprise infrastructure by bringing clear, differentiated value to both the practitioner and the customer. |

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| ● | Professional conferencing products that are used in executive boardrooms, courtrooms, hospitals, and auditoriums that integrate with leading video and telepresence systems |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Premium conferencing products that integrate with leading video and web conferencing systems and applications                                                               |
| ● | Tabletop conferencing phones used in conference rooms and offices                                                                                                           |
| ● | Personal conferencing products that enable hands-free audio communications in new ways such as through PCs, laptops, cell phones and handsets.                              |

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| ● | Availability of easy-to-use conferencing systems and applications                                         |
|---------|-----------------------------------------------------------------------------------------------------------|
| ● | Voice quality of audio conferencing systems as compared to the quality of telephone handset speakerphones |
| ● | Expansion of global, regional, and local corporate enterprises                                            |

| ● | Availability of affordable audio conferencing solutions for small businesses and home offices                                                                                 |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Growth of distance learning and corporate training programs                                                                                                                   |
| ● | Increasing adoption of teleworking                                                                                                                                            |
| ● | Decreases in travel due to cost and carbon footprint considerations                                                                                                           |
| ● | Transition to the Internet Protocol (IP) network from the traditional public switched telephone network (PSTN) and the deployment of VoIP applications                        |
| ● | Increased adoption of unified communication platforms that leverage the affordability and capability of personal computers as a central component of corporate communication. |

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| ● | PCs and Macs                       | VoIP telephony applications such as Skype; Popular audio instant messaging (IM) applications like Yahoo, MSN, Google, etc.; enterprise softphones; audio for web-based videoconferencing applications; gaming; music playback |
|---------|------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Cell and Smart phones              | Connects to the 2.5mm headset jack of many cell and smart phones for hands-free, full-duplex audio conferencing                                                                                                               |
| ● | Telephones                         | Connects to the headset jack (certain phone models) for hands-free, full-duplex audio conferencing                                                                                                                            |
| ● | iPods and MP3 players              | For full-bandwidth audio playback                                                                                                                                                                                             |
| ● | Desktop video conferencing systems | For hands-free, full-duplex audio conferencing                                                                                                                                                                                |

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| ● | Quality and functionality of the products                                               |
|---------|-----------------------------------------------------------------------------------------|
| ● | Broad and deep channel partnerships                                                     |
| ● | Established history of successful world-wide installations for diverse vertical markets |
| ● | Brand name recognition                                                                  |
| ● | Quality of customer and partner support, and                                            |
| ● | Effective sales and marketing communication                                             |

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ITEM 1A.  RISK FACTORS

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

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| ● | 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. |

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| ● | 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.                                                                                                                                                     |

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ITEM 1B.  

ITEM 2.  PROPERTIES

ITEM 3.  LEGAL PROCEEDINGS

Note 9 – Commitments and Contingencies 

ITEM 4.  RESERVED

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ITEM 5.  

|                                     |   | Period ended December 31, 2009 |   |   | Year ended June 30, 2009 |   |   | Year ended June 30, 2008 |   |
|------------------------------------------|--------|--------------------------------|--------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                     |   | High                           |   |   | Low                      |   |   | High                     |   |   | Low |   |   | High |   |   | Low |   |
| First Quarter – July 1 to Sep 30   |   | $                              | 2.93   |   |                     | $      | 2.40   |                     |   | $ | 5.00 |   |   | $ | 3.10 |   |   | $ | 7.25 |   |   | $ | 4.40 |   |
| Second Quarter – Oct 1 to Dec 31   |   |                           | 3.49   |   |                     |   | 2.63   |                     |   |   | 4.74 |   |   |   | 3.27 |   |   |   | 7.42 |   |   |   | 5.00 |   |
| Third Quarter – Jan 1 to Mar 31    |   |                           |   |   |                     |   |   |                     |   |   | 4.06 |   |   |   | 3.00 |   |   |   | 5.81 |   |   |   | 4.50 |   |
| Fourth Quarter – April 1 to Jun 30 |   |                           |   |   |                     |   |   |                     |   |   | 3.25 |   |   |   | 2.47 |   |   |   | 5.07 |   |   |   | 3.66 |   |

Note 10 – Shareholders’ Equity 

ITEM 6.  SELECTED 

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ITEM 7.  MANAGEMENT'S 

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|                                 |   | Six months ended          |   |                        |   |                             |   |         |
|--------------------------------------|--------|---------------------------|--------|-----------------------------|--------|----------------------------------|--------|--------------|
|                                 |   | December 31, 2009 Audited |   | December 31, 2008 Unaudited |   | Variance Favorable (Unfavorable) |
|                                 |   | $ thousands               |   | % of Revenue                |   | $ thousands                      |   | % of Revenue |   | $ thousands |   | % |
| Revenue                              |   | $                         | 16,836 |                        |   |                             | 100.0  | %            |   | $ | 21,037 |   |   |   | 100.0 | % |   | $ | (4,201 | ) |   |   | -20.0 | % |
| Cost of goods sold                   |   |                      | 7,276  |                        |   |                             | 43.2   | %            |   |   | 7,887 |   |   |   | 37.5 | % |   |   | 611 |   |   |   | 7.7 | % |
| Gross profit                         |   |                      | 9,560  |                        |   |                             | 56.8   | %            |   |   | 13,150 |   |   |   | 62.5 | % |   |   | (3,590 | ) |   |   | -27.3 | % |
| Sales and marketing                  |   |                      | 3,204  |                        |   |                             | 19.0   | %            |   |   | 3,911 |   |   |   | 18.6 | % |   |   | 707 |   |   |   | 18.1 | % |
| Research and product development     |   |                      | 3,493  |                        |   |                             | 20.7   | %            |   |   | 3,620 |   |   |   | 17.2 | % |   |   | 127 |   |   |   | 3.5 | % |
| General and administrative           |   |                      | 2,900  |                        |   |                             | 17.2   | %            |   |   | 2,328 |   |   |   | 11.1 | % |   |   | (572 | ) |   |   | -24.6 | % |
| Operating income                     |   |                      | (37    | )                           |   |                             | -0.2   | %            |   |   | 3,291 |   |   |   | 15.6 | % |   |   | (3,328 | ) |   |   | -101.1 | % |
| Interest income, net                 |   |                      | 41     |                        |   |                             | 0.2    | %            |   |   | 206 |   |   |   | 1.0 | % |   |   | (165 | ) |   |   | -80.1 | % |
| Other expense, net                   |   |                      | 100    |                        |   |                             | 0.6    | %            |   |   | (45 | ) |   |   | -0.2 | % |   |   | 145 |   |   |   | -322.2 | % |
| Income before income taxes           |   |                      | 104    |                        |   |                             | 0.6    | %            |   |   | 3,452 |   |   |   | 16.4 | % |   |   | (3,348 | ) |   |   | -97.0 | % |
| (Provision) benefit for income taxes |   |                      | 320    |                        |   |                             | 1.9    | %            |   |   | (1,183 | ) |   |   | -5.6 | % |   |   | 1,503 |   |   |   | -127.0 | % |
| Net income                           |   | $                         | 424    |                        |   |                             | 2.5    | %            |   | $ | 2,269 |   |   |   | 10.8 | % |   | $ | (1,845 | ) |   |   | -81.3 | % |

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|                                                  |   | Year ended June 30, 2009 |   | Year ended June 30, 2008 |   | 2009 vs. 2008Favorable (Unfavorable) |   |
|-------------------------------------------------------|--------|--------------------------|--------|--------------------------|--------|--------------------------------------|--------|
|                                                  |   | $ thousands              |   | % of Revenue             |   | $ thousands                          |   |   | % of Revenue |   | $ thousands |   | % |
| Revenue                                               |   | $                        | 35,700 |                     |   |                                 | 100.0  | % |   | $ | 38,758 |   |   |   | 100.0 | % |   | $ | (3,058 | ) |   |   | -7.9 | %  |
| Cost of goods sold                                    |   |                     | 15,323 |                     |   |                                 | 42.9   | % |   |   | 16,204 |   |   |   | 41.8 | % |   |   | 881 |   |   |   | 5.4 | %  |
| Gross profit                                          |   |                     | 20,377 |                     |   |                                 | 57.1   | % |   |   | 22,554 |   |   |   | 58.2 | % |   |   | (2,177 | ) |   |   | -9.7 | %  |
| Operating expenses (benefit):                         |   |                     |   |                     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing                                   |   |                     | 7,529  |                     |   |                                 | 21.1   | % |   |   | 6,673 |   |   |   | 17.2 | % |   |   | (856 | ) |   |   | -12.8 | %  |
| Research and product development                      |   |                     | 7,541  |                     |   |                                 | 21.1   | % |   |   | 7,070 |   |   |   | 18.2 | %  |   |   | (471 | ) |   |   | -6.7 | %  |
| General and administrative                            |   |                     | 3,631  |                     |   |                                 | 10.2   | % |   |   | 7,669 |   |   |   | 19.8 | %  |   |   | 4,038 |   |   |   | 52.7 | %  |
| Insurance settlement proceeds                         |   |                     | (1,100 | )                        |   |                                 | -3.1   | % |   |   | — |   |   |   | 0.0 | %  |   |   | 1,100 |   |   |   | * |   |
| Total operating expenses                              |   |                     | 17,601 |                     |   |                                 | 49.3   | % |   |   | 21,412 |   |   |   | 55.2 | %  |   |   | 3,811 |   |   |   | 17.8 | %  |
| Operating income                                      |   |                     | 2,776  |                     |   |                                 | 7.8    | % |   |   | 1,142 |   |   |   | 2.9 | %  |   |   | 1,634 |   |   |   | 143.1 | %  |
| Other income, net                                     |   |                     | 446    |                     |   |                                 | 1.2    | % |   |   | 1,005 |   |   |   | 2.6 | %  |   |   | (559 | ) |   |   | -55.6 | %  |
| Income from continuing operations before income taxes |   |                     | 3,222  |                     |   |                                 | 9.0    | % |   |   | 2,147 |   |   |   | 5.5 | %  |   |   | 1,075 |   |   |   | 50.1 | %  |
| Benefit from (provision for) income taxes             |   |                     | (995   | )                        |   |                                 | -2.8   | % |   |   | 3,096 |   |   |   | 8.0 | %  |   |   | (4,091 | ) |   |   | -132.1 | %  |
| Income from continuing operations                     |   |   $                 | 2,227  |                     |   |                                 | 6.2    | % |   |   | 5,243 |   |   |   | 13.5 | %  |   |   $ | (3,016 | ) |   |   | -57.5 | %  |

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Note 3 - Business Combinations, Goodwill and Intangible Assets

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Note 2

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|                        |   | As of December 31, 2009 |   |   | As of June 30, 2009 |    |   | As of June 30, 2008 |   |
|-----------------------------|--------|-------------------------|--------|--------|---------------------|---------|--------|---------------------|--------|
| Deferred Revenue            |   | $                       | 4,707  |   |                | $       | 4,709  |                |   | $ | 5,795 |   |
| Deferred Cost of Goods Sold |   |                    | 1,846  |   |                |    | 1,843  |                |   |   | 2,047 |   |
| Deferred Gross Profit       |   |  $                 | 2,861  |   |                |  $ | 2,866  |                |   |  $ | 3,748 |   |

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Note 14 - Income Taxes 

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ITEM 7A.  

