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

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

|   |
|---|
|   |  |
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|        |
|--------|
|        |  |
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

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

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

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |
| Delaware                                                      |   | 95-2390133 |
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |
|                                                          |   |   |
| 3888 Calle Fortunada, San Diego, California                   |   | 92123 |
| (Address of principal executive offices)                      |   | (Zip Code) |

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

|                                   |
|-----------------------------------|
|                                   |  |  |  |  |  |  |
| Large accelerated filer |   | ¨ |    | Accelerated filer |   | x |
|                              |   |   |   |   |   |   |
| Non-accelerated filer             |   | ¨  (Do not check if a smaller reporting company) |    | Smaller reporting company |   | ¨ |

----

Table of Contents

|                                      |
|--------------------------------------|
|                                      |  |  |
|                                 |   | Page |
|                                 |   |   |
| PART I – Financial Information | 3 |
|                                 |   |   |
| Item 1.                         | Financial Statements (Unaudited): | 3 |
|                                 |   |   |
|                                 | Condensed Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012 | 4 |
|                                 |   |   |
|                                 | Condensed Consolidated Statements of Operations – Three and nine months ended September 30, 2013 and 2012 | 5 |
|                                 |   |   |
|                                 | Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and nine months ended September 30, 2013 and 2012 | 6 |
|                                 |   |   |
|                                 | Condensed Consolidated Statements of Cash Flows – Nine months ended September 30, 2013 and 2012 | 7 |
|                                 |   |   |
|                                 | Notes to Condensed Consolidated Financial Statements | 8 |
|                                 |   |   |
| Item 2.                         | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 |
|                                 |   |   |
| Item 3.                         | Quantitative and Qualitative Disclosures About Market Risk | 37 |
|                                 |   |   |
| Item 4.                         | Controls and Procedures | 37 |
|                                 |   |   |
| PART II – Other Information    | 39 |
|                                 |   |   |
| Item 1.                         | Legal Proceedings | 39 |
|                                 |   |   |
| Item 1A.                        | Risk Factors | 39 |
|                                 |   |   |
| Item 6.                         | Exhibits | 39 |
|                                 |   |   |
| Signatures                           | 40 |

----

Table of Contents

|         |                      |
|---------|----------------------|
| Item 1. | Financial Statements |

----

Table of Contents

|                                                                                                                                                                                        |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                        |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                   |   | September 30, 2013 |   | December 31, 2012 |
| ASSETS                                                                                                                                                                                 |   |   |   |   |
| Current assets:                                                                                                                                                                        |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                              |   | $ | 37,047 |  |   | $ | 28,739 |  |
| Restricted cash                                                                                                                                                                        |   | 4,050 |  |   | — |  |
| Trade and other accounts receivable, net of allowance for doubtful accounts of $133 and $157, at September 30, 2013 and December 31, 2012, respectively                      |   | 29,370 |  |   | 33,420 |  |
| Inventories                                                                                                                                                                            |   | 42,576 |  |   | 41,620 |  |
| Prepaid expenses and other current assets                                                                                                                                              |   | 3,190 |  |   | 3,228 |  |
| Total current assets                                                                                                                                                                   |   | 116,233 |  |   | 107,007 |  |
| Property and equipment, net                                                                                                                                                            |   | 41,976 |  |   | 36,235 |  |
| Intangible assets, net                                                                                                                                                                 |   | 420 |  |   | 669 |  |
| Goodwill                                                                                                                                                                               |   | 25,678 |  |   | 25,416 |  |
| Pension asset                                                                                                                                                                          |   | 7,733 |  |   | 6,939 |  |
| Other non-current assets                                                                                                                                                               |   | 331 |  |   | 206 |  |
| Total assets                                                                                                                                                                           |   | $ | 192,371 |  |   | $ | 176,472 |  |
| LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                             |   |   |   |   |
| Current liabilities:                                                                                                                                                                   |   |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                               |   | $ | 29,829 |  |   | $ | 27,181 |  |
| Accrued warranty                                                                                                                                                                       |   | 129 |  |   | 269 |  |
| Accrued employee compensation                                                                                                                                                          |   | 8,344 |  |   | 4,743 |  |
| Deferred revenue                                                                                                                                                                       |   | 2,594 |  |   | 6,408 |  |
| Short-term borrowings and current portion of long-term debt                                                                                                                            |   | 8,253 |  |   | 9,452 |  |
| Deferred tax liability                                                                                                                                                                 |   | 980 |  |   | 980 |  |
| Total current liabilities                                                                                                                                                              |   | 50,129 |  |   | 49,033 |  |
| Deferred tax liability, long-term                                                                                                                                                      |   | 1,376 |  |   | 1,384 |  |
| Long-term debt, excluding current portion                                                                                                                                              |   | 86 |  |   | 83 |  |
| Other long-term liabilities                                                                                                                                                            |   | 2,280 |  |   | 1,039 |  |
| Total liabilities                                                                                                                                                                      |   | 53,871 |  |   | 51,539 |  |
| Commitments and contingencies (Note 10)                                                                                                                                                |   |  |  |   |  |  |
| Stockholders’ equity:                                                                                                                                                            |   |   |   |   |
| Common stock, $0.10 par value per share, 40,000 shares authorized; 29,641 and 29,162 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively |   | 2,961 |  |   | 2,913 |  |
| Additional paid-in capital                                                                                                                                                             |   | 270,455 |  |   | 267,623 |  |
| Accumulated deficit                                                                                                                                                                    |   | (148,980 | ) |   | (158,134 | ) |
| Accumulated other comprehensive income                                                                                                                                                 |   | 14,064 |  |   | 12,531 |  |
| Total stockholders’ equity                                                                                                                                                       |   | 138,500 |  |   | 124,933 |  |
| Total liabilities and stockholders’ equity                                                                                                                                       |   | $ | 192,371 |  |   | $ | 176,472 |  |

