----

----

| ý |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE             |
|--------|--------|---------------------------------------------------------------------|
|   |   | SECURITIES EXCHANGE ACT OF 1934                                     |
|   |   |                                                                |
|   |   | For the quarterly period ended June 30, 2009                        |
|   |   |                                                                |
|   |   | OR                                                                  |
|   |   |                                                                |
| o      |   | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE            |
|   |   | SECURITIES EXCHANGE ACT OF 1934                                     |
|   |   |                                                                |
|   |   | For the transition period from ________________ to ________________ |

| Delaware                                               |   | 86-0828608          |
|--------------------------------------------------------|--------|---------------------|
| (State or other jurisdiction of                        |   | (I.R.S. Employer    |
| incorporation or organization)                         |   | Identification No.) |
|                                                   |   |                |
| 8888 East Raintree Drive, Suite 300Scottsdale, Arizona |   | 85260               |
| (Address of principal executive offices)               |   | (Zip Code)          |

|         Large accelerated filer [   ]          | Accelerated filer [ √ ]                             |
|--------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                                                                                             |                                                      |
|         Non-accelerated filer  [   ] | Smaller reporting company  [   ] |
|         (Do not check if a smaller reporting company)         |                                                      |

| Class                                   |   | Outstanding at August 3, 2009 |
|-----------------------------------------|--------|-------------------------------|
| Common Stock, $.001 par value per share |   | 54,672,478 shares             |

----

INDEX

|   PART I. |   FINANCIAL INFORMATION                                                               | Page   |
|---------------------|-------------------------------------------------------------------------------------------------|--------|
|                |                                                                                            |   |
| Item 1.             | Financial Statements                                                                            | 1      |
|                |                                                                                            |   |
|                | Consolidated Balance Sheets – June 30, 2009 and December 31, 2008                         | 1      |
|                |                                                                                            |   |
|                | Consolidated Statements of Operations – Three and six months ended June 30, 2009 and 2008 | 2      |
|                |                                                                                            |   |
|                | Consolidated Statements of Cash Flows – Three and six months ended June 30, 2009 and 2008 | 3      |
|                |                                                                                            |   |
|                | Notes to Consolidated Financial Statements                                                      | 4      |
|                |                                                                                            |   |
| Item 2.             | Management’s Discussion and Analysis of Financial Condition and Results of Operations     | 16     |
|                |                                                                                            |   |
| Item 3.             | Quantitative and Qualitative Disclosures About Market Risk                                      | 26     |
|                |                                                                                            |   |
| Item 4.             | Controls and Procedures                                                                         | 27     |
|                |                                                                                            |   |
| PART II.            | OTHER INFORMATION                                                                               |   |
|                |                                                                                            |   |
| Item 1.             | Legal Proceedings                                                                               | 28     |
|                |                                                                                            |   |
| Item 1A.            | Risk Factors                                                                                    | 28     |
|                |                                                                                            |   |
| Item 4.             | Submission of Matters to a Vote of Security Holders                                             | 29     |
|                |                                                                                            |   |
| Item 5.             | Other Information                                                                               | 29     |
|                |                                                                                            |   |
| Item 6.             | Exhibits                                                                                        | 30     |
|                |                                                                                            |   |
|                | Signatures                                                                                      | 31     |
|                |                                                                                            |   |
|                | Exhibit 10.3                                                                                    |   |
|                | Exhibit 10.4                                                                                    |   |
|                | Exhibit 31.1                                                                                    |   |
|                | Exhibit 31.2                                                                                    |   |
|                | Exhibit 32                                                                                      |   |

----

Table of Contents

PART I — FINANCIAL INFORMATION 

Item 1

HYPERCOM CORPORATION 

  

|                                                                        |   | June 30, |     |   | December 31, |   |
|-----------------------------------------------------------------------------|--------|----------|----------|--------|--------------|--------|
| Amounts in thousands, except share data                                     |   | 2009     |     |   | 2008         |   |
| ASSETS                                                                      |   |     |     |   |         |   |
| Current assets:                                                             |   |     |     |   |         |   |
|   Cash and cash equivalents                                            |   | $        | 40,544   |   |         | $      | 35,978 |   |
|   Short-term investments                                               |   |     | -        |   |         |   | 499 |   |
|   Accounts receivable, net of allowance for doubtful                   |   |     |     |   |         |   |   |   |
|     accounts of $5,879 and $4,799, respectively              |   |     | 83,292   |   |         |   | 96,986 |   |
|   Current portion of net investment in sales-type leases               |   |     | 7,741    |   |         |   | 9,915 |   |
|   Inventories                                                          |   |     | 31,092   |   |         |   | 31,681 |   |
|   Prepaid expenses and other current assets                            |   |     | 8,488    |   |         |   | 7,106 |   |
|   Deferred income taxes                                                |   |     | 1,000    |   |         |   | 1,320 |   |
| Total current assets                                                        |   |     | 172,157  |   |         |   | 183,485 |   |
|                                                                        |   |     |     |   |         |   |   |   |
| Property, plant and equipment, net                                          |   |     | 25,881   |   |         |   | 26,870 |   |
| Net investment in sales-type leases                                         |   |     | 6,172    |   |         |   | 4,869 |   |
| Intangible assets, net                                                      |   |     | 52,721   |   |         |   | 57,311 |   |
| Goodwill                                                                    |   |     | 26,784   |   |         |   | 26,715 |   |
| Other long-term assets                                                      |   |     | 7,517    |   |         |   | 7,050 |   |
| Total assets                                                                |   | $        | 291,232  |   |         | $      | 306,300 |   |
|                                                                        |   |     |     |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                        |   |     |     |   |         |   |   |   |
| Current liabilities:                                                        |   |     |     |   |         |   |   |   |
|   Accounts payable                                                     |   | $        | 37,047   |   |         | $      | 52,929 |   |
|   Accrued payroll and related expenses                                 |   |     | 15,923   |   |         |   | 16,619 |   |
|   Accrued sales and other taxes                                        |   |     | 6,204    |   |         |   | 7,709 |   |
|   Product warranty liabilities                                         |   |     | 6,666    |   |         |   | 6,597 |   |
|   Restructuring liabilities                                            |   |     | 8,897    |   |         |   | 7,724 |   |
|   Accrued other liabilities                                            |   |     | 21,516   |   |         |   | 22,866 |   |
|   Deferred revenue                                                     |   |     | 14,212   |   |         |   | 12,177 |   |
|   Deferred tax liabilities                                             |   |     | 3,685    |   |         |   | 4,828 |   |
|   Income taxes payable                                                 |   |     | 7,360    |   |         |   | 5,201 |   |
| Total current liabilities                                                   |   |     | 121,510  |   |         |   | 136,650 |   |
|                                                                        |   |     |     |   |         |   |   |   |
| Long-term debt                                                              |   |     | 53,327   |   |         |   | 48,769 |   |
| Deferred tax liabilities                                                    |   |     | 16,250   |   |         |   | 15,999 |   |
| Other liabilities                                                           |   |     | 11,874   |   |         |   | 11,094 |   |
| Total liabilities                                                           |   |     | 202,961  |   |         |   | 212,512 |   |
| Commitments and contingencies                                               |   |     |     |   |         |   |   |   |
| Stockholders' equity:                                                       |   |     |     |   |         |   |   |   |
|   Common stock, $.001 par value; 100,000,000 shares                    |   |     |     |   |         |   |   |   |
|     authorized; 54,672,478 and 53,442,799 shares outstanding |   |     |     |   |         |   |   |   |
|     at June 30, 2009 and December 31 2008, respectively      |   |     | 58       |   |         |   | 57 |   |
|   Additional paid-in capital                                           |   |     | 274,103  |   |         |   | 272,869 |   |
|   Accumulated deficit                                                  |   |     | (147,915 | )      |         |   | (139,245 | ) |
|   Treasury stock, 3,162,248 shares (at cost) at                        |   |     |     |   |         |   |   |   |
|     June 30, 2009 and December 31, 2008.                     |   |     | (22,749  | )      |         |   | (22,749 | ) |
|   Accumulated other comprehensive loss                                 |   |     | (15,226  | )      |         |   | (17,144 | ) |
| Total stockholders' equity                                                  |   |     | 88,271   |   |         |   | 93,788 |   |
| Total liabilities and stockholders' equity                                  |   | $        | 291,232  |   |         | $      | 306,300 |   |