ITEM 8.  FINANCIAL 

page F-1

ITEM 9.  CHANGES 

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ITEM 9A(T).  CO

| (1) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;                                                                                                                                                                       |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and  |
| (3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.                                                                                                                         |

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ITEM 9B. 

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ITEM 10.  

| Name                               | Age | Position                                                                   | Director or Officer since |
|------------------------------------|-----|----------------------------------------------------------------------------|---------------------------|
| Zeynep “Zee” Hakimoglu | 56  | Chairman of the Board of Directors, Chief Executive Officer, and President | See Note 1 below          |
| Brad R. Baldwin                    | 54  | Director and Member of the Audit, Compensation and Nominating Committees   | October 1988              |
| Larry R. Hendricks                 | 67  | Director and Member of the Audit, Compensation and Nominating Committees   | June 2003                 |
| Scott M. Huntsman                  | 44  | Director and Member of the Audit, Compensation and Nominating Committees   | June 2003                 |
| E. Bryan Bagley                    | 46  | Director                                                                   | November 2009             |
| Narsi Narayanan                    | 39  | Vice President of Finance and Corporate Secretary                          | July 2009                 |
| Tracy A. Bathurst                  | 45  | Chief Technology Officer                                                   | August 2007               |
| Michael E. Braithwaite             | 42  | Senior Vice President of Technology                                        | November 2009             |

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ITEM 11.  

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| Name and Principal Position                                                        |   | Salary |    |   | Option Awards (1) |   |    | Non-Equity Incentive Plan Compensation (2) |   |   | All Other Compensation (3) |   |   | Total  |    |
|------------------------------------------------------------------------------------|--------|--------|---------|--------|-------------------|--------|---------|--------------------------------------------|--------|--------|----------------------------|--------|--------|--------|---------|
| Zee Hakimoglu - Chairman of the Board, Chief Executive Officer and President       |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |
| Six months ended December 31, 2009                                                 |   | $      | 110,000 |   |              | $      | — |                                       |   | $      | —                    |   |   | $      | — |   |   |   | 110,000 |   |
| Year ended June 30, 2009                                                           |   |   | 215,157 |   |              |   | 87,000  |                                       |   |   | 44,485                     |   |   |   | 8,390   |   |   |   | 355,032 |   |
| Year ended June 30, 2008                                                           |   |   | 200,000 |   |              |   | 555,000 |                                       |   |   | —                    |   |   |   | 7,267   |   |   |   | 762,267 |   |
| Tracy A. Bathurst - Chief Strategy Officer                                         |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |   |   |   |   |   |
| Six months ended December 31, 2009                                                 |   |   | 72,500  |   |              |   | — |                                       |   |   | 12,732                     |   |   |   | — |   |   |   | 85,232 |   |
| Year ended June 30, 2009                                                           |   |   | 142,123 |   |              |   | 43,500  |                                       |   |   | 34,736                     |   |   |   | 3,867   |   |   |   | 224,226 |   |
| Year ended June 30, 2008                                                           |   |   | 139,664 |   |              |   | 92,500  |                                       |   |   | 41,155                     |   |   |   | 4,442   |   |   |   | 277,761 |   |
| Narsi Narayanan(4) – Vice President of Finance and Corporate Secretary       |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |   |   |   |   |   |
| Six months ended December 31, 2009                                                 |   |   | 45,833  |   |              |   | 36,300  |                                       |   |   | 12,029                     |   |   |   | — |   |   |   | 94,162 |   |
| Michael Braithwaite (7) – Senior Vice President of Technology                |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |   |   |   |   |   |
| Six months ended December 31, 2009                                                 |   |   | 25,000  |   |              |   | 31,800  |                                       |   |   | —                    |   |   |   | — |   |   |   | 56,800 |   |
| Joseph P. Sorrentino(6) – Former Vice President of Worldwide Sales           |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |   |   |   |   |   |
| Six months ended December 31, 2009                                                 |   |   | 79,110  |   |              |   | — |                                       |   |   | 5,438                      |   |   |   | — |   |   |   | 84,548 |   |
| Year ended June 30, 2009                                                           |   |   | 46,250  |   |              |   | 60,500  |                                       |   |   | —                    |   |   |   | 40,000  |   |   |   | 146,750 |   |
| Greg A. LeClaire(5) – Former Chief Financial Officer and Corporate Secretary |   |   |    |   |              |   |    |                                       |   |   |                       |   |   |   |    |   |   |   |   |   |
| Year ended June 30, 2009                                                           |   |   | 133,227 |   |              |   | 43,500  |                                       |   |   | 30,008                     |   |   |   | 12,169  |   |   |   | 218,904 |   |
| Year ended June 30, 2008                                                           |   |   | 149,615 |   |              |   | 185,000 |                                       |   |   | 49,311                     |   |   |   | 6,744   |   |   |   | 390,670 |   |

|  (1) | The amounts in the “Option Awards” column reflect the aggregate grant date fair value of awards of stock options granted pursuant to our long-term incentive plans during the periods reported above computed in accordance with FASB ASC Topic 718, Compensation - Stock compensation. The assumptions made in the valuation of our option awards is disclosed in Note 11 - Share Based Payments in our Notes to Consolidated Financial Statements contained in this transition annual report on Form 10-KT.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       |  Non-Equity Incentive Plan Compensation is based upon the achievement of pre-determined quarterly goals, namely, quantitative financial goals comprising of revenue, gross margin and operating income, and non-quantitative performance goals. While quantitative financial goals are similar for all the executive officers, non-quantitative goals vary for each officer. Examples of non-quantitative goals include introduction of a new product, identification of a new distribution opportunity, implementing internal controls, and improving product quality. The Chief Executive Officer recommends to the Compensation Committee the compensation for achievement or partial achievement of any such predetermined goal. Compensation under the non-equity incentive plan is calculated by assigning 70% weight to quantitative financial goals (with revenue, gross margin and operating income having equal share) and 30% to non-quantitative goals. Of the amounts included above, Ms. Hakimoglu’s compensation for year ended June 30, 2009 included $15,385 for achieving financial goals and $29,100 for achieving non-quantitative goals. Mr. LeClaire’s compensation for year ended June 30, 2009 included $6,119 for achieving financial goals and $23,889 for achieving non-quantitative goals. Mr. Bathurst’s compensation for six months included December 31, 2009 included $12,732 for achieving non-quantitative goals and during the year ended June 30, 2009, $5,915 for achieving financial goals and $28,821 for achieving non-quantitative goals. Mr. Sorrentino's compensation for the year ended June 30, 2009 included $5,438 towards achieving non-quantitative goals. Mr. Narayanan's compesation for the six months ended December 31, 2009 includes $12,732 towards achieving non-quantitative goals. |

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| (3) | The amounts in the “All Other Compensation” column reflect the value of our 401(k) and Employee Stock Purchase Plan, or ESPP, matching contributions; paid time off, sign-on bonus and severance payments as follows. Ms. Hakimoglu received the following: 401(k) matching contribution of $6,009 during 2009 and $5,055 during 2008; and ESPP matching contribution of $2,381 during 2009 and $2,212 during 2008.  Mr. LeClaire received the following: 401(k) matching contribution of $3,666 during 2009 and $5,096 during 2008; ESPP matching contribution of $1,517 during 2009 and $1,648 during 2008; and time off payout of $6,986 during 2009.  Mr. Bathurst received the following: 401(k) matching contribution of $3,867 during 2009 and $4,442 during 2008.  Mr. Fletcher received the following: time off payout of $4,784 and severance of $7,778 during 2009. Mr. Sorrentino received $40,000 towards sign-on bonus. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Mr. Narayanan joined our company as our Vice President of Finance during July 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (5) | Mr. LeClaire left our company during May 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (6) | Mr. Sorrentino joined our company during April 2009 and left our company during December 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (7) | Mr. Braithwaite joined our company during November 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

| Name                |   | Number of Securities Underlying Options Exercisable |    |   | Number of Securities Underlying Options Unexercisable (1) |   |    | Option Exericse Price |   | Option Grant Date |   | Option Expiration Date |
|---------------------|--------|-----------------------------------------------------|---------|--------|-----------------------------------------------------------|--------|---------|-----------------------|--------|-------------------|--------|------------------------|
| Zee Hakimoglu       |   |                                                | 50,000  |   |                                                      |   | — |                  |   | $                 | 6.40   |                   | 03/24/2004 |   | 03/24/2014 |
|                |   |                                                | 100,000 |   |                                                      |   | — |                  |   |              | 5.55   |                   | 07/26/2004 |   | 07/26/2014 |
|                |   |                                                | 150,000 |   |                                                      |   | — |                  |   |              | 3.65   |                   | 09/18/2006 |   | 09/18/2016 |
|                |   |                                                | 116,666 |   |                                                      |   | 33,334  |                  |   |              | 6.15   |                   | 08/14/2007 |   | 08/14/2017 |
|                |   |                                                | 18,055  |   |                                                      |   | 31,945  |                  |   |              | 4.03   |                   | 11/14/2008 |   | 11/14/2018 |
| Tracy A. Bathurst   |   |                                                | 50,000  |   |                                                      |   | — |                  |   |              | 15.25  |                   | 05/17/2000 |   | 05/17/2010 |
|                |   |                                                | 5,000   |   |                                                      |   | — |                  |   |              | 6.5    |                   | 04/12/2004 |   | 04/12/2014 |
|                |   |                                                | 20,000  |   |                                                      |   | — |                  |   |              | 4.00   |                   | 01/27/2005 |   | 01/27/2015 |
|                |   |                                                | 25,000  |   |                                                      |   | — |                  |   |              | 3.65   |                   | 09/18/2006 |   | 09/18/2016 |
|                |   |                                                | 19,444  |   |                                                      |   | 5,556   |                  |   |              | 6.15   |                   | 08/14/2007 |   | 08/14/2017 |
|                |   |                                                | 9,027   |   |                                                      |   | 15,973  |                  |   |              | 4.03   |                   | 11/14/2008 |   | 11/14/2018 |
| Narsi Narayanan     |   |                                                | — |   |                                                      |   | 30,000  |                  |   |              | 2.78   |                   | 08/27/2009 |   | 08/27/2019 |
| Michael Braithwaite |   |                                                | — |   |                                                      |   | 30,000  |                  |   |              | 2.65   |                   | 11/30/2009 |   | 11/30/2019 |