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Table of Contents

|                                                      |
|------------------------------------------------------|
|                                                      |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                 |   | Three Months Ended |   | Nine Months Ended |
|                                                 |   | September 30, |   | September 30, |
|                                                 |   |   |   | 2012 |   |   |   | 2012 |
|                                                 |   | 2013 |   | (Restated) |   | 2013 |   | (Restated) |
| Revenue                                              |   | $ | 51,197 |  |   | $ | 42,713 |  |   | $ | 154,555 |  |   | $ | 114,755 |  |
| Cost of revenue                                      |   | 30,084 |  |   | 24,571 |  |   | 93,636 |  |   | 66,932 |  |
| Gross profit                                         |   | 21,113 |  |   | 18,142 |  |   | 60,919 |  |   | 47,823 |  |
| Operating expenses:                                  |   |   |   |   |   |   |   |   |
| Selling, general and administrative                  |   | 9,455 |  |   | 7,342 |  |   | 32,945 |  |   | 25,539 |  |
| Research and development                             |   | 5,450 |  |   | 5,084 |  |   | 16,851 |  |   | 15,948 |  |
| Total operating expenses                             |   | 14,905 |  |   | 12,426 |  |   | 49,796 |  |   | 41,487 |  |
| Income from operations                               |   | 6,208 |  |   | 5,716 |  |   | 11,123 |  |   | 6,336 |  |
| Interest expense, net                                |   | 36 |  |   | 56 |  |   | 121 |  |   | 138 |  |
| Amortization of debt discount and prepaid debt costs |   | 16 |  |   | 16 |  |   | 46 |  |   | 42 |  |
| Income from operations before income taxes           |   | 6,156 |  |   | 5,644 |  |   | 10,956 |  |   | 6,156 |  |
| Income tax provision                                 |   | 129 |  |   | 416 |  |   | 1,802 |  |   | 1,849 |  |
| Net income                                           |   | $ | 6,027 |  |   | $ | 5,228 |  |   | $ | 9,154 |  |   | $ | 4,307 |  |
| Net income per share:                                |   |   |   |   |   |   |   |   |
| Basic                                                |   | $ | 0.21 |  |   | $ | 0.18 |  |   | $ | 0.32 |  |   | $ | 0.15 |  |
| Diluted                                              |   | $ | 0.21 |  |   | $ | 0.18 |  |   | $ | 0.32 |  |   | $ | 0.15 |  |
| Weighted average common shares outstanding:          |   |   |   |   |   |   |   |   |
| Basic                                                |   | 28,884 |  |   | 28,736 |  |   | 28,857 |  |   | 28,511 |  |
| Diluted                                              |   | 28,940 |  |   | 28,748 |  |   | 28,883 |  |   | 28,695 |  |

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Table of Contents

|                                                                                                                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                       |   | Three Months Ended |   | Nine Months Ended |
|                                                                                                                                                                                                                                       |   | September 30, |   | September 30, |
|                                                                                                                                                                                                                                       |   |   |   | 2012 |   |   |   | 2012 |
|                                                                                                                                                                                                                                       |   | 2013 |   | (Restated) |   | 2013 |   | (Restated) |
| Net income                                                                                                                                                                                                                                 |   | $ | 6,027 |  |   | $ | 5,228 |  |   | $ | 9,154 |  |   | $ | 4,307 |  |
| Other comprehensive income (loss), net of tax:                                                                                                                                                                                             |   |   |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                                                                                                                                                                    |   | 3,778 |  |   | 718 |  |   | 1,391 |  |   | (176 | ) |
| Defined benefit pension plan, net of tax:                                                                                                                                                                                                  |   |   |   |   |   |   |   |   |
| Amortization of deferred loss, net of tax benefit of $7 and $8 for the three months ended September 30, 2013 and 2012, respectively; net of tax benefit of $21 and $24 for the nine months ended September 30, 2013 and 2012, respectively |   | 38 |  |   | 45 |  |   | 114 |  |   | 138 |  |
| Amortization of prior service cost, net of tax benefit of $1 for both the three months ended September 30, 2013 and 2012; net of tax benefit of $7 and $5 for the nine months ended September 30, 2013 and 2012, respectively    |   | 10 |  |   | 10 |  |   | 28 |  |   | 27 |  |
| Other comprehensive income (loss), net of tax                                                                                                                                                                                              |   | 3,826 |  |   | 773 |  |   | 1,533 |  |   | (11 | ) |
| Comprehensive income                                                                                                                                                                                                                       |   | $ | 9,853 |  |   | $ | 6,001 |  |   | $ | 10,687 |  |   | $ | 4,296 |  |

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Table of Contents

|                                                                                             |
|---------------------------------------------------------------------------------------------|
|                                                                                             |  |  |  |  |  |  |  |  |
|                                                                                        |   | Nine Months Ended |
|                                                                                        |   | September 30, |
|                                                                                        |   |   |   | 2012 |
|                                                                                        |   | 2013 |   | (Restated) |
| OPERATING ACTIVITIES:                                                                       |   |   |   |   |
| Net income                                                                                  |   | $ | 9,154 |  |   | $ | 4,307 |  |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |   |   |   |   |
| Depreciation                                                                                |   | 6,518 |  |   | 5,104 |  |
| Amortization of intangible assets                                                           |   | 247 |  |   | 351 |  |
| Amortization of debt discount and prepaid debt costs                                        |   | 46 |  |   | 42 |  |
| Pension cost                                                                                |   | 15 |  |   | 135 |  |
| Stock-based compensation expense                                                            |   | 2,622 |  |   | 2