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Table of Contents

HYPERCOM CORPORATION 

|                                                |   | Three Months Ended June 30,                             |       |   | Six Months Ended June 30, |   |
|-----------------------------------------------------|--------|---------------------------------------------------------|------------|--------|---------------------------|--------|
|                                                |   | 2009                                                    |       |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
|                                                |   | (Amounts in thousands, except share and per share data) |       |
| Net revenue:                                        |   |                                                    |       |   |                      |   |   |   |   |   |   |   |
|   Products                                     |   | $                                                       | 79,672     |   |                      | $      | 92,774 |   |   | $ | 137,577 |   |   | $ | 142,358 |   |
|   Services                                     |   |                                                    | 27,157     |   |                      |   | 31,406 |   |   |   | 52,867 |   |   |   | 52,327 |   |
|   Total net revenue                            |   |                                                    | 106,829    |   |                      |   | 124,180 |   |   |   | 190,444 |   |   |   | 194,685 |   |
| Costs of revenue:                                   |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   Products                                     |   |                                                    | 50,291     |   |                      |   | 64,653 |   |   |   | 89,201 |   |   |   | 97,903 |   |
|   Services                                     |   |                                                    | 21,703     |   |                      |   | 24,886 |   |   |   | 41,414 |   |   |   | 42,498 |   |
|   Amortization of purchased intangible assets  |   |                                                    | 706        |   |                      |   | 1,058 |   |   |   | 1,381 |   |   |   | 1,141 |   |
|   Total costs of revenue                       |   |                                                    | 72,700     |   |                      |   | 90,597 |   |   |   | 131,996 |   |   |   | 141,542 |   |
| Gross profit                                        |   |                                                    | 34,129     |   |                      |   | 33,583 |   |   |   | 58,448 |   |   |   | 53,143 |   |
| Operating expenses:                                 |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   Research and development                     |   |                                                    | 10,581     |   |                      |   | 14,892 |   |   |   | 21,387 |   |   |   | 21,004 |   |
|   Selling, general and administrative          |   |                                                    | 18,941     |   |                      |   | 24,803 |   |   |   | 37,520 |   |   |   | 40,314 |   |
|   Amortization of purchased intangible assets  |   |                                                    | 1,500      |   |                      |   | 1,960 |   |   |   | 2,929 |   |   |   | 2,092 |   |
|   Total operating expenses                     |   |                                                    | 31,022     |   |                      |   | 41,655 |   |   |   | 61,836 |   |   |   | 63,410 |   |
| Operating income (loss)                             |   |                                                    | 3,107      |   |                      |   | (8,072 | ) |   |   | (3,388 | ) |   |   | (10,267 | ) |
| Interest income                                     |   |                                                    | 52         |   |                      |   | 322 |   |   |   | 129 |   |   |   | 1,119 |   |
| Interest expense                                    |   |                                                    | (2,526     | )      |                      |   | (2,512 | ) |   |   | (4,976 | ) |   |   | (2,512 | ) |
| Foreign currency gain (loss)                        |   |                                                    | 627        |   |                      |   | (254 | ) |   |   | (70 | ) |   |   | (205 | ) |
| Other income                                        |   |                                                    | 309        |   |                      |   | 70 |   |   |   | 321 |   |   |   | 149 |   |
| Income (loss) before income taxes and               |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   discontinued operations                      |   |                                                    | 1,569      |   |                      |   | (10,446 | ) |   |   | (7,984 | ) |   |   | (11,716 | ) |
| Income tax provision                                |   |                                                    | (311       | )      |                      |   | (673 | ) |   |   | (752 | ) |   |   | (10 | ) |
| Income (loss) before discontinued operations        |   |                                                    | 1,258      |   |                      |   | (11,119 | ) |   |   | (8,736 | ) |   |   | (11,726 | ) |
| Income (loss) from discontinued operations          |   |                                                    | (3         | )      |                      |   | 224 |   |   |   | 66 |   |   |   | 499 |   |
| Net income (loss)                                   |   | $                                                       | 1,255      |   |                      | $      | (10,895 | ) |   | $ | (8,670 | ) |   | $ | (11,227 | ) |
|                                                |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per share:                   |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   Income (loss) before discontinued operations |   | $                                                       | 0.02       |   |                      | $      | (0.21 | ) |   | $ | (0.16 | ) |   | $ | (0.22 | ) |
|   Income from discontinued operations          |   |                                                    | -          |   |                      |   | 0.01 |   |   |   | - |   |   |   | 0.01 |   |
|   Basic and diluted income (loss) per share    |   | $                                                       | 0.02       |   |                      | $      | (0.20 | ) |   | $ | (0.16 | ) |   | $ | (0.21 | ) |
|                                                |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |                                                    |       |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| Basic weighted average common shares                |   |                                                    | 53,514,573 |   |                      |   | 53,342,947 |   |   |   | 53,459,082 |   |   |   | 53,283,760 |   |
| Diluted weighted average common shares              |   |                                                    | 53,748,345 |   |                      |   | 53,342,947 |   |   |   | 53,459,082 |   |   |   | 53,283,760 |   |