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| Name                  |   | Period                |   | Fees Earned or Paid in Cash (1) |   |   | Option Awards (2)(4) |    |    | Total  |   |
|-----------------------|--------|-----------------------|--------|---------------------------------|--------|--------|---------------------------|---------|---------|--------|--------|
| Brad R. Baldwin       |   | Period ended 12/31/09 |   |  $                         | 24,000 |   |                      |  $ | 26,100  |   |   |  $ | 50,100 |   |
|                  |   | Year ended 06/30/09   |   |                            | 12,000 |   |                      |    | — |   |   |   | 12,000 |   |
| Larry R. Hendricks    |   | Period ended 12/31/09 |   |                            | 24,000 |   |                      |    | 26,100  |   |   |   | 50,100 |   |
|                  |   | Year ended 06/30/09   |   |                            | 12,000 |   |                      |    | — |   |   |   | 12,000 |   |
| Scott M. Huntsman     |   | Period ended 12/31/09 |   |                            | 24,000 |   |                      |    | 26,100  |   |   |   | 50,100 |   |
|                  |   | Year ended 06/30/09   |   |                            | 12,000 |   |                      |    | — |   |   |   | 12,000 |   |
| E. Bryan Bagley(3)(4) |   | Period ended 12/31/09 |   |                            | 2,000  |   |                      |    | 15,900  |   |   |   | 17,900 |   |

|  (1) | The base annual director’s fee for the period ended December 31, 2009 and year ended June 30, 2009 was $24,000.                                                                                                                                                                                                                                                                                                                                                                                                          |
|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)       | The amounts in the “Option Awards” column reflect the aggregate grant date fair value of awards of stock options granted pursuant to our long-term incentive plans during the periods reported above computed in accordance with FASB ASC Topic 718, Compensation - Stock compensation. The assumptions made in the valuation of our option awards is disclosed in Note 11 - Share Based Payments in our Notes to Consolidated Financial Statements contained in this transition annual report on Form 10-KT. |
| (3)       | E. Bryan Bagley became a director in November 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (4)       | As of the end of December 31, 2009, each non-employee director had outstanding options to purchase the following number of company shares of common stock: Mr. Baldwin, 150,000; Mr. Hendricks, 75,000: Mr. Huntsman, 75,000 and Mr. Bagley, 15,000.                                                                                                                                                                                                                                                                           |

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ITEM 12.  SECURITY 

|                                                        |   | Number of securities to be issued upon exercise of outstanding options, warrants and rights(a) |      |   | Weighted-average exercise price of outstanding options,warrants and rights(b) |   |    | Number of securities remainingavailable for future issuanceunder equity compensationplans(excluding securitiesreflectedin column (a))(c) |   |
|-------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|-----------|--------|-------------------------------------------------------------------------------|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by shareholders          |   |                                                                                           | 1,226,117 |   |                                                                          | $      | 5.44    |                                                                                                                                     |   |   | 753,344 |   |
| Equity compensation plans not approved by shareholders |   |                                                                                           | —   |   |                                                                          |   | — |                                                                                                                                     |   |   | — |   |
| Total                                                       |   |                                                                                           | 1,226,117 |   |                                                                          | $      | 5.44    |                                                                                                                                     |   |   | 753,344 |   |

|  Name of Beneficial Owner (1)                          |   | Shares Beneficially Owned |
|-------------------------------------------------------------|--------|---------------------------|
|                                                        |   | Number (2)                |   | Percent (2) |
| Directors and Executive Officers:                           |   |                      |   |   |
| Zeynep “Zee” Hakimoglu (3)                      |   | 530,431                   |   | 5.4% |
| Brad R. Baldwin (4)                                         |   | 240,582                   |   | 2.5% |
| Tracy A. Bathurst (5)                                       |   | 137,303                   |   | 1.4% |
| E. Bryan Bagley (6)                                         |   | 236,215                   |   | 2.4% |
| Larry R. Hendricks (7)                                      |   | 67,916                    |   | * |
| Scott M. Huntsman (8)                                       |   | 67,916                    |   | * |
| Michael Braithwaite                                         |   | —                   |   | * |
| Narsi Narayanan                                             |   | —                   |   | * |
| All directors and executive officers as a group (8 persons) |   | 1,280,363                 |   | 13.0% |
|                                                        |   |                      |   |   |
| 5% Stockholders:                                            |   |                      |   |   |
| Edward Dallin Bagley (9)                                    |   | 2,204,402                 |   | 22.5% |
| FMR Corp. (10)                                              |   | 1,000,503                 |   | 10.2% |
| Royce & Associates Inc. (11)                            |   | 909,126                   |   | 9.3% |

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| (1)        | Except as otherwise indicated, each person named in the table has sole voting and investment power with respect to all common stock beneficially owned, subject to applicable community property law.  Except as otherwise indicated, each person may be reached at our corporate offices c/o ClearOne Communications, Inc., 5225 Wiley Post Way, Suite 500, Salt Lake City, Utah 84116.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)        | The percentages shown are calculated based on 8,929,279 shares of common stock outstanding on May 4, 2010.  The numbers and percentages shown include the shares of common stock actually owned as of May 4, 2010 and the shares of common stock that the identified person or group had the right to acquire within 60 days of such date.  In calculating the percentage of ownership, all shares of common stock that the identified person or group had the right to acquire within 60 days of May 4, 2010 upon the exercise of options are deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by that person or group, but are not deemed to be outstanding for the purpose of computing the percentage of the shares of common stock owned by any other person or group.                                                                               |
| (3)        | Includes 468,055 shares of common stock issuable upon exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (4)        | Includes 88,666 shares held in the Baldwin Family Trust; 9,000 shares owned directly, which are held in an IRA under the name of Mr. Baldwin; and 142,916 shares of common stock issuable upon exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| (5)        | Includes 136,085 shares of common stock issuable upon exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (6)        | Includes 1,000 shares held by E. Bryan Bagley’s spouse with respect to which he disclaims beneficial ownership.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (7)        | Includes 67,916 of common stock issuable upon exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (8)        | Includes 67,916 shares of common stock issuable upon exercise of stock options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| (9)        | E. Bryan Bagley is the son of Edward D. Bagley, and each of them disclaims beneficial ownership of common stock beneficially owned by the other.  Amounts for Mr. Edward D. Bagley, include 126,166 shares held by Edward D. Bagley’s spouse with respect to which he disclaims beneficial ownership and 55,083 shares of common stock issuable upon exercise of stock options. Mr. Edward D. Bagley has sole voting and dispositive power over 2,078,236 shares (including the shares that may be acquired pursuant to the exercise of stock options) and shared voting and dispositive power over the 126,166 shares held by Mr. Edward D. Bagley’s spouse.                                                                                                                                                                                                                                                             |
|  (10) | Represents 1,000,503 shares of common stock beneficially owned by FMR Corp.  Fidelity Management & Research Company, a wholly owned subsidiary of FMR Corp. and a registered investment advisor beneficially owns 1,000,503 of such shares as a result of acting as investment advisor to various investment companies.  Edward C. Johnson III and FMR Corp. each have sole power to dispose of the 1,000,503 shares owned by the Fidelity Funds.  Neither FMR Corp., nor Edward C. Johnson III as Chairman of FMR Corp. has sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the funds’ board of trustees. The address of FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109.  This information is based upon a Schedule 13G, as filed and amended with the SEC as of February 17, 2009. |
|  (11) | Represents 909,126 shares of our common stock beneficially owned by Royce & Associates, LLC in its capacity as investment advisor on behalf of its clients.  Royce & Associates has sole voting and dispositive power over all of such shares.  The address of Royce & Associates is 745 Fifth Avenue, New York, NY 10151.  This information is based upon a Schedule 13G, as filed and amended with the SEC as of January 22, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

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ITEM 13.  CERTAIN 

Former Officers Indemnification

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ITEM 14.  PRINCIPAL 

|               |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |    |    | Year EndedJune 30, 2008 |   |
|--------------------|--------|-----------------------------------|---------|--------|-------------------------|---------|---------|-------------------------|--------|
| Audit Fees (1)     |   |  $                           | 158,192 |   |                    |  $ | 82,824  |                    |   |  $ | 83,579 |   |
| Audit-related Fees |   |                              | — |   |                    |    | — |                    |   |   | — |   |
| Tax fees (2)       |   |                              | 42,854  |   |                    |    | 58,582  |                    |   |   | 66,823 |   |
| All other fees (3) |   |                              | 24,249  |   |                    |    | 5,529   |                    |   |   | 54,058 |   |
| Total              |   |  $                           | 225,295 |   |                    |  $ | 146,935 |                    |   |  $ | 204,460 |   |

| (1) | Represents fees billed for professional services rendered for the audit and reviews of our financial statements filed with the SEC on Forms 10-K and 10-Q. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Represents fees billed for tax filing, preparation, and tax advisory services.                                                                             |
| (3) | Represents fees billed for all other non-audit services, such as consulting on potential acquisitions or dispositions.                                     |

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ITEM 15. 

|   | Report of Independent Registered Public Accounting Firm – Jones Simkins, P.C.                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Consolidated Balance Sheets as of December 31, 2009, June 30, 2009 and June 20, 2008                                                                 |
|   | Consolidated Statements of Operations and Comprehensive Income (Loss) for period ended December 31, 2009, fiscal years ended June 30, 2009 and 2008. |
|   | Consolidated Statements of Shareholders’ Equity for period ended December 31, 2009, fiscal years ended June 30, 2009 and 2008                  |
|   | Consolidated Statements of Cash Flows for period ended December 31, 2009, fiscal years ended June 30, 2009 and 2008                                  |
|   | Notes to Consolidated Financial Statements                                                                                                           |

| Exhibit No. |   | Title of Document                                                                                                                                                                                                     |
|-------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 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. (10) |
| 3.1         |   | Articles of Incorporation and amendments thereto (7)                                                                                                                                                                  |
| 3.2         |   | Bylaws                                                                                                                                                                                                                |
| 10.1        |   | Employment Separation Agreement between ClearOne Communications, Inc. and Frances Flood, dated December 5, 2003* (1)                                                                                                  |
| 10.2        |   | Employment Termination Agreement between ClearOne Communications, Inc. and Susie Strohm, dated December 5, 2003* (1)                                                                                             |
| 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 (1)           |
| 10.4        |   | 1997 Employee Stock Purchase Plan(3)                                                                                                                                                                                  |
| 10.5        |   | 1998 Stock Option Plan(3)                                                                                                                                                                                             |
| 10.6        |   | 2007 Equity Incentive Plan(6)                                                                                                                                                                                         |
| 10.8        |   | Office Lease between Edgewater Corporate Park, LLC and ClearOne Communications, Inc. dated June 5, 2006(2)                                                                                                            |
| 10.11       |   | Compromise Agreement between ClearOne Communications UK Limited and Martin Offwood dated August 13, 2007* (5)                                                                                                         |