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Table of Contents

HYPERCOM CORPORATION 

|                                                                                         |   | Six Months Ended June 30, |   |
|----------------------------------------------------------------------------------------------|--------|---------------------------|--------|
| (Amounts in thousands)                                                                       |   | 2009                      |   |   | 2008 |   |
|                                                                                         |   |                      |   |   |   |   |
| Cash flows from continuing operations:                                                       |   |                      |   |   |   |   |
|   Net loss from continuing operations                                                   |   | $                         | (8,736 | ) |   | $ | (11,726 | ) |
|   Adjustments to reconcile net loss                                                |   |                      |   |   |   |   |   |   |
|     from continuing operations to net cash                                    |   |                      |   |   |   |   |   |   |
|     provided by operating activities:                                         |   |                      |   |   |   |   |   |   |
|       Depreciation and amortization                                 |   |                      | 4,837  |   |   |   | 4,917 |   |
|       Amortization of purchased intangibles                         |   |                      | 4,310  |   |   |   | 3,233 |   |
|       Interest conversion to debt                                   |   |                      | 3,271  |   |   |   | 1,500 |   |
|       Amortization of debt issuance costs                           |   |                      | 64     |   |   |   | 32 |   |
|       Amortization of discount on notes payable                     |   |                      | 1,475  |   |   |   | 915 |   |
|       Amortization of discounts on short-term                       |   |                      |   |   |   |   |   |   |
|         investments                                       |   |                      | -      |   |   |   | (58 | ) |
|       Provision (reversal) for doubtful accounts                    |   |                      | 1,486  |   |   |   | (1,000 | ) |
|       Provision for excess and obsolete inventory                   |   |                      | 1,100  |   |   |   | 1,289 |   |
|       Provision for warranty and other product charges              |   |                      | 2,479  |   |   |   | 1,840 |   |
|       Deferred income tax benefit (provision)                  |   |                      | (575   | ) |   |   | 4,007 |   |
|       Non-cash share-based compensation                        |   |                      | 1,131  |   |   |   | 1,753 |   |
|       Foreign currency gains (losses)                          |   |                      | (1,429 | ) |   |   | 4 |   |
|       Non-cash write-off of intangibles and other assets       |   |                      | 1,082  |   |   |   | 451 |   |
|       Changes in operating assets and                          |   |                      |   |   |   |   |   |   |
|         liabilities, net                                  |   |                      | (3,649 | ) |   |   | 10,600 |   |
|   Net cash provided by operating activities                                             |   |                      | 6,846  |   |   |   | 17,757 |   |
|                                                                                         |   |                      |   |   |   |   |   |   |
| Cash flows from investing activities:                                                        |   |                      |   |   |   |   |   |   |
|   Purchase of property, plant and equipment                                             |   |                      | (3,898 | ) |   |   | (3,042 | ) |
|   Cash paid for acquisitions including acquisition costs deferred, net of cash acquired |   |                      | (37    | ) |   |   | (114,898 | ) |
|   Software development costs capitalized                                                |   |                      | (248   | ) |   |   | (57 | ) |
|   Purchase of short-term investments                                                    |   |                      | (1,376 | ) |   |   | (31,051 | ) |
|   Proceeds from the sale or maturity of                                                 |   |                      |   |   |   |   |   |   |
|     short-term investments                                                    |   |                      | 1,875  |   |   |   | 32,075 |   |
|   Net cash used in investing activities                                                 |   |                      | (3,684 | ) |   |   | (116,973 | ) |
|                                                                                         |   |                      |   |   |   |   |   |   |
| Cash flows from financing activities:                                                        |   |                      |   |   |   |   |   |   |
|   Borrowings on revolving line of credit                                                |   |                      | 7,800  |   |   |   | - |   |
|   Repayments of bank notes payable and other                                            |   |                      |   |   |   |   |   |   |
|     debt instruments                                                          |   |                      | (7,985 | ) |   |   | (434 | ) |
|   Debt issuance cost                                                                    |   |                      | -      |   |   |   | (687 | ) |
|   Proceeds from issuance of common stock                                                |   |                      | 90     |   |   |   | 602 |   |
|   Proceeds from long term debt                                                          |   |                      | -      |   |   |   | 60,000 |   |
|   Net cash provided by (used in) financing activities                                   |   |                      | (95    | ) |   |   | 59,481 |   |
| Effect of exchange rate changes on cash                                                      |   |                      | 1,363  |   |   |   | 397 |   |
| Net increase (decrease) in cash flows from                                                   |   |                      |   |   |   |   |   |   |
|   continuing operations                                                                 |   |                      | 4,430  |   |   |   | (39,338 | ) |
| Net cash provided by operating                                                               |   |                      |   |   |   |   |   |   |
|   activities - discontinued operations                                                  |   |                      | 136    |   |   |   | 288 |   |
| Cash and cash equivalents, beginning of period                                               |   |                      | 35,978 |   |   |   | 76,925 |   |
| Cash and cash equivalents, end of period                                                     |   | $                         | 40,544 |   |   | $ | 37,875 |   |

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Table of Contents

HYPERCOM CORPORATION

----

Table of Contents

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Table of Contents

|                                                               |   | Cash paid |    |   | Balance Accrued     |   |   | Cash paid |   |   | Cash paid |   |   | Cash paid |    |
|--------------------------------------------------------------------|--------|-----------|---------|--------|---------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|---------|
|                                                               |   | Total     |    |   | as of June 30, 2009 |   |   | 2009      |   |   | 2008      |   |   | 2007      |    |
| Cash paid to purchase TeT shares, working capital and assumed debt |   | $         | 133,611 |   |                | $      | -      |      |   | $      | -         |   |   | $         | 133,611 |   |   | $ | - |   |
| Cash paid for transaction costs                                    |   |      | 3,827   |   |                |   | -      |      |   |   | 37        |   |   |      | 3,422   |   |   |   | 368 |   |
| Cash deposit                                                       |   |      | 10,000  |   |                |   | -      |      |   |   | -         |   |   |      | -       |   |   |   | 10,000 |   |
| Preliminary working capital adjustment                             |   |      | 2,000   |   |                |   | 2,000  |      |   |   | -         |   |   |      | -       |   |   |   | - |   |
|     Subtotal                                   |   |      | 149,438 |   |                |   | 2,000  |      |   |   | 37        |   |   |      | 137,033 |   |   |   | 10,368 |   |
| Cash acquired from TeT                                             |   |      | (21,865 | )      |                |   | -      |      |   |   | -         |   |   |      | (21,865 | ) |   |   | - |   |
| Total cash paid, net of cash acquired                              |   | $         | 127,573 |   |                | $      | 2,000  |      |   | $      | 37        |   |   | $         | 115,168 |   |   | $ | 10,368 |   |

As of June 30, 2009, the Company has recorded a preliminary amount of $2.0 million for the working capital adjustment. The working capital adjustment is subject to negotiation, which could result in further changes. None of the goodwill associated with the TeT acquisition is expectedto be deductible for tax purposes. 

|                                   |   | Six Months Ended June 30, |    |
|----------------------------------------|--------|---------------------------|---------|
|                                   |   | 2009                      |    |   | 2008 |   |
| Total net revenue                      |   | $                         | 190,444 |   |   | $ | 237,829 |   |
| Net loss                               |   | $                         | (8,670  | ) |   | $ | (19,887 | ) |
| Net loss per share - basic and diluted |   | $                         | (0.16   | ) |   | $ | (0.37 | ) |

|                                |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |   |     | Net    |   |         |
|-------------------------------------|--------|-----------------------|--------|--------|--------------------------|--------|--------|----------|--------|--------|--------------|
|                                |   | June 30,              |   |   | December 31,             |   |   | June 30, |   |   | December 31, |   |   | June 30, |   |   | December 31, |   |
|                                |   | 2009                  |   |   | 2008                     |   |   | 2009     |   |   | 2008         |   |   | 2009 |   |   | 2008 |   |
|                                |   |                  |   |   |                     |   |   |     |   |   |         |   |   |   |   |   |   |   |
| Capitalized software                |   | $                     | 4,947  |   |                     | $      | 4,699  |     |   | $      | (3,901       | ) |   | $ | (3,597 | ) |   | $ | 1,046 |   |   | $ | 1,102 |   |
| Customer and supplier relationships |   |                  | 55,441 |   |                     |   | 55,517 |     |   |   | (7,416       | ) |   |   | (4,266 | ) |   |   | 48,025 |   |   |   | 51,251 |   |
| Unpatented technology               |   |                  | 3,065  |   |                     |   | 3,039  |     |   |   | (2,709       | ) |   |   | (1,851 | ) |   |   | 356 |   |   |   | 1,188 |   |
| Trademarks, trade names             |   |                  | 3,573  |   |                     |   | 3,562  |     |   |   | (1,336       | ) |   |   | (930 | ) |   |   | 2,237 |   |   |   | 2,632 |   |
| Service know-how                    |   |                  | 1,330  |   |                     |   | 1,330  |     |   |   | (321         | ) |   |   | (255 | ) |   |   | 1,009 |   |   |   | 1,075 |   |
| Other                               |   |                  | 149    |   |                     |   | 149    |     |   |   | (101         | ) |   |   | (86 | ) |   |   | 48 |   |   |   | 63 |   |
|                                |   | $                     | 68,505 |   |                     | $      | 68,296 |     |   | $      | (15,784      | ) |   | $ | (10,985 | ) |   | $ | 52,721 |   |   | $ | 57,311 |   |

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Table of Contents

|                              |   | June 30, 2009 |   |
|-----------------------------------|--------|---------------|--------|
| Balance, beginning of year        |   | $             | 26,715 |   |
| Additions related to acquisitions |   |          | 219    |   |
| Currency translation adjustment   |   |          | (150   | ) |
| Balance, end of year              |   | $             | 26,784 |   |

| ·   | Reorganization of the Company’s service business in Brazil. |
|--------------------|-------------------------------------------------------------------|

| ·   | Consolidation of the Company’s U.K. operations in the Salisbury facility, which will result in the closing of the Woking facility. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Reorganization of the Company’s operations in its Asia-Pacific segment. |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Reorganization of the Company’s management team in the Company’s offices in Arizona, Mexico and the Caribbean. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|                            |   | Severance |   |
|---------------------------------|--------|-----------|--------|
| Balance at March 31, 2009       |   | $         | -      |   |
| Additions                       |   |      | 1,905  |   |
| Cash payments                   |   |      | (360   | ) |
| Currency translation adjustment |   |      | 42     |   |
| Balance at June 30, 2009        |   | $         | 1,587  |   |

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|                            |   | Severance |   |
|---------------------------------|--------|-----------|--------|
| Balance at December 31, 2008    |   | $         | 7,724  |   |
| Additions                       |   |      | 124    |   |
| Cash payments                   |   |      | (182   | ) |
| Currency translation adjustment |   |      | (356   | ) |
| Balance at June 30, 2009        |   | $         | 7,310  |   |

|                                         |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|----------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                         |   | 2009                        |   |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
|                                         |   |                        |   |   |                      |   |   |   |   |   |   |   |
| Net revenue                                  |   | $                           | 53     |   |                      | $      | 1,244 |   |   | $ | 555 |   |   | $ | 2,435 |   |
| Costs of revenue                             |   |                        | 50     |   |                      |   | 1,056 |   |   |   | 482 |   |   |   | 2,043 |   |
| Gross profit                                 |   |                        | 3      |   |                      |   | 188 |   |   |   | 73 |   |   |   | 392 |   |
| Selling, general and administrative expenses |   |                        | (0.4   | )      |                      |   | (104 | ) |   |   | (14 | ) |   |   | (178 | ) |
| Income from discontinued operations          |   | $                           | 3      |   |                      | $      | 84 |   |   | $ | 59 |   |   | $ | 214 |   |

|                                |   | June 30, |   |   | December 31, |   |
|-------------------------------------|--------|----------|--------|--------|--------------|--------|
|                                |   | 2009     |   |   | 2008         |   |
|                                |   |     |   |   |         |   |
| Lease contracts receivable          |   | $        | 17,714 |   |         | $      | 18,919 |   |
| Unearned revenue                    |   |     | (2,328 | )      |         |   | (2,899 | ) |
| Allowance for bad debt              |   |     | (1,473 | )      |         |   | (1,236 | ) |
| Net investment in sales-type leases |   | $        | 13,913 |   |         | $      | 14,784 |   |

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|             |   | June 30, |   |   | December 31, |   |
|------------------|--------|----------|--------|--------|--------------|--------|
|             |   | 2009     |   |   | 2008         |   |
| Purchased parts  |   | $        | 7,364  |   |         | $      | 4,039 |   |
| Work in progress |   |     | 398    |   |         |   | 353 |   |
| Finished goods   |   |     | 23,330 |   |         |   | 27,289 |   |
|             |   | $        | 31,092 |   |         | $      | 31,681 |   |

|                                       |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|--------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                       |   | 2009                        |   |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
| Balance at beginning of period             |   | $                           | 6,445  |   |                      | $      | 1,704 |   |   | $ | 6,597 |   |   | $ | 1,754 |   |
| Warranty liability assumed on acquisitions |   |                        | -      |   |                      |   | 5,344 |   |   |   | - |   |   |   | 5,344 |   |
| Warranty charges                           |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
|   from normal operations              |   |                        | 1,341  |   |                      |   | 1,345 |   |   |   | 2,479 |   |   |   | 1,840 |   |
| Utilization of warranty liability          |   |                        | (1,412 | )      |                      |   | (1,453 | ) |   |   | (2,531 | ) |   |   | (1,998 | ) |
| Currency translation adjustment            |   |                        | 292    |   |                      |   | - |   |   |   | 121 |   |   |   | - |   |
| Balance at end of period                   |   | $                           | 6,666  |   |                      | $      | 6,940 |   |   | $ | 6,666 |   |   | $ | 6,940 |   |

On January 15, 2008, certain of the Company’s subsidiaries (the “Borrowers”) entered into a Loan and Security Agreement (the “Loan Agreement”) with a bank and other financial institutions. The Company and certain other subsidiaries are guarantors (together with the Borrowers, the “Obligors”)of the Borrowers’ obligations under the Loan Agreement. The bank also serves as agent for the lenders under the Loan Agreement (the “Agent”). The Loan Agreement provides for a revolving credit facility of up to $25.0 million. Under the Loan Agreement, if certain conditions are met, the Borrowers may request an increase in the credit facility to an aggregate total of up to $40.0 million. Amounts borrowed under the Loan Agreement and repaid or prepaid during the term may be reborrowed.Outstanding amounts under the Loan Agreement will bear interest, at the Borrower’s option, at either (i) LIBOR plus 175 basis points or (ii) the bank’s prime rate. All amounts outstanding under the Loan Agreement are due on January 15, 2011. 

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|                                 |   | June 30, |    |   | December 31, |   |
|--------------------------------------|--------|----------|---------|--------|--------------|--------|
|                                 |   | 2009     |    |   | 2008         |   |
| Credit Agreement                     |   | $        | 60,000  |   |         | $      | 60,000 |   |
| Interest conversion to debt          |   |     | 7,884   |   |         |   | 4,613 |   |
| Discount on warrants issued to FP II |   |     | (17,758 | )      |         |   | (17,758 | ) |
| Amortization of warrant discount     |   |     | 3,201   |   |         |   | 1,726 |   |
| Debt assumed on acquisitions         |   |     | -       |   |         |   | 185 |   |
| Other                                |   |     | -       |   |         |   | 3 |   |
|                                 |   | $        | 53,327  |   |         | $      | 48,769 |   |

    On funding of the loan under the Credit Agreement and the closing of the acquisition, FP II was granted a five-year warrant (the “Warrant”) to purchase approximately 10.5 million shares of the Company’s common stock at $5.00 per share. The estimated fair value of the Warrant at the date issued was $1.68 per share using a Black-Scholes option pricing model. The valuationdate for the Warrant was February 14, 2008, when all relevant terms and conditions of the debt agreement had been reached in accordance with Accounting Principles Board No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. The total fair value of the Warrant of $17.8 million was recorded as a discount to the acquisition financing and has been recognized in equity as additional paid in capital. The loan discountis being amortized as interest expense over the life of the loan and amounted to $3.2 million and $1.5 million for the six months ended June 30, 2009 and 2008, respectively. 

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|                                |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|-------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                |   | 2009                        |   |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
| Costs of revenue                    |   | $                           | 54     |   |                      | $      | 38 |   |   | $ | 123 |   |   | $ | 2 |   |
| Research and development            |   |                        | 6      |   |                      |   | 51 |   |   |   | 24 |   |   |   | 126 |   |
| Selling, general and administrative |   |                        | 397    |   |                      |   | 746 |   |   |   | 984 |   |   |   | 1,625 |   |
| Total                               |   | $                           | 457    |   |                      | $      | 835 |   |   | $ | 1,131 |   |   | $ | 1,753 |   |

|                                         |   | Number of Options |      |   | Weighted Average Exercise Price |   |   | Weighted Average Remaining Contractual Term |   |   | Aggregate Intrinsic Value (In Thousands) |   |
|----------------------------------------------|--------|-------------------|-----------|--------|---------------------------------|--------|--------|---------------------------------------------|--------|--------|------------------------------------------|--------|
|                                         |   |              |      |   |                            |   |   |                                        |   |   |                                     |   |
| Outstanding at June 30, 2009                 |   |              | 4,744,844 |   |                            | $      | 5.16   |                                        |   |   | 7.55                                     |   |   | $ | 249 |   |
|                                         |   |              |      |   |                            |   |   |                                        |   |   |                                     |   |   |   |   |   |
| Vested and expected to vest at June 30, 2009 |   |              | 4,523,990 |   |                            | $      | 5.25   |                                        |   |   | 7.45                                     |   |   | $ | 219 |   |
|                                         |   |              |      |   |                            |   |   |                                        |   |   |                                     |   |   |   |   |   |
| Exercisable at June 30, 2009                 |   |              | 2,934,567 |   |                            | $      | 6.33   |                                        |   |   | 6.23                                     |   |   | $ | 2 |   |