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| Exhibit No. |   | Title of Document |
|-------------|--------|-------------------|

| 10.14 |   | Consulting Agreement between Edward D. Bagley and ClearOne Communications, Inc. dated July 6, 2007 (4)                                                                                  |
|-------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.15 |   | Severance Agreement between ClearOne Communications, Inc. and Edward D. Bagley dated July 6, 2007* (4)                                                                                  |
| 10.20 |   | Margin Loan Agreement between ClearOne Communications, Inc. and UBS Financial Services, Inc. dated September 10, 2008 (8)                                                               |
| 10.21 |   | Manufacturing Services Agreement between Flextronics Industrial, Ltd. and ClearOne Communications, Inc. dated November 3, 2008 (9)                                                      |
| 10.22 |   | Settlement and Release Agreement between ClearOne Communications, Inc. and Edward Dallin Bagley dated October 7, 2009 (9)                                                               |
| 10.23 |   | Joinder to Loan and Security Agreement, dated as of November 3, 2009, by and between ClearOne Communications, Inc. and Square 1 Bank.(10)                                               |
| 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.(10) |
| 14.1  |   | Code of Ethics, approved by the Board of Directors on August 23, 2006(2)                                                                                                                |
| 21.1  |   | Subsidiaries of the registrant                                                                                                                                                          |
| 23.1  |   | Consent of Jones Simkins P.C., independent auditors for the year ending June 30, 2009                                                                                                   |
| 31.1  |   | Section 302 Certification of Chief Executive Officer                                                                                                                                    |
| 31.2  |   | Section 302 Certification of Chief Financial Officer                                                                                                                                    |
| 32.1  |   | Section 906 Certification of Chief Executive Officer                                                                                                                                    |
| 32.2  |   | Section 906 Certification of Chief Financial Officer                                                                                                                                    |

| 1  | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2003.        |
|----|--------------------------------------------------------------------------------------------------------------------------------|
| 2  | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2006.        |
| 3  | Incorporated by reference to the Registrant’s registration statement on form S-8 filed with the SEC on October 6, 2006.  |
| 4  | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2007.        |
| 5  | Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.    |
| 6  | Incorporated by reference to the Registrant’s registration statement on Form S-8 filed with the SEC on January 22, 2008. |
| 7  | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2008.        |
| 8  | Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on September 11, 2008.       |
| 9  | Incorporated by reference to the Registrant’s Annual Report on Form 10-K for the fiscal year ended June 30, 2009.        |
| 10 | Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on November 9, 2009.         |

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SIGNA

|   | CLEARONE COMMUNICATIONS, INC.                                                  |
|--------|--------------------------------------------------------------------------------|
|   |                                                                           |   |
|   |                                                                           |   |
| By:    | /s/ Zeynep Hakimoglu                                                           | Date: May 6, 2010 |
|   | Zeynep Hakimoglu                                                               |   |
|   | President, Chief Executive Officer, and Chairman (Principal Executive Officer) |   |
|   |                                                                           |   |
|   |                                                                           |   |

|  By: |   /s/ Zeynep Hakimoglu                                                    |   Date: May 6, 2010 |
|-----------|--------------------------------------------------------------------------------|-------------------------------|
|      | Zeynep Hakimoglu                                                               |                          |
|      | President, Chief Executive Officer, and Chairman (Principal Executive Officer) |                          |
|      |                                                                           |                          |
|  By: | /s/ Narsi Narayanan                                                            | Date: May 6, 2010             |
|      | Narsi Narayanan                                                                |                          |
|      | Vice President of Finance (Principal Financial and Accounting Officer)         |                          |
|      |                                                                           |                          |
|  By: | /s/ E. Bryan Bagley                                                            |  Date: May 6, 2010       |
|      |  E.Bryan Bagley                                                           |                          |
|      |  Director                                                                 |                          |
|      |                                                                           |                          |
|  By: | /s/ Brad R. Baldwin                                                            | Date: May 6, 2010             |
|      | Brad R. Baldwin                                                                |                          |
|      | Director                                                                       |                          |
|      |                                                                           |                          |
|  By: | /s/ Larry R. Hendricks                                                         | Date: May 6, 2010             |
|      | Larry R. Hendricks                                                             |                          |
|      | Director                                                                       |                          |
|      |                                                                           |                          |
|  By: | /s/ Scott M. Huntsman                                                          | Date: May 6, 2010             |
|      | Scott M. Huntsman                                                              |                          |
|      | Director                                                                       |                          |

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INDEX TO 

|                                                                                                                                                       | Page  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Report of Independent Registered Public Accounting Firm – Jones Simkins, P.C.                                                                        | F-2        |
| Consolidated Balance Sheets as of December 31, 2009 and June 30, 2009 and 2008                                                                             | F-3        |
| Consolidated Statements of Operations and Comprehensive Income for transition period ended December 31, 2009 and fiscal years ended June 30, 2009 and 2008 | F-4        |
| Consolidated Statements of Shareholders' Equity for transition period ended December 31, 2009 and fiscal years ended June 30, 2009 and 2008                | F-5        |
| Consolidated Statements of Cash Flows for transition period ended December 31, 2009 and fiscal years ended June 30, 2009 and 2008                          | F-6        |
| Notes to Consolidated Financial Statements                                                                                                                 | F-8        |

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Report of Independent 

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CLEARONE COMMUNICATIONS

|                                                                                                                                                     |   | December 31, 2009 |    |   | June 30, 2009 |   |          | June 30, 2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|---------|--------|---------------|--------|---------------|---------------|--------|
| ASSETS                                                                                                                                                   |   |              |    |   |          |   |          |          |   |
| Current assets:                                                                                                                                          |   |              |    |   |          |   |          |          |   |
| Cash and cash equivalents                                                                                                                                |   | $                 | 9,494   |   |          | $      | 9,801         |          |   | $ | 3,327 |   |
| Marketable securities                                                                                                                                    |   |              | — |   |          |   | 2,103         |          |   |   | 5,922 |   |
| Receivables, net of allowance for doubtful accounts of $103, $103 and $87, respectively                                                                  |   |              | 6,662   |   |          |   | 4,968         |          |   |   | 7,281 |   |
| Deposit, bond for preliminary injunction                                                                                                                 |   |              | — |   |          |   | —       |          |   |   | 908 |   |
| Inventories, net                                                                                                                                         |   |              | 6,236   |   |          |   | 7,075         |          |   |   | 8,129 |   |
| Deferred income taxes                                                                                                                                    |   |              | 3,129   |   |          |   | 2,970         |          |   |   | 3,168 |   |
| Prepaid expenses and other assets                                                                                                                        |   |              | 1,609   |   |          |   | 1,398         |          |   |   | 820 |   |
| Total current assets                                                                                                                                     |   |              | 27,130  |   |          |   | 28,315        |          |   |   | 29,555 |   |
|                                                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| Long-term inventory                                                                                                                                      |   |              | 6,412   |   |          |   | 8,559         |          |   |   | — |   |
| Property and equipment, net                                                                                                                              |   |              | 3,246   |   |          |   | 2,762         |          |   |   | 2,554 |   |
| Intangibles                                                                                                                                              |   |              | 3,095   |   |          |   | 37            |          |   |   | 47 |   |
| Goodwill                                                                                                                                                 |   |              | 669     |   |          |   | —       |          |   |   | — |   |
| Long-term deferred tax asset                                                                                                                             |   |              | 1,002   |   |          |   | 1,159         |          |   |   | 1,639 |   |
| Other assets                                                                                                                                             |   |              | 21      |   |          |   | 21            |          |   |   | 7 |   |
| Long-term marketable securities                                                                                                                          |   |              | — |   |          |   | —       |          |   |   | 11,168 |   |
| Total assets                                                                                                                                             |   | $                 | 41,575  |   |          | $      | 40,853        |          |   | $ | 44,970 |   |
|                                                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| Current liabilities:                                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| Accounts payable                                                                                                                                         |   | $                 | 2,304   |   |          | $      | 3,545         |          |   | $ | 2,187 |   |
| Accrued liabilities                                                                                                                                      |   |              | 1,768   |   |          |   | 2,380         |          |   |   | 3,672 |   |
| Current maturities of long term debt                                                                                                                     |   |              | 2,000   |   |          |   |  — |          |   |   | — |   |
| Deferred product revenue                                                                                                                                 |   |              | 4,707   |   |          |   | 4,709         |          |   |   | 5,795 |   |
| Total current liabilities                                                                                                                                |   |              | 10,779  |   |          |   | 10,634        |          |   |   | 11,654 |   |
|                                                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| Deferred rent                                                                                                                                            |   |              | 466     |   |          |   | 544           |          |   |   | 700 |   |
| Other long-term liabilities                                                                                                                              |   |              | 1,232   |   |          |   | 1,189         |          |   |   | 1,054 |   |
| Total liabilities                                                                                                                                        |   |              | 12,477  |   |          |   | 12,367        |          |   |   | 13,408 |   |
|                                                                                                                                                     |   |              |    |   |          |   |          |          |   |   |   |   |
| Shareholders' equity:                                                                                                                                    |   |              |    |   |          |   |          |          |   |   |   |   |
| Common stock, par value $0.001, 50,000,000 shares authorized, 8,929,134,  8,928,802 and 10,228,902 shares issued and outstanding, respectively |   |              | 9       |   |          |   | 9             |          |   |   | 10 |   |
| Additional paid-in capital                                                                                                                               |   |              | 38,810  |   |          |   | 38,616        |          |   |   | 44,618 |   |
| Accumulated other comprehensive income (loss)                                                                                                            |   |              | — |   |          |   | 6             |          |   |   | (694 | ) |
| Accumulated deficit                                                                                                                                      |   |              | (9,721  | )      |          |   | (10,145       | )             |   |   | (12,372 | ) |
| Total shareholders' equity                                                                                                                               |   |              | 29,098  |   |          |   | 28,486        |          |   |   | 31,562 |   |
| Total liabilities and shareholders' equity                                                                                                               |   | $                 | 41,575  |   |          | $      | 40,853        |          |   | $ | 44,970 |   |