|                                     | Three Months Ended June 30,                                                                                   | Six Months Ended June 30, |
|------------------------------------------|---------------------------------------------------------------------------------------------------------------|---------------------------|
|                                     | 2009                                                                                                          |                      | 2008 |   | 2009 |   | 2008 |
| Weighted average risk free interest rate | 1.96%                                                                                                         |                      | 3.04% |   | 1.83% |   | 2.88% |
| Expected life of the options (in years)  | 4.91                                                                                                          |                      | 5.31 |   | 5.19 |   | 4.71 |
| Expected stock price volatility          | 73.2%                                                                                                         |                      | 47.6% |   | 71.2% |   | 47.8% |
| Expected dividend yield                  |                   - |                      |                - |   |                      - |   |                - |

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|                         |  Nonvested Shares Outstanding                                                   |  Weighted Average Grant Date Fair Value per Share |
|------------------------------|--------------------------------------------------------------------------------------|--------------------------------------------------------|
|                         |                                                                                 |                                                   |   |
| Balance at December 31, 2008 |              50,000 |                                                   |                  4.94 |
| Shares granted               |          1,119,000                      |                                                   |                  1.19 |
| Shares vested                |             (70,000)     |                                                   |                  3.83 |
| Balance at June 30, 2009     |          1,099,000                      |                                                   |                  1.19 |

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|                               |   | Three Months Ended June 30,             |    |   | Six Months Ended June 30,                   |   |
|------------------------------------|--------|-----------------------------------------|---------|--------|---------------------------------------------|--------|
|                               |   | 2009                                    |    |   | 2008                                        |   |   | 2009 |   |   | 2008 |   |
| Net Revenue                        |   |                                    |    |   |                                        |   |   |   |   |   |   |   |
|   Americas                    |   | $                                       | 36,245  |   |                                        | $      | 37,604 |   |   | $ | 61,257 |   |   | $ | 79,806 |   |
|   NEMEA                       |   |                                    | 25,490  |   |                                        |   | 31,227 |   |   |   | 46,445 |   |   |   | 33,579 |   |
|   SEMEA                       |   |                                    | 31,540  |   |                                        |   | 41,318 |   |   |   | 59,297 |   |   |   | 56,100 |   |
|   Asia-Pacific                |   |                                    | 13,554  |   |                                        |   | 14,031 |   |   |   | 23,445 |   |   |   | 25,200 |   |
|                               |   | $                                       | 106,829 |   |                                        | $      | 124,180 |   |   | $ | 190,444 |   |   | $ | 194,685 |   |
|                               |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                               |   | Three Months Ended June 30,             |    |   | Six Months Ended June 30,                   |   |
|                               |   |                                    | 2009    |   |                                        |   | 2008 |   |   |   | 2009 |   |   |   | 2008 |   |
| Operating Income                   |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|   Americas                    |   | $                                       | 5,968   |   |                                        | $      | 3,520 |   |   | $ | 8,270 |   |   | $ | 11,310 |   |
|   NEMEA                       |   |                                    | 4,627   |   |                                        |   | 3,799 |   |   |   | 7,530 |   |   |   | 4,763 |   |
|   SEMEA                       |   |                                    | 6,237   |   |                                        |   | 5,314 |   |   |   | 11,491 |   |   |   | 8,468 |   |
|   Asia-Pacific                |   |                                    | 3,628   |   |                                        |   | 2,347 |   |   |   | 5,116 |   |   |   | 4,610 |   |
|   Shared Cost Centers         |   |                                    | (17,353 | )      |                                        |   | (23,052 | ) |   |   | (35,795 | ) |   |   | (39,418 | ) |
|   Total segment income (loss) |   | $                                       | 3,107   |   |                                        | $      | (8,072 | ) |   | $ | (3,388 | ) |   | $ | (10,267 | ) |
|                               |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                    |   |                                    | 52      |   |                                        |   | 322 |   |   |   | 129 |   |   |   | 1,119 |   |
| Interest expense                   |   |                                    | (2,526  | )      |                                        |   | (2,512 | ) |   |   | (4,976 | ) |   |   | (2,512 | ) |
| Foreign currency gain (loss)       |   |                                    | 627     |   |                                        |   | (254 | ) |   |   | (70 | ) |   |   | (205 | ) |
| Other expense                      |   |                                    | 309     |   |                                        |   | 70 |   |   |   | 321 |   |   |   | 149 |   |
| Income (loss) before income taxes  |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |
|   and discontinued operations |   | $                                       | 1,569   |   |                                        | $      | (10,446 | ) |   | $ | (7,984 | ) |   | $ | (11,716 | ) |
|                               |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|                               |   |       June 30, |    |   |       December 31, |   |   |   |   |   |   |   |   |   |
|                               |   |                                    | 2009    |   |                                        |   | 2008 |   |   |   |   |   |   |   |   |   |
| Total Assets                       |   |                                    |    |   |                                        |   |   |   |   |   |   |   |   |   |   |   |
|   Americas                    |   | $                                       | 56,189  |   |                                        | $      | 61,813 |   |   |   |   |   |   |   |   |   |
|   NEMEA                       |   |                                    | 105,186 |   |                                        |   | 99,909 |   |   |   |   |   |   |   |   |   |
|   SEMEA                       |   |                                    | 80,018  |   |                                        |   | 79,132 |   |   |   |   |   |   |   |   |   |
|   Asia-Pacific                |   |                                    | 29,558  |   |                                        |   | 35,840 |   |   |   |   |   |   |   |   |   |
|   Shared Cost Centers         |   |                                    | 20,282  |   |                                        |   | 29,606 |   |   |   |   |   |   |   |   |   |
|                               |   | $                                       | 291,232 |   |                                        | $      | 306,300 |   |   |   |   |   |   |   |   |   |

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|                                    |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |   |
|-----------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                    |   | 2009                        |   |   | 2008                      |   |   | 2009 |   |   | 2008 |   |
| Net income (loss)                       |   | $                           | 1,255  |   |                      | $      | (10,895 | ) |   | $ | (8,670 | ) |   | $ | (11,227 | ) |
| Foreign currency translation adjustment |   |                        | 5,202  |   |                      |   | 1,499 |   |   |   | 1,918 |   |   |   | 1,499 |   |
| Total comprehensive income (loss)       |   | $                           | 6,457  |   |                      | $      | (9,396 | ) |   | $ | (6,752 | ) |   | $ | (9,728 | ) |

|                                                  | Three Months Ended June 30,                                                                                                                       |   |  Six Months Ended June 30,                                                                                                                                                                                           |
|-------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                  |  2009                                                                                                                                        |   |  2008                                                                                                                                                                                                                |   |  2009 |   |  2008 |
| Shares used in basic income (loss) per                |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|    share computation (weighted average      |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|    common shares outstanding)               |                   53,514,573                            |   |                   53,342,947                                                                                                    |   |              53,459,082 |   |                53,283,760 |
| Dilutive effect of stock options and                  |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|    stock awards                             |                        233,772 |   |                                     - |   |                                 - |   |                                  - |
| Shares used in diluted income per                     |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|    share computation                        |                  53,748,345                                  |   |                   53,342,947                                                                                                    |   |              53,459,082 |   |                53,283,760 |
|                                                  |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
| Options, stock awards and warrants that               |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|   could potentially dilute income per share      |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|   in the future that were not included           |                                                                                                                                              |   |                                                                                                                                                                                                                      |   |   |   |   |
|   in the computation of diluted income per share |                    16,154,554 (a)             |   |                    14,905,022 (b)                                                                                          |   |               16,238,507 (b) |   |  14,905,300 (b) |

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Item 2

|   | • |   | with regard to our recent acquisition and ongoing integration of TeT: (i) the inability to assimilate the technologies, operations and personnel of TeT; (ii) the disruption of our existing business, including the diversion of management attention and the redeployment of resources; (iii) the loss of customers; (iv) thepossibility of our entering markets in which we have limited prior experience; (v) the loss of key employees of TeT; and (vi) the inability to obtain the desired strategic and financial benefits from the acquisition; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |
|   | • |   | the volatility of our financial results and our stock price;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |    |
|   | • |   | the loss of  key customers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |    |
|   | • |   | defects in our products;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |    |
|   | • |   | the accumulation of excess and obsolete inventory;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    |
|   | • |   | breaches in the security of transactions involving our products;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |    |
|   | • |   | our inability to adequately protect our proprietary technology;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |    |
|   | • |   | our technology infringing the proprietary rights of third parties;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |    |
|   | • |   | a disruption in manufacturing of our third-party manufacturers or suppliers;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |    |
|   | • |   | a disruption, including those caused by changes in component lead-times, in the supply of components to our third-party manufactures by their suppliers;                                                                                                                                                                                                                                                                                                                                                                                                                              |

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|   |    |
|--------|---------|
|   | • |   | risks associated with our dependence on single-source suppliers; |
|   |    |
|   | • |   | our ability to timely and successfully introduce new products and product families on which our future sales will be substantially dependent, and to transition legacy products through end-of-life; |
|   |    |
|   | • |   | our transition to a contract manufacturing model; |
|   |    |   |   |
|   | • |   | the challenges posed by conducting business in international markets; |
|   |    |
|   | • |   | fluctuations in currency exchange rates; |
|   |    |
|   | • |   | the loss of a member of our senior management team or other key employees; |
|   |    |
|   | • |   | risks associated with acquisitions and other strategic investments; |
|   |    |
|   | • |   | force majeure events, including any such events that may cause interruptions or delays in service from our data center hosting facilities or those of third parties we contract with for such facilities, which could impair the delivery of our services and harm our business; |
|   |    |
|   | • |   | uncertainties related to country-specific legal and regulatory requirements, including product-related regulations, requirements and certifications, and tax assessments and interpretations; |
|   |    |   |   |
|   | • |   | our ability to maintain the quality of our internal control over financial reporting; |
|   |    |
|   | • |   | our ability to assimilate and integrate technologies or businesses we may acquire in the future; |
|   |    |
|   | • |   | the highly-competitive nature of the markets in which we compete; |
|   |    |
|   | • |   | industry and technological developments in the markets in which we sell our products and services; |
|   |    |
|   | • |   | the impact of industry standards, certifications and government regulations to which our products are subject; |
|   |    |
|   | • |   | the impact of SEC regulations and SEC review of our periodic filings; |
|   |    |
|   | • |   | the anti-takeover effects of certain provisions in our charter, bylaws and Delaware law; |
|   |    |
|   | • |   | the dilution of our stock price caused by the exercise of outstanding warrants and options; |
|   |    |
|   | • |   | our lack of a plan to pay dividends on our common stock in the foreseeable future; |
|   |    |
|   | • |   | the impact of the current global economic downturn on our ability to acquire sufficient capital to support our operations; |
|   |    |
|   | • |   | our ability to repay outstanding debt, including amounts owed to FP II; and |
|   |    |
|   | • |   | our ability to obtain additional financing, if needed, to meet future capital and working capital requirements of our business on satisfactory terms. |

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| ·   | Reorganization of our service business in Brazil. |
|--------------------|---------------------------------------------------|

| ·   | Consolidation of our U.K. operations in our Salisbury facility, which will result in the closing of the Woking facility. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------|

| ·   | Reorganization of our operations in our Asia-Pacific segment. |
|--------------------|---------------------------------------------------------------|

| ·   | Reorganization of our management team in our offices in Arizona, Mexico and the Caribbean. |
|--------------------|-------------------------------------------------------------------------------------------------|

|                            |   | Severance |   |
|---------------------------------|--------|-----------|--------|
| Balance at March 31, 2009       |   | $         | -      |   |
| Additions                       |   |      | 1,905  |   |
| Cash payments                   |   |      | (360   | ) |
| Currency translation adjustment |   |      | 42     |   |
| Balance at June 30, 2009        |   | $         | 1,587  |   |

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|                                               |   | Three Months Ended June 30, |    |
|----------------------------------------------------|--------|-----------------------------|---------|
|                                               |   | 2009                        |    |   | % of Revenue |   |   | 2008 |   |   | % of Revenue |   |   | Dollar Change |   |
| (Amounts in thousands)                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net revenue:                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   | $                           | 79,672  |   |   |   | 74.6 | % |   | $ | 92,774 |   |   |   | 74.7 | % |   | $ | (13,102 | ) |
|   Service                                     |   |                        | 27,157  |   |   |   | 25.4 | % |   |   | 31,406 |   |   |   | 25.3 | % |   |   | (4,249 | ) |
|   Total net revenue                           |   |                        | 106,829 |   |   |   | 100.0 | % |   |   | 124,180 |   |   |   | 100.0 | % |   |   | (17,351 | ) |
| Costs of revenue:                                  |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   |                        | 50,291  |   |   |   | 63.1 | % |   |   | 64,653 |   |   |   | 69.7 | % |   |   | (14,362 | ) |
|   Service                                     |   |                        | 21,703  |   |   |   | 79.9 | % |   |   | 24,886 |   |   |   | 79.2 | % |   |   | (3,183 | ) |
|   Amortization of purchased intangible assets |   |                        | 706     |   |   |   | 0.7 | % |   |   | 1,058 |   |   |   | 0.9 | % |   |   | (352 | ) |
|   Total costs of revenue                      |   |                        | 72,700  |   |   |   | 68.1 | % |   |   | 90,597 |   |   |   | 73.0 | % |   |   | (17,897 | ) |
| Gross profit:                                      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   |                        | 29,381  |   |   |   | 36.9 | % |   |   | 28,121 |   |   |   | 30.3 | % |   |   | 1,260 |   |
|   Service                                     |   |                        | 5,454   |   |   |   | 20.1 | % |   |   | 6,520 |   |   |   | 20.8 | % |   |   | (1,066 | ) |
|   Amortization of purchased intangible assets |   |                        | (706    | ) |   |   | -0.7 | % |   |   | (1,058 | ) |   |   | -0.9 | % |   |   | 352 |   |
|   Total gross profit                          |   |                        | 34,129  |   |   |   | 31.9 | % |   |   | 33,583 |   |   |   | 27.0 | % |   |   | 546 |   |
| Operating expenses:                                |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research and development                    |   |                        | 10,581  |   |   |   | 9.9 | % |   |   | 14,892 |   |   |   | 12.0 | % |   |   | (4,311 | ) |
|   Selling, general and administrative         |   |                        | 18,941  |   |   |   | 17.7 | % |   |   | 24,803 |   |   |   | 20.0 | % |   |   | (5,862 | ) |
|   Amortization of purchased intangible assets |   |                        | 1,500   |   |   |   | 1.4 | % |   |   | 1,960 |   |   |   | 1.6 | % |   |   | (460 | ) |
|   Total operating expenses                    |   |                        | 31,022  |   |   |   | 29.0 | % |   |   | 41,655 |   |   |   | 33.5 | % |   |   | (10,633 | ) |
| Operating income (loss)                            |   |                        | 3,107   |   |   |   | 2.9 | % |   |   | (8,072 | ) |   |   | -6.5 | % |   |   | 11,179 |   |
| Interest income                                    |   |                        | 52      |   |   |   | 0.0 | % |   |   | 322 |   |   |   | 0.3 | % |   |   | (270 | ) |
| Interest expense                                   |   |                        | (2,526  | ) |   |   | -2.4 | % |   |   | (2,512 | ) |   |   | -2.0 | % |   |   | (14 | ) |
| Foreign currency gain (loss)                       |   |                        | 627     |   |   |   | 0.6 | % |   |   | (254 | ) |   |   | -0.2 | % |   |   | 881 |   |
| Other income                                       |   |                        | 309     |   |   |   | 0.3 | % |   |   | 70 |   |   |   | 0.1 | % |   |   | 239 |   |
| Non-operating expense, net                         |   |                        | (1,538  | ) |   |   | -1.4 | % |   |   | (2,374 | ) |   |   | -1.9 | % |   |   | 836 |   |
| Income (loss) before income taxes and              |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   discontinued operations                     |   |                        | 1,569   |   |   |   | 1.5 | % |   |   | (10,446 | ) |   |   | -8.4 | % |   |   | 12,015 |   |
| Income tax provision                               |   |                        | (311    | ) |   |   | -0.3 | % |   |   | (673 | ) |   |   | -0.5 | % |   |   | 362 |   |
| Income (loss) before discontinued operations       |   |                        | 1,258   |   |   |   | 1.2 | % |   |   | (11,119 | ) |   |   | -9.0 | % |   |   | 12,377 |   |
| Income (loss) from discontinued operations         |   |                        | (3      | ) |   |   | 0.0 | % |   |   | 224 |   |   |   | 0.2 | % |   |   | (227 | ) |
| Net income (loss)                                  |   | $                           | 1,255   |   |   |   | 1.2 | % |   | $ | (10,895 | ) |   |   | -8.8 | % |   | $ | 12,150 |   |
|                                               |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted income (loss) per share          |   | $                           | 0.02    |   |   |   |   |   |   | $ | (0.20 | ) |   |   |   |   |   |   |   |   |