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CLEARONE COMMUNICATIONS

|                                                                                              |   | Six Months endedDecember 31, 2009 |      |   | Year endedJune 30, 2009 |   |      | Year endedJune 30, 2008 |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|--------|-------------------------|--------|-----------|-------------------------|--------|
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |
| Revenue                                                                                           |   | $                                 | 16,836    |   |                    | $      | 35,700    |                    |   | $ | 38,758 |   |
| Cost of goods sold                                                                                |   |                              | 7,276     |   |                    |   | 15,323    |                    |   |   | 16,204 |   |
| Gross profit                                                                                      |   |                              | 9,560     |   |                    |   | 20,377    |                    |   |   | 22,554 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Operating expenses:                                                                               |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Sales and marketing                                                                               |   |                              | 3,204     |   |                    |   | 7,529     |                    |   |   | 6,673 |   |
| Research and product development                                                                  |   |                              | 3,493     |   |                    |   | 7,541     |                    |   |   | 7,070 |   |
| General and administrative                                                                        |   |                              | 2,900     |   |                    |   | 3,631     |                    |   |   | 7,669 |   |
| Insurance settlement proceeds                                                                     |   |                              | —   |   |                    |   | (1,100    | )                       |   |   | — |   |
| Total operating expenses                                                                          |   |                              | 9,597     |   |                    |   | 17,601    |                    |   |   | 21,412 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Operating income (loss)                                                                           |   |                              | (37       | )      |                    |   | 2,776     |                    |   |   | 1,142 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Other income, net:                                                                                |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Interest income                                                                                   |   |                              | 76        |   |                    |   | 474       |                    |   |   | 1,039 |   |
| Interest expense                                                                                  |   |                              | (35       | )      |                    |   | (1        | )                       |   |   | (5 | ) |
| Other, net                                                                                        |   |                              | 100       |   |                    |   | (27       | )                       |   |   | (29 | ) |
| Total other income, net                                                                           |   |                              | 141       |   |                    |   | 446       |                    |   |   | 1,005 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Income from continuing operations before income taxes                                             |   |                              | 104       |   |                    |   | 3,222     |                    |   |   | 2,147 |   |
| Benefit from (provision for) income taxes                                                         |   |                              | 320       |   |                    |   | (995      | )                       |   |   | 3,096 |   |
| Income from continuing operations                                                                 |   |                              | 424       |   |                    |   | 2,227     |                    |   |   | 5,243 |   |
| Gain on disposal of discontinued operations, net of taxes of $9                                   |   |                              | —   |   |                    |   | —   |                    |   |   | 16 |   |
| Net income                                                                                        |   | $                                 | 424       |   |                    | $      | 2,227     |                    |   | $ | 5,259 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Comprehensive income:                                                                             |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Net income                                                                                        |   | $                                 | 424       |   |                    | $      | 2,227     |                    |   | $ | 5,259 |   |
| Unrealized gain (loss) on marketable securities, net of taxes of 2, ($415) and $413, respectively |   |                              | (6        | )      |                    |   | 700       |                    |   |   | (694 | ) |
| Comprehensive income                                                                              |   | $                                 | 418       |   |                    | $      | 2,927     |                    |   | $ | 4,565 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Basic earnings per common share                                                                   |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |
| Diluted earnings per common share                                                                 |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |
|                                                                                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Basic weighted average shares outstanding                                                         |   |                              | 8,928,970 |   |                    |   | 9,213,731 |                    |   |   | 10,694,401 |   |
| Diluted weighted average shares outstanding                                                       |   |                              | 9,045,842 |   |                    |   | 9,338,320 |                    |   |   | 10,798,281 |   |

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CLEARONE COMMUNICATIONS

|                                                   |   |         |       |   |    |   |    |          |   |   | Accumulated   |   |   |          |    |   |   |   |
|--------------------------------------------------------|--------|--------------|------------|--------|---------|--------|---------|---------------|--------|--------|---------------|--------|--------|---------------|---------|--------|--------|--------|
|                                                   |   |         |       |   |    |   |    | Additional    |   |   | Other         |   |   |          |    |   | Total  |   |
|                                                   |   | Common Stock |       |   | Paid-In |   |    | Comprehensive |   |   | Accumulated   |   |   | Shareholders' |    |
|                                                   |   | Shares       |       |   | Amount  |   |    | Capital       |   |   | Income (loss) |   |   | Deficit       |    |   | Equity |   |
|                                                   |   |         |       |   |    |   |    |          |   |   |          |   |   |          |    |   |   |   |
| Balances at June 30, 2007                              |   |         | 10,861,920 |   |    | $      | 11      |          |   | $      | 47,582        |   |   | $             | — |   |   | $      | (17,336 | ) |   | $ | 30,257 |   |
| Stock buy back program                                 |   |         | (834,646   | )      |    |   | (1      | )             |   |   | (4,354        | )      |   |          | — |   |   |   | — |   |   |   | (4,355 | ) |
| Exercise of stock options                              |   |         | 228,368    |   |    |   | — |          |   |   | 792           |   |   |          | — |   |   |   | — |   |   |   | 792 |   |
| Shares received/retired upon exercise of stock options |   |         | (28,066    | )      |    |   | — |          |   |   | (186          | )      |   |          | — |   |   |   | — |   |   |   | (186 | ) |
| Tax benefit stock option exercise                      |   |         | —    |   |    |   | — |          |   |   | 70            |   |   |          | — |   |   |   | — |   |   |   | 70 |   |
| Compensation cost associated with ASC Topic 718        |   |         | —    |   |    |   | — |          |   |   | 707           |   |   |          | — |   |   |   | — |   |   |   | 707 |   |
| Employee Stock Purchase Plan                           |   |         | 1,326      |   |    |   | — |          |   |   | 7             |   |   |          | — |   |   |   | — |   |   |   | 7 |   |
| Adoption of ASC Topic 740                              |   |         | —    |   |    |   | — |          |   |   | —       |   |   |          | — |   |   |   | (295 | ) |   |   | (295 | ) |
| Unrealized loss on marketable securities, net of tax   |   |         | —    |   |    |   | — |          |   |   | —       |   |   |          | (694    | )      |   |   | — |   |   |   | (694 | ) |
| Net income                                             |   |         | —    |   |    |   | — |          |   |   | —       |   |   |          | -       |   |   |   | 5,259 |   |   |   | 5,259 |   |
| 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 |   |

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|                                                                                                                           |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |    | Year EndedJune 30, 2008 |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|---------|-------------------------|--------|
| Cash flows from operating activities:                                                                                          |   |                              |    |   |                    |   |    |                    |   |
| Net income from continuing operations                                                                                          |   | $                                 | 424     |   |                    | $      | 2,227   |                    |   | $ | 5,243 |   |
| Adjustments to reconcile net income (loss) from continuing operations  to net cash provided by (used in) operations: |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Impairment on marketable securities                                                                                            |   |                              | — |   |                    |   | — |                    |   |   | 155 |   |
| Depreciation and amortization expense                                                                                          |   |                              | 453     |   |                    |   | 720     |                    |   |   | 767 |   |
| Stock-based compensation                                                                                                       |   |                              | 194     |   |                    |   | 631     |                    |   |   | 714 |   |
| Provision for doubtful accounts                                                                                                |   |                              | — |   |                    |   | 16      |                    |   |   | 33 |   |
| Increase (decrease) in reserves against inventory                                                                              |   |                              | (153    | )      |                    |   | 2,293   |                    |   |   | 136 |   |
| Write-off of note receivable                                                                                                   |   |                              | — |   |                    |   | 5       |                    |   |   | — |   |
| Gain on sale of marketable securities                                                                                     |   |                              | (95     | )      |                    |   | — |                    |   |   | — |   |
| (Gain) loss on disposal of assets                                                                                              |   |                              | (5      | )      |                    |   | — |                    |   |   | 6 |   |
| Changes in operating assets and liabilities:                                                                                   |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Accounts receivable                                                                                                            |   |                              | (1,502  | )      |                    |   | 1,248   |                    |   |   | 485 |   |
| Deposit, bond for preliminary injunction                                                                                       |   |                              | — |   |                    |   | 908     |                    |   |   | (908 | ) |
| Inventories                                                                                                                    |   |                              | 4,343   |   |                    |   | (9,798  | )                       |   |   | (929 | ) |
| Deferred income taxes                                                                                                          |   |                              | (306    | )      |                    |   | 262     |                    |   |   | (4,807 | ) |
| Prepaids expenses and other assets                                                                                             |   |                              | 209     |   |                    |   | (592    | )                       |   |   | (590 | ) |
| Accounts payable                                                                                                               |   |                              | (2,550  | )      |                    |   | 2,402   |                    |   |   | 875 |   |
| Accrued liabilities                                                                                                            |   |                              | (1,188  | )      |                    |   | (1,292  | )                       |   |   | 1,676 |   |
| Deferred product revenue                                                                                                       |   |                              | (2      | )      |                    |   | (1,086  | )                       |   |   | 669 |   |
| Other long term liabilities                                                                                                    |   |                              | 42      |   |                    |   | 135     |                    |   |   | — |   |
| Net cash provided by (used in) continuing operating activities                                                                 |   |                              | (136    | )      |                    |   | (1,921  | )                       |   |   | 3,525 |   |
|                                                                                                                           |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Cash flows from investing activities:                                                                                          |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Acquisition of NetStreams, Inc. (net of cash acquired)                                                                         |   |                              | (1,643  | )      |                    |   | — |                    |   |   | — |   |
| Purchase of property and equipment                                                                                             |   |                              | (745    | )      |                    |   | (1,074  | )                       |   |   | (786 | ) |
| Proceeds from sale of property and equipment                                                                                   |   |                              | 24      |   |                    |   | — |                    |   |   | — |   |
| Purchase of intangible assets                                                                                                  |   |                              | — |   |                    |   | — |                    |   |   | (49 | ) |
| Purchase of marketable securities                                                                                              |   |                              | — |   |                    |   | (1,253  | )                       |   |   | (15,378 | ) |
| Sale of marketable securities                                                                                                  |   |                              | 2,192   |   |                    |   | 17,356  |                    |   |   | 16,897 |   |
| Net cash (used in) provided by continuing investing activities                                                                 |   |                              | (172    | )      |                    |   | 15,029  |                    |   |   | 684 |   |
| Net cash provided by discontinued investing activities                                                                         |   |                              | — |   |                    |   | — |                    |   |   | 16 |   |
| Net cash (used in) provided by investing activities                                                                            |   |                              | (172    | )      |                    |   | 15,029  |                    |   |   | 700 |   |
|                                                                                                                           |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Cash flows from financing activities:                                                                                          |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Proceeds from the issuance of common stock - options                                                                           |   |                              | 1       |   |                    |   | 134     |                    |   |   | 605 |   |
| Common stock purchased and retired                                                                                             |   |                              | — |   |                    |   | (6,768  | )                       |   |   | (4,355 | ) |
| Tax benefit from stock options                                                                                                 |   |                              | — |   |                    |   | — |                    |   |   | 70 |   |
| Net cash used in financing activities                                                                                          |   |                              | 1       |   |                    |   | (6,634  | )                       |   |   | (3,680 | ) |
|                                                                                                                           |   |                              |    |   |                    |   |    |                    |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                           |   |                              | (307    | )      |                    |   | 6,474   |                    |   |   | 545 |   |
| Cash and cash equivalents at the beginning of the year                                                                         |   |                              | 9,801   |   |                    |   | 3,327   |                    |   |   | 2,782 |   |
| Cash and cash equivalents at the end of the year                                                                               |   | $                                 | 9,494   |   |                    | $      | 9,801   |                    |   | $ | 3,327 |   |