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|                                               |   | Six Months Ended June 30, |    |
|----------------------------------------------------|--------|---------------------------|---------|
|                                               |   | 2009                      |    |   | % of Revenue |   |   | 2008 |   |   | % of Revenue |   |   | Dollar Change |   |
| (Amounts in thousands)                             |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Net revenue:                                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   | $                         | 137,577 |   |   |   | 72.2 | % |   | $ | 142,358 |   |   |   | 73.1 | % |   | $ | (4,781 | ) |
|   Service                                     |   |                      | 52,867  |   |   |   | 27.8 | % |   |   | 52,327 |   |   |   | 26.9 | % |   |   | 540 |   |
|   Total net revenue                           |   |                      | 190,444 |   |   |   | 100.0 | % |   |   | 194,685 |   |   |   | 100.0 | % |   |   | (4,241 | ) |
| Costs of revenue:                                  |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   |                      | 89,201  |   |   |   | 64.8 | % |   |   | 97,903 |   |   |   | 68.8 | % |   |   | (8,702 | ) |
|   Service                                     |   |                      | 41,414  |   |   |   | 78.3 | % |   |   | 42,498 |   |   |   | 81.2 | % |   |   | (1,084 | ) |
|   Amortization of purchased intangible assets |   |                      | 1,381   |   |   |   | 0.7 | % |   |   | 1,141 |   |   |   | 0.6 | % |   |   | 240 |   |
|   Total costs of revenue                      |   |                      | 131,996 |   |   |   | 69.3 | % |   |   | 141,542 |   |   |   | 72.7 | % |   |   | (9,546 | ) |
| Gross profit:                                      |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Product                                     |   |                      | 48,376  |   |   |   | 35.2 | % |   |   | 44,455 |   |   |   | 31.2 | % |   |   | 3,921 |   |
|   Service                                     |   |                      | 11,453  |   |   |   | 21.7 | % |   |   | 9,829 |   |   |   | 18.8 | % |   |   | 1,624 |   |
|   Amortization of purchased intangible assets |   |                      | (1,381  | ) |   |   | -0.7 | % |   |   | (1,141 | ) |   |   | -0.6 | % |   |   | (240 | ) |
|   Total gross profit                          |   |                      | 58,448  |   |   |   | 30.7 | % |   |   | 53,143 |   |   |   | 27.3 | % |   |   | 5,305 |   |
| Operating expenses:                                |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Research and development                    |   |                      | 21,387  |   |   |   | 11.2 | % |   |   | 21,004 |   |   |   | 10.8 | % |   |   | 383 |   |
|   Selling, general and administrative         |   |                      | 37,520  |   |   |   | 19.7 | % |   |   | 40,314 |   |   |   | 20.7 | % |   |   | (2,794 | ) |
|   Amortization of purchased intangible assets |   |                      | 2,929   |   |   |   | 1.5 | % |   |   | 2,092 |   |   |   | 1.1 | % |   |   | 837 |   |
|   Total operating expenses                    |   |                      | 61,836  |   |   |   | 32.5 | % |   |   | 63,410 |   |   |   | 32.6 | % |   |   | (1,574 | ) |
| Operating loss                                     |   |                      | (3,388  | ) |   |   | -1.8 | % |   |   | (10,267 | ) |   |   | -5.3 | % |   |   | 6,879 |   |
| Interest income                                    |   |                      | 129     |   |   |   | 0.1 | % |   |   | 1,119 |   |   |   | 0.6 | % |   |   | (990 | ) |
| Interest expense                                   |   |                      | (4,976  | ) |   |   | -2.6 | % |   |   | (2,512 | ) |   |   | -1.3 | % |   |   | (2,464 | ) |
| Foreign currency loss                              |   |                      | (70     | ) |   |   | 0.0 | % |   |   | (205 | ) |   |   | -0.1 | % |   |   | 135 |   |
| Other income                                       |   |                      | 321     |   |   |   | 0.2 | % |   |   | 149 |   |   |   | 0.1 | % |   |   | 172 |   |
| Non-operating expense, net                         |   |                      | (4,596  | ) |   |   | -2.4 | % |   |   | (1,449 | ) |   |   | -0.7 | % |   |   | (3,147 | ) |
| Loss before income taxes and                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   discontinued operations                     |   |                      | (7,984  | ) |   |   | -4.2 | % |   |   | (11,716 | ) |   |   | -6.0 | % |   |   | 3,732 |   |
| Income tax provision                               |   |                      | (752    | ) |   |   | -0.4 | % |   |   | (10 | ) |   |   | 0.0 | % |   |   | (742 | ) |
| Loss before discontinued operations                |   |                      | (8,736  | ) |   |   | -4.6 | % |   |   | (11,726 | ) |   |   | -6.0 | % |   |   | 2,990 |   |
| Income from discontinued operations                |   |                      | 66      |   |   |   | 0.0 | % |   |   | 499 |   |   |   | 0.3 | % |   |   | (433 | ) |
| Net loss                                           |   | $                         | (8,670  | ) |   |   | -4.6 | % |   | $ | (11,227 | ) |   |   | -5.8 | % |   | $ | 2,557 |   |
|                                               |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted loss per share                   |   | $                         | (0.16   | ) |   |   |   |   |   | $ | (0.21 | ) |   |   |   |   |   |   |   |   |