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|                                                                                 |   | Six months endedDec ember 31, 2009 |    |    | Year EndedJune 30, 2009 |   |    | Year EndedJune 30, 2008 |   |
|--------------------------------------------------------------------------------------|--------|------------------------------------|---------|---------|-------------------------|--------|---------|-------------------------|--------|
| Supplemental disclosure of cash flow information:                                    |   |                               |    |    |                    |   |    |                    |   |
| Cash paid for interest                                                               |   | $                                  | 35      |    |                    | $      | 1       |                    |   | $ | 5 |   |
| Cash paid for income taxes                                                           |   |                               | — |    |                    |   | 1,637   |                    |   |   | 1,701 |   |
|                                                                                 |   |                               |    |    |                    |   |    |                    |   |   |   |   |
| Supplemental disclosure of non-cash activities:                                 |   |                               |    |    |                    |   |    |                    |   |   |   |   |
|                                                                                 |   |                               |    |    |                    |   |    |                    |   |   |   |   |
| Exchanged accounts receivable from a vendor with accounts payable to the same vendor |   | $                                  | 74      |    |                    | $      | 1,044   |                    |   | $ | 432 |   |
| Adoption of ASC Topic 740                                                            |   |                               | — |    |                    |   | — |                    |   |   | 295 |   |
| Unrealized gain (loss) on marketable securities, net of tax of $2, ($415) and $413   |   |                               | (6      | )  |                    |   | 700     |                    |   |   | (694 | ) |

| Cash                                 |   | $      | 161    |   |
|--------------------------------------|--------|--------|--------|--------|
| Accounts Receivable                  |   |   | 266    |   |
| Inventories                          |   |   | 1,204  |   |
| Other Current Assets                 |   |   | 72     |   |
| Accounts payable                     |   |   | (1,384 | )      |
| Accrued Expenses                     |   |   | (576   | )      |
| Property and Equipment               |   |   | 227    |   |
| Intangible Assets                    |   |   | 3,120  |   |
| Goodwill                             |   |   | 669    |   |
| Current maturities of long-term debt |   |   | (2,000 | )      |
| Deferred tax liability               |   |   | (305   | )      |
| Total purchase price                 |   | $      | 1,454  |   |
| Additional cash placed in escrow     |   |   | 350    |   |
| Less: Cash acquired                  |   |   | (161   | )      |
| Net cash paid in acquisition         |   | $      | 1,643  |   |

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CLEARON

2.  Summary 

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Note 6 – Marketable Securities

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|                           |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|--------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|--------|-------------------------|--------|
| Balance at Beginning of Period |   | $                                 | 103     |   |                    | $      | 87     |                    |   | $ | 54 |   |
| Charged to Costs and Expenses  |   |                              | — |   |                    |   | 173    |                    |   |   | 33 |   |
| Deductions                     |   |                              | — |   |                    |   | (157   | )                       |   |   | — |   |
| Balance at End of Period       |   | $                                 | 103     |   |                    | $      | 103    |                    |   | $ | 87 |   |

Note 3 – Business Combinations, Goodwill and Intangibles

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|                        |   | As ofDecember 31, 2009 |   |   | As ofJune 30, 2009 |   |   | As ofJune 30, 2008 |   |
|-----------------------------|--------|------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| Deferred Revenue            |   | $                      | 4,707  |   |               | $      | 4,709  |               |   | $ | 5,795 |   |
| Deferred Cost of Goods Sold |   |                   | 1,846  |   |               |   | 1,843  |               |   |   | 2,047 |   |
| Deferred Gross Profit       |   | $                      | 2,861  |   |               | $      | 2,866  |               |   | $ | 3,748 |   |

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|                               |   |                              |   |   |                    |   |   |                    |   |
|------------------------------------|--------|-----------------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
|                               |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
| Balance at the beginning of period |   | $                                 | 149    |   |                    | $      | 211    |                    |   | $ | 125 |   |
| Accruals/additions                 |   |                              | 106    |   |                    |   | 262    |                    |   |   | 329 |   |
| Usage                              |   |                              | (122   | )      |                    |   | (324   | )                       |   |   | (243 | ) |
| Balance at end of period           |   | $                                 | 133    |   |                    | $      | 149    |                    |   | $ | 211 |   |

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|                                                          |   |                              |      |   |                    |   |      |                    |   |
|---------------------------------------------------------------|--------|-----------------------------------|-----------|--------|-------------------------|--------|-----------|-------------------------|--------|
|                                                          |   | Six months endedDecember 31, 2009 |      |   | Year EndedJune 30, 2009 |   |      | Year EndedJune 30, 2008 |   |
| Numerator:                                                    |   |                              |      |   |                    |   |      |                    |   |
| Income from continuing operations                             |   | $                                 | 424       |   |                    | $      | 2,227     |                    |   | $ | 5,243 |   |
| Gain on disposal of discontinued operations, net of tax       |   |                              | —   |   |                    |   | —   |                    |   |   | 16 |   |
| Net income                                                    |   | $                                 | 424       |   |                    | $      | 2,227     |                    |   | $ | 5,259 |   |
| Denominator:                                                  |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Basic weighted average shares                                 |   |                              | 8,928,970 |   |                    |   | 9,213,731 |                    |   |   | 10,694,401 |   |
| Dilutive common stock equivalents using treasury stock method |   |                              | 116,872   |   |                    |   | 124,589   |                    |   |   | 103,880 |   |
| Diluted weighted average shares                               |   |                              | 9,045,842 |   |                    |   | 9,338,320 |                    |   |   | 10,798,281 |   |
|                                                          |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Basic earnings per common share:                              |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Continuing operations                                         |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |
| Disposal of discontinued operations                           |   | $                                 | —   |   |                    | $      | —   |                    |   | $ | — |   |
| Net income                                                    |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |
| Diluted earnings per common share:                            |   |                              |      |   |                    |   |      |                    |   |   |   |   |
| Continuing operations                                         |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |
| Disposal of discontinued operations                           |   | $                                 | —   |   |                    | $      | —   |                    |   | $ | — |   |
| Net income                                                    |   | $                                 | 0.05      |   |                    | $      | 0.24      |                    |   | $ | 0.49 |   |

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Note 11 – Share Based Payment 

3.  Business Combination, Goodwill and Intangibles

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| Cash                                 |   | $      | 161    |   |
|--------------------------------------|--------|--------|--------|--------|
| Accounts Receivable                  |   |   | 266    |   |
| Inventories                          |   |   | 1,204  |   |
| Other Current Assets                 |   |   | 72     |   |
| Accounts payable                     |   |   | (1,384 | )      |
| Accrued Expenses                     |   |   | (576   | )      |
| Property and Equipment               |   |   | 227    |   |
| Intangible Assets                    |   |   | 3,120  |   |
| Goodwill                             |   |   | 669    |   |
| Current maturities of long-term debt |   |   | (2,000 | )      |
| Deferred tax liability               |   |   | (305   | )      |
| Total purchase price                 |   | $      | 1,454  |   |

|    |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|---------|--------|-----------------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| Revenue |   | $                                 | 24,079 |   |                    | $      | 42,721 |                    |   | $ | 47,258 |   |
| Income  |   | $                                 | (5,127 | )      |                    | $      | (3,569 | )                       |   | $ | (1,564 | ) |

|                                                         |   | EstimatedUseful lives (Years) |   |   | Amount |    |   | AccumulatedAmortization |   |    | Net    |   |
|--------------------------------------------------------------|--------|------------------------------------|--------|--------|--------|---------|--------|-------------------------|--------|---------|--------|--------|
| Intangibles acquired through acquisition of NetStreams, Inc. |   |                               |   |   |   |    |   |                    |   |    |   |   |
| Tradename                                                    |   |                               | 7      |   |   | $       | 435    |                    |   | $       | 10     |   |   | $ | 425 |   |
| Patents and Technological Know-how                           |   |                               | 10     |   |   |    | 2,070  |                    |   |    | 35     |   |   |   | 2,035 |   |
| Proprietary Software                                         |   |                               | 3      |   |   |    | 215    |                    |   |    | 12     |   |   |   | 203 |   |
|                                                         |   |                               |   |   |   |    | 2,720  |                    |   |    | 57     |   |   |   | 2,663 |   |
| In-process Research and Development                          |   | Indefinite                         |   |   |   | 400     |   |                    |   | — |   |   |   | 400 |   |
| Acquired through acquisition of NetStreams, Inc.             |   |                               |   |   |   |    | 3,120  |                    |   |    | 57     |   |   |   | 3,063 |   |
| Other                                                        |   |                               | 5      |   |   |    | 49     |                    |   |    | 17     |   |   |   | 32 |   |
| Total                                                        |   |                               |   |   |   |  $ | 3,169  |                    |   |  $ | 74     |   |   |  $ | 3,095 |   |

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| Years ending December 31, |   |   |   |
|---------------------------|--------|--------|--------|
| 2010                      |   | $      | 351    |   |
| 2011                      |   |   | 351    |   |
| 2012                      |   |   | 339    |   |
| 2013                      |   |   | 271    |   |
| 2014                      |   |   | 269    |   |
| Thereafter                |   |   | 1,114  |   |
|                      |   | $      | 2,695  |   |

|           |   | As ofDecember 31, 2009 |   |   | As ofJune 30, 2009 |   |   | As ofJune 30, 2008 |   |
|----------------|--------|------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| Current:       |   |                   |   |   |               |   |   |               |   |
| Raw materials  |   | $                      | 453    |   |               | $      | 352    |               |   | $ | 724 |   |
| Finished goods |   |                   | 5,783  |   |               |   | 6,723  |               |   |   | 7,405 |   |
|           |   | $                      | 6,236  |   |               | $      | 7,075  |               |   | $ | 8,129 |   |
|           |   |                   |   |   |               |   |   |               |   |   |   |   |
| Long-term:     |   |                   |   |   |               |   |   |               |   |   |   |   |
| Raw materials  |   | $                      | 1,056  |   |               | $      | 2,376  |               |   | $ | — |   |
| Finished goods |   |                   | 5,356  |   |               |   | 6,183  |               |   |   | — |   |
|           |   | $                      | 6,412  |   |               | $      | 8,559  |               |   | $ | — |   |

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|                                          | Estimateduseful lives |   | As ofDecember 31, 2009 |   |   | As ofJune 30, 2009 |   |   | As ofJune 30, 2008 |   |
|-----------------------------------------------|-----------------------|--------|------------------------|--------|--------|--------------------|--------|--------|--------------------|--------|
| Office furniture and equipment                | 3 to 10 years         |   | $                      | 9,346  |   |               | $      | 8,403  |               |   | $ | 8,197 |   |
| Leasehold improvements                        | 1 to 6 years          |   |                   | 1,333  |   |               |   | 1,334  |               |   |   | 1,309 |   |
| Manufacturing and test equipment              | 2 to 10 years         |   |                   | 2,281  |   |               |   | 2,288  |               |   |   | 1,532 |   |
|                                          |                  |   |                   | 12,960 |   |               |   | 12,025 |               |   |   | 11,038 |   |
| Accumulated depreciation and amortization     |                  |   |                   | (9,714 | )      |               |   | (9,263 | )                  |   |   | (8,484 | ) |
|    Property and equipment, net |                  |   | $                      | 3,246  |   |               | $      | 2,762  |               |   | $ | 2,554 |   |

6.  Marketable 

|                          |   | Cost Basis |    |   | Unrealized Gains |   |    | Unrealized Losses |   |   | Recorded Basis |   |   | Current Marketable Securities |    |   | Long-term Marketable Securities |   |
|-------------------------------|--------|------------|---------|--------|------------------|--------|---------|-------------------|--------|--------|----------------|--------|--------|-------------------------------|---------|--------|---------------------------------|--------|
| As of December 31, 2009       |   |       |    |   |             |   |    |              |   |   |           |   |   |                          |    |   |                            |   |
| Corporate bonds – Total |   |  $    | — |   |             |   | — |              |   |   | —        |   |   |                          | — |   |                            |   | — |   |   |   | — |   |
|                          |   |       |    |   |             |   |    |              |   |   |           |   |   |                          |    |   |                            |   |   |   |   |   |   |   |
| As of June 30, 2009           |   |       |    |   |             |   |    |              |   |   |           |   |   |                          |    |   |                            |   |   |   |   |   |   |   |
| Corporate bonds – Total |   |       | 2,098   |   |             |   | 5       |              |   |   | —        |   |   |                          | 2,103   |   |                            |   | 2,103 |   |   |   | — |   |
|                          |   |       |    |   |             |   |    |              |   |   |           |   |   |                          |    |   |                            |   |   |   |   |   |   |   |
| As of June 30, 2008           |   |       |    |   |             |   |    |              |   |   |           |   |   |                          |    |   |                            |   |   |   |   |   |   |   |
| Corporate bonds               |   |       | 5,972   |   |             |   | — |              |   |   | (50            | )      |   |                          | 5,922   |   |                            |   | 5,922 |   |   |   | — |   |
| Municipal Securities          |   |       | 12,225  |   |             |   | — |              |   |   | (1,057         | )      |   |                          | 11,168  |   |                            |   | — |   |   |   | 11,168 |   |
| Total                         |   | $          | 18,197  |   |             | $      | — |              |   | $      | (1,107         | )      |   | $                             | 17,090  |   |                            | $      | 5,922 |   |   | $ | 11,168 |   |

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|                                                                                              |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|---------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|--------|-------------------------|--------|
| Unrealized holding gains (losses) at beginning of year                                            |   | $                                 | 6       |   |                    | $      | (694   | )                       |   | $ | — |   |
|   Unrealized holding  gains (losses), in marketable securities (before taxes) |   |                              | (8      | )      |                    |   | 1,115  |                    |   |   | (1,107 | ) |
|   Income tax (provision) benefit                                                        |   |                              | 2       |   |                    |   | (415   | )                       |   |   | 413 |   |
| Unrealized holding gains (losses) at end of year                                                  |   | $                                 | — |   |                    | $      | 6      |                    |   | $ | (694 | ) |

| ● | Level 1: Valuations based on quoted prices in active markets for identical instruments that we are able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Level 2: Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and sigificant value drivers are observable in active markets. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | Level 3: Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
|---------|------------------------------------------------------------------------------------------------------------------|

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|                                     |   | Total Fair Value |   |   | Quoted Prices in Active Markets for Identical Assets (Level 1) |   |   | Significant other observable inputs (Level 2) |   |   | Significant unobservable inputs (Level3) |   |   | Total  |    |
|------------------------------------------|--------|------------------|--------|--------|---------------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|--------|------------------------------------------|--------|--------|--------|---------|
| As of June 30, 2009                      |   |             |   |   |                                                                |   |   |                                          |   |   |                                     |   |   |   |    |
| Short-term available-for-sale securities |   | $                | 2,103  |   |                                                                | $      | 2,103  |                                          |   | $      | —                                  |   |   | $      | — |   |   | $ | 2,103 |   |

| Years ending December 31,    |   |   |   |
|------------------------------|--------|--------|--------|
| 2010                         |   | $      | 832    |   |
| 2011                         |   |   | 830    |   |
| 2012                         |   |   | 808    |   |
| 2013                         |   |   | 817    |   |
| Total minimum lease payments |   | $      | 3,287  |   |

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|                                    |   | As ofDecember 31, 2009 |   |   | As ofJune 30, 2009 |   |    | As ofJune 30, 2008 |   |
|-----------------------------------------|--------|------------------------|--------|--------|--------------------|--------|---------|--------------------|--------|
| Accrued salaries and other compensation |   | $                      | 672    |   |               | $      | 1,112   |               |   | $ | 974 |   |
| Accrued taxes                           |   |                   | 4      |   |               |   | — |               |   |   | 72 |   |
| Other accrued liabilities               |   |                   | 1,092  |   |               |   | 1,268   |               |   |   | 2,626 |   |
| Total                                   |   | $                      | 1,768  |   |               | $      | 2,380   |               |   | $ | 3,672 |   |

Note 9 – Commitments and Contingencies – Former Officer Indemnification

9.  Commitments and 

Former Officer Indemnification

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10.  Shareholders’ 

11.  Share-Based Payment

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|                               |   | Six months endedDecember 31, 2009 | Year EndedJune 30, 2009 | Year EndedJune 30, 2008 |
|------------------------------------|--------|-----------------------------------|-------------------------|-------------------------|
| Risk-free interest rate, average   |   | 2.2%                              | 2.4%                    | 4.5%                    |
| Expected option life, average      |   | 3.9 years                         | 3.9 years               | 4.3 years               |
| Expected price volatility, average |   | 51.6%                             | 54.1%                   | 73.9%                   |
| Expected dividend yield            |   | 0.0%                              | 0.0%                    | 0.0%                    |
| Expected annual forfeiture rate    |   | 10.0%                             | 10.0%                   | 10.0%                   |

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|                             |   | Number of Shares |      |   | Weighted Average Exercise Price |    |
|----------------------------------|--------|------------------|-----------|--------|---------------------------------|---------|
|                             |   |             |      |   |                            |    |
| Outstanding at June 30, 2007     |   |             | 1,273,199 |   |                            | $       | 5.38 |   |
|                             |   |             |      |   |                            |    |   |   |
| Granted                          |   |             | 319,000   |   |                            |    | 6.13 |   |
| Expired and canceled             |   |             | (68,058   | )      |                            |    | 7.39 |   |
| Forfeited prior to vesting       |   |             | (96,727   | )      |                            |    | 5.23 |   |
| Exercised                        |   |             | (228,368  | )      |                            |    | 3.47 |   |
| 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 |   |
| Exercisable                      |   |             | 983,208   |   |                            |  $ | 5.76 |   |

|                 |            |   | 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 |   |
|                 |            |   |                |      |    |                            |   |   |   |   |   |   |   |   |   |   |
| $                    | 0.00 to $4.00   |   |                |      | 665,211 |                            |   | $ | 3.46 |   |   |   | 6.8 |   |   |   | 471,558 |   |   | $ | 3.52 |   |
| $                    | 4.01 to $8.00   |   |                |      | 435,656 |                            |   |   | 6.08 |   |   |   | 5.7 |   |   |   | 394,952 |   |   |   | 6.09 |   |
| $                    | 8.01 to $12.00  |   |                |      | 50,000  |                            |   |   | 11.94 |   |   |   | 0.7 |   |   |   | 50,000 |   |   |   | 11.94 |   |
| $                    | 12.01 to $16.00 |   |                |      | 74,500  |                            |   |   | 14.74 |   |   |   | 0.7 |   |   |   | 66,275 |   |   |   | 14.99 |   |
| $                    | 16.01 to $20.00 |   |                |      | 750     |                            |   |   | 18.80 |   |   |   | 0.3 |   |   |   | 423 |   |   |   | 19.13 |   |
|                 |            |   |                |      |    |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                |            |   |                | 1,226,117 |    |                            | $      | 5.44 |   |   |   | 5.8 |   |   |   | 983,208 |   |   | $ | 5.76 |   |

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|   Non-vested Shares   |   | Number of Shares |     |   | Weighted Average Grant-Date Fair Value |   |
|---------------------------------|--------|------------------|----------|--------|----------------------------------------|--------|
| Non-vested at June 30, 2009     |   |             | 296,773  |   |                                   | $      | 2.48 |   |
| Granted                         |   |             | 102,500  |   |                                   |   | 1.12 |   |
| Vested                          |   |             | (105,394 | )      |                                   |   | 2.69 |   |
| Forfeited prior to vesting      |   |             | (50,970  | )      |                                   |   | 1.24 |   |
| Non-vested at December 31, 2009 |   |             | 242,909  |   |                                   | $      | 2.07 |   |

|       |   | Six months ended  |   | Year Ended    |   | Year Ended    |
|------------|--------|-------------------|--------|---------------|--------|---------------|
|       |   | December 31, 2009 |   | June 30, 2009 |   | June 30, 2008 |
| Customer A |   | 26.5%             |   | 31.0%         |   | 31.0%         |
| Customer B |   | 12.6%             |   | 15.0%         |   | 14.4%         |
| Customer C |   | 10.9%             |   | 12.0%         |   | 14.4%         |
| Total      |   | 50.0%             |   | 58.0%         |   | 59.8%         |

|       |   | As ofDecember 31, 2009 |   | As ofJune 30, 2009 |   | As ofJune 30, 2008 |
|------------|--------|------------------------|--------|--------------------|--------|--------------------|
| Customer A |   | 24.2%                  |   | 19.2%              |   | 22.5%              |
| Customer B |   | 12.2%                  |   | 15.5%              |   | 15.3%              |
| Customer C |   | 10.6%                  |   | 9.1%               |   | 12.3%              |
| Total      |   | 47.0%                  |   | 43.8%              |   | 50.1%              |

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14.  Income Taxes

|     |   | Six months ended December 31, 2009 |   |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|----------|--------|------------------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| U.S.     |   | $                                  | (36    | )      |                    | $      | 3,166  |                    |   | $ | 2,296 |   |
| Non U.S. |   |                               | 140    |   |                    |   | 56     |                    |   |   | (149 | ) |
| Total    |   | $                                  | 104    |   |                    | $      | 3,222  |                    |   | $ | 2,147 |   |

|                                          |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|-----------------------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|--------|-------------------------|--------|
| Current:                                      |   |                              |    |   |                    |   |   |                    |   |
| U.S. Federal                                  |   | $                                 | 52      |   |                    | $      | (236   | )                       |   | $ | (1,396 | ) |
| U.S. State                                    |   |                              | (38     | )      |                    |   | (405   | )                       |   |   | (61 | ) |
| Non-U.S.                                      |   |                              | — |   |                    |   | (5     | )                  |   |   | — |   |
| Total current                                 |   |                              | 14      |   |                    |   | (646   | )                       |   |   | (1,457 | )  |
|                                          |   |                              |    |   |                    |   |   |                    |   |   |   |   |
| Deferred:                                     |   |                              |    |   |                    |   |   |                    |   |   |   |   |
| U.S. Federal                                  |   |                              | 264     |   |                    |   | 16     |                    |   |   | 3,663 |   |
| U.S. State                                    |   |                              | (6      | )      |                    |   | 562    |                    |   |   | 890 |   |
| Change in deferred before valuation allowance |   |                              | 258     |   |                    |   | 578    |                    |   |   | 4,553 |   |
| Change in valuation allowance                 |   |                              | 48      |   |                    |   | (927   | )                       |   |   | — |   |
| Total deferred                                |   |                              | 306     |   |                    |   | (349   | )                       |   |   | 4,553 |   |
| (Provision) benefit for income taxes          |   | $                                 | 320     |   |                    | $      | (995   | )                       |   | $ | 3,096 |   |