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|                          |   | Three Months Ended June 30, |    |
|-------------------------------|--------|-----------------------------|---------|
|                          |   |                        |    |   | % of |   |   |   |   |   | % of |   |   | Dollar |   |
|                          |   | 2009                        |    |   | Revenue |   |   | 2008 |   |   | Revenue |   |   | Change |   |
| Net revenue:                  |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Americas               |   | $                           | 36,245  |   |   |   | 33.9 | % |   | $ | 37,604 |   |   |   | 30.3 | % |   | $ | (1,359 | ) |
|   NEMEA                  |   |                        | 25,490  |   |   |   | 23.9 | % |   |   | 31,227 |   |   |   | 25.1 | % |   | $ | (5,737 | ) |
|   SEMEA                  |   |                        | 31,540  |   |   |   | 29.5 | % |   |   | 41,318 |   |   |   | 33.3 | % |   | $ | (9,778 | ) |
|   Asia-Pacific           |   |                        | 13,554  |   |   |   | 12.7 | % |   |   | 14,031 |   |   |   | 11.3 | % |   | $ | (477 | ) |
|                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total net revenue             |   | $                           | 106,829 |   |   |   | 100.0 | % |   | $ | 124,180 |   |   |   | 100.0 | % |   | $ | (17,351 | ) |
|                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Americas               |   | $                           | 5,968   |   |   |   | 5.6 | % |   | $ | 3,520 |   |   |   | 2.8 | % |   |   | 2,448 |   |
|   NEMEA                  |   |                        | 4,627   |   |   |   | 4.3 | % |   |   | 3,799 |   |   |   | 3.1 | % |   |   | 828 |   |
|   SEMEA                  |   |                        | 6,237   |   |   |   | 5.8 | % |   |   | 5,314 |   |   |   | 4.3 | % |   |   | 923 |   |
|   Asia-Pacific           |   |                        | 3,628   |   |   |   | 3.4 | % |   |   | 2,347 |   |   |   | 1.9 | % |   |   | 1,281 |   |
|   Shared Cost Centers    |   |                        | (17,353 | ) |   |   | -16.2 | % |   |   | (23,052 | ) |   |   | -18.6 | % |   |   | 5,699 |   |
|                          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating income (loss) |   | $                           | 3,107   |   |   |   | 2.9 | % |   | $ | (8,072 | ) |   |   | -6.5 | % |   | $ | 11,179 |   |

|                       |   | Six Months Ended June 30, |    |
|----------------------------|--------|---------------------------|---------|
|                       |   |                      |    |   | % of |   |   |   |   |   | % of |   |   | Dollar |   |
|                       |   | 2009                      |    |   | Revenue |   |   | 2008 |   |   | Revenue |   |   | Change |   |
| Net revenue:               |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Americas            |   | $                         | 61,257  |   |   |   | 32.2 | % |   | $ | 79,806 |   |   |   | 41.0 | % |   | $ | (18,549 | ) |
|   NEMEA               |   |                      | 46,445  |   |   |   | 24.4 | % |   |   | 33,579 |   |   |   | 17.2 | % |   | $ | 12,866 |   |
|   SEMEA               |   |                      | 59,297  |   |   |   | 31.1 | % |   |   | 56,100 |   |   |   | 28.8 | % |   | $ | 3,197 |   |
|   Asia-Pacific        |   |                      | 23,445  |   |   |   | 12.3 | % |   |   | 25,200 |   |   |   | 12.9 | % |   | $ | (1,755 | ) |
|                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total net revenue          |   | $                         | 190,444 |   |   |   | 100.0 | % |   | $ | 194,685 |   |   |   | 100.0 | % |   | $ | (4,241 | ) |
|                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):   |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Americas            |   | $                         | 8,270   |   |   |   | 4.3 | % |   | $ | 11,310 |   |   |   | 5.8 | % |   |   | (3,040 | ) |
|   NEMEA               |   |                      | 7,530   |   |   |   | 4.0 | % |   |   | 4,763 |   |   |   | 2.4 | % |   |   | 2,767 |   |
|   SEMEA               |   |                      | 11,491  |   |   |   | 6.0 | % |   |   | 8,468 |   |   |   | 4.3 | % |   |   | 3,023 |   |
|   Asia-Pacific        |   |                      | 5,116   |   |   |   | 2.7 | % |   |   | 4,610 |   |   |   | 2.4 | % |   |   | 506 |   |
|   Shared Cost Centers |   |                      | (35,795 | ) |   |   | -18.8 | % |   |   | (39,418 | ) |   |   | -20.2 | % |   |   | 3,623 |   |
|                       |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total operating loss       |   | $                         | (3,388  | ) |   |   | -1.8 | % |   | $ | (10,267 | ) |   |   | -5.3 | % |   | $ | 6,879 |   |

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Item 3

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Item 4

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Item 1A

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Item 4

| Nominee          | For        | Withheld   | Abstentions | Broker Non-Votes |
|------------------|------------|------------|-------------|------------------|
| Johann J. Dreyer | 32,054,250 | 12,159,602 | —     | —          |
| Keith B. Geeslin | 32,385,321 | 11,828,531 | —     | —          |
| Ian K. Marsh     | 31,608,251 | 12,605,601 | —     | —          |
| Phillip J. Riese | 28,766,559 | 15,447,293 | —     | —          |

| For        | Against | Abstain | Broker Non-Votes |
|------------|---------|---------|------------------|
| 43,380,309 | 825,626 | 7,917   | —          |

Item 5

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Item 6

| Exhibit Number | Description of Exhibit                                                                                                                                                                                                                                                                                                        |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1            | Amended and Restated Certificate of Incorporation of Hypercom Corporation (incorporated by reference to Exhibit 3.1 to Hypercom Corporation’s Registration Statement on Form S-1 (Registration No. 333-35641))                                                                                                               |
| 3.2            | Second Amended and Restated Bylaws of Hypercom Corporation (incorporated by reference to Exhibit 3.1 to Hypercom Corporation’s Current Report on Form 8-K filed on November 6, 2006)                                                                                                                                         |
| 4.1            | Warrant to Purchase Common Stock dated April 1, 2008 (incorporated by reference to Exhibit 4.1 to Hypercom Corporation’s Current Report on Form 8-K filed on April 2, 2008, as amended by the Current Report on Form 8-K/A filed on June 16, 2008)                                                                      |
| 4.2            | Registration Rights Agreement, dated as of April 1, 2008, by and between Hypercom Corporation and FP Hypercom Holdco, LLC (incorporated by reference to Exhibit 4.2 to Hypercom Corporation’s Current Report on Form 8-K filed on April 2, 2008, as amended by the Current Report on Form 8-K/A filed on June 16, 2008) |
| 10.1           | Amendment No. 2 to Employment Agreement, dated April 29, 2009, by and between Hypercom Corporation and Norman Stout (incorporated by reference to Exhibit 10.1 to Hypercom Corporation’s Current Report on Form 8-K filed on April 30, 2009)                                                                                 |
| 10.2           | Separation Agreement and General Release, dated May 19, 2009, by and between Hypercom Corporation and Robert M. Vreeland (incorporated by reference to Exhibit 10.1 to Hypercom Corporation’s Current Report on Form 8-K filed on May 22, 2009)                                                                              |
| 10.3           | Employment Contract, dated July 2, 2009, by and between Hypercom France SARL and Henry Gaillard *                                                                                                                                                                                                                                  |
| 10.4           | Change of Control Agreement, dated August 6, 2009, by and between Hypercom Corporation and Shawn Rathje *                                                                                                                                                                                                                          |
| 31.1           | Certification of Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *                                                                                                                                                                                                                   |
| 31.2           | Certification of Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *                                                                                                                                                                                                                   |
| 32             | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **                                                                                                                                                   |

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SIGNATURES

| Date: August 7, 2009 | By: /s/ Philippe Tartavull |
|----------------------|----------------------------|

| Date: August 7, 2009 | By: /s/ Thomas B. Sabol |
|----------------------|-------------------------|

| Date: August 7, 2009 | By: /s/ Shawn C. Rathje |
|----------------------|-------------------------|

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