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|                                                                   |   | Six months endedDecember 31, 2009 |    |   | Year EndedJune 30, 2009 |   |    | Year EndedJune 30, 2008 |   |
|------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|-------------------------|--------|---------|-------------------------|--------|
| U.S. federal statutory income tax rate at 34.0 percent                 |   | $                                 | (36     | )      |                    | $      | (1,096  | )                       |   | $ | (730 | ) |
| State income tax (provision) benefit, net of federal income tax effect |   |                              | (21     | )      |                    |   | (454    | )                       |   |   | 547 |   |
| Repatriated foreign earnings                                           |   |                              | — |   |                    |   | — |                    |   |   | (308 | ) |
| Foreign tax credit                                                     |   |                              | — |   |                    |   | — |                    |   |   | 185 |   |
| Non-deductible ASC Topic 718 compensation expense                      |   |                              | (20     | )      |                    |   | — |                    |   |   | (106 | ) |
| Research and development credit                                        |   |                              | 152     |   |                    |   | 343     |                    |   |   | 58 |   |
| Foreign earnings or losses taxed at different rates                    |   |                              | 48      |   |                    |   | 14      |                    |   |   | (45 | ) |
| Uncertain tax positions                                                |   |                              | (42     | )      |                    |   | (53     | )                       |   |   | (295 | ) |
| Non-deductible items and other                                         |   |                              | 211     |   |                    |   | 334     |                    |   |   | 51 |   |
| Change in valuation allowance                                          |   |                              | 28      |   |                    |   | (83     | )                       |   |   | 3,739 |   |
| Tax (provision) benefit                                                |   | $                                 | 320     |   |                    | $      | (995    | )                       |   | $ | 3,096 |   |

|                                                  |   | As ofDecember 31, 2009 |          |   | As ofJune 30, 2009 |   |        | As ofJune 30,2008 |   |
|-------------------------------------------------------|--------|------------------------|---------------|--------|--------------------|--------|-------------|-------------------|--------|
|                                                  |   | Current                |          |   | Long-term          |   |        | Current           |   |   | Long-term |   |   | Current |   |   | Long-term |   |
| Deferred revenue                                      |   | $                      | 1,116    |   |               | $      | —     |              |   | $ | 1,118 |   |   | $ | — |   |   | $ | 1,462 |   |   | $ | — |   |
| Basis difference in intangible assets                 |   |                   | —       |   |               |   | (707        | )            |   |   | — |   |   |   | 525 |   |   |   | — |   |   |   | 599 |   |
| Inventory reserve                                     |   |                   | 1,697    |   |               |   | —     |              |   |   | 1,471 |   |   |   | — |   |   |   | 815 |   |   |   | — |   |
| Net operating loss carryforwards                      |   |                   | —       |   |               |   | 885         |              |   |   | — |   |   |   | 211 |   |   |   | — |   |   |   | 10 |   |
| Accumulated research and development credits          |   |                   | —       |   |               |   | 1,145  |              |   |   | — |   |   |   | 852 |   |   |   | — |   |   |   | 341 |   |
| Alternative minimum tax credits                       |   |                   | —       |   |               |   | 409    |              |   |   | — |   |   |   | 409 |   |   |   | — |   |   |   | 287 |   |
| Accrued liabilities                                   |   |                   | 256      |   |               |   | —     |              |   |   | 255 |   |   |   | — |   |   |   | 848 |   |   |   | — |   |
| Deductible SFAS 123R compensation expense             |   |                   | —       |   |               |   | 691    |              |   |   | — |   |   |   | 638 |   |   |   | — |   |   |   | 513 |   |
| Allowance for sales returns and doubtful accounts     |   |                   | 37       |   |               |   | —     |              |   |   | 37 |   |   |   | — |   |   |   | 34 |   |   |   | — |   |
| Difference in property and equipment basis            |   |                   |  — |   |               |   | (527        | )            |   |   | — |   |   |   | (517 | ) |   |   | — |   |   |   | (324 | ) |
| Other                                                 |   |                   | 23       |   |               |   | (14         | )            |   |   | 89 |   |   |   | (31 | ) |   |   | 9 |   |   |   | 213 |   |
|    Total net deferred income tax asset |   |                   | 3,129    |   |               |   | 1,882  |              |   |   | 2,970 |   |   |   | 2,087 |   |   |   | 3,168 |   |   |   | 1,639 |   |
|    Less: Valuation allowance           |   |                   | —       |   |               |   | (880        | )            |   |   | — |   |   |   | (928 | ) |   |   | — |   |   |   | — |   |
|    Net deferred income tax asset       |   | $                      | 3,129    |   |               | $      | 1,002  |              |   | $ | 2,970 |   |   | $ | 1,159 |   |   | $ | 3,168 |   |   | $ | 1,639 |   |

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|                                              |   | Six months endedDecember 31, 2009 |           | Year endedJune 30, 2009 |   |   | Year endedJune 30, 2008 |   |
|---------------------------------------------------|--------|-----------------------------------|----------------|-------------------------|--------|--------|-------------------------|--------|
| Unrecognized tax benefits, beginning balance |   | $                                 | 1,199          |                    |   | $      | 1,152                   |   |   | $ | 862 |   |
| Tax positions taken in a prior period             |   |                              |           |                    |   |   |                    |   |   |   |   |   |
| Gross increases                                   |   |                              | —        |                    |   |   | 163                     |   |   |   | 63 |   |
| Gross decreases                                   |   |                              | (28            | )                  |   |   | —                 |   |   |   | — |   |
| Tax positions taken in the current period         |   |                              |           |                    |   |   |                    |   |   |   |   |   |
| Gross increases                                   |   |                              | 49             |                    |   |   | 97                      |   |   |   | 419 |   |
| Settlements with taxing authorities               |   |                              | —        |                    |   |   | —                 |   |   |   | — |   |
| Lapse of applicable statute of limitations        |   |                              |   — |                    |   |   | (213                    | )      |   |   | (192 | ) |
| Unrecognized tax benefits, ending balance         |   | $                                 | $1,220         |                    |   | $      | 1,199                   |   |   | $ | 1,152 |   |

|                |   | Six months endedDecember 31, 2009 |   |   | Year EndedJune 30, 2009 |   |   | Year EndedJune 30, 2008 |   |
|---------------------|--------|-----------------------------------|--------|--------|-------------------------|--------|--------|-------------------------|--------|
| United States       |   | $                                 | 10,774 |   |                    | $      | 24,214 |                    |   | $ | 27,371 |   |
| All other countries |   |                              | 6,062  |   |                    |   | 11,486 |                    |   |   | 11,387 |   |
| Total               |   | $                                 | 16,836 |   |                    | $      | 35,700 |                    |   | $ | 38,758 |   |

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| ASSETS                                                     |   |    |    |
|------------------------------------------------------------|--------|---------|---------|
| Current assets:                                            |   |    |    |
| Cash and cash equivalents                                  |   | $       | 2,323   |   |
| Marketable securities                                      |   |    | 9,628   |   |
| Receivables, net of allowance for doubtful accounts of $64 |   |    | 7,546   |   |
| Inventories, net                                           |   |    | 13,094  |   |
| Deferred income taxes                                      |   |    | 3,124   |   |
| Prepaid expenses and other assets                          |   |    | 1,219   |   |
| Total current assets                                       |   |    | 36,934  |   |
| Property and equipment, net                                |   |    | 2,768   |   |
| Long-term deferred tax asset                               |   |    | 724     |   |
| Other assets                                               |   |    | 63      |   |
| Total assets                                               |   | $       | 40,489  |   |
|                                                       |   |    |    |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                       |   |    |    |   |
| Current liabilities:                                       |   |    |    |   |
| Accounts payable                                           |   |  $ | 1,736   |   |
| Accrued liabilities                                        |   |    | 3,308   |   |
| Deferred product revenue                                   |   |    | 5,320   |   |
| Total current liabilities                                  |   |    | 10,364  |   |
| Deferred rent                                              |   |    | 622     |   |
| Other long-term liabilities                                |   |    | 1,372   |   |
| Total liabilities                                          |   |    | 12,358  |   |
|                                                       |   |    |    |   |
| Shareholders' equity:                                      |   |    |    |   |
| Common Stock                                               |   |    | 9       |   |
| Additional paid-in capital                                 |   |    | 38,191  |   |
| Accumulated other comprehensive income                     |   |    | 36      |   |
| Accumulated deficit                                        |   |    | (10,105 | ) |
| Total shareholders' equity                                 |   |    | 28,131  |   |
| Total liabilities and shareholders' equity                 |   | $       | 40,489  |   |

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| Revenue                                     |   | $      | 21,037    |   |
|---------------------------------------------|--------|--------|-----------|--------|
| Cost of goods sold                          |   |   | 7,887     |   |
| Gross profit                                |   |   | 13,150    |   |
| Sales and marketing                         |   |   | 3,911     |   |
| Research and product development            |   |   | 3,620     |   |
| General and administrative                  |   |   | 2,328     |   |
| Operating income                            |   |   | 3,291     |   |
| Interest income, net                        |   |   | 206       |   |
| Other expense, net                          |   |   | (45       | )      |
| Income before income taxes                  |   |   | 3,452     |   |
| Provision for income taxes                  |   |   | (1,183    | )      |
| Net income                                  |   | $      | 2,269     |   |
|                                        |   |   |      |   |
| Basic earnings per common share             |   | $      | 0.24      |   |
| Diluted earnings per common share           |   | $      | 0.24      |   |
|                                        |   |   |      |   |
| Basic weighted average shares outstanding   |   |   | 9,501,381 |   |
| Diluted weighted average shares outstanding |   |   | 9,600,291 |   |

| Cash flows from operating activities:                             |   |    |   |
|-------------------------------------------------------------------|--------|---------|--------|
| Net cash used in operating activities                             |   |  $ | (2,242 | ) |
|                                                              |   |    |   |   |
| Cash flows from investing activities:                             |   |    |   |   |
| Purchase of property and equipment                                |   |    | (635   | ) |
| Sale of marketable securities                                     |   |    | 8,626  |   |
| Net cash provided by investing activities                         |   |    | 7,991  |   |
|                                                              |   |    |   |   |
| Cash flows from financing activities:                             |   |    |   |   |
| Proceeds from the issuance of common stock                        |   |    | 17     |   |
| Common stock purchased and retired                                |   |    | (6,768 | ) |
| Tax benefit attributable to exercise of stock options             |   |    | (2     | ) |
| Net cash used in financing activities                             |   |    | (6,753 | ) |
|                                                              |   |    |   |   |
| Net decrease in cash and cash equivalents                         |   |    | (1,004 | ) |
| Cash and cash equivalents at the beginning of the year            |   |    | 3,327  |   |
| Cash and cash equivalents at the end of the year                  |   | $       | 2,323  |   |
|                                                              |   |    |   |   |
| Supplemental disclosure of cash flow information:                 |   |    |   |   |
| Cash paid for interest                                            |   | $       | 1      |   |
| Cash paid for income taxes                                        |   |    | 914    |   |
|                                                              |   |    |   |   |
| Supplemental disclosure of non-cash financing activities:         |   |    |   |   |
| Exchanged accounts receivable from a vendor with accounts payable |   |    |   |   |
| to the same vendor                                                |   | $       | 446    |   |
| Unrealized gain on marketable securities, net of tax of $434      |   |    | 730    |   |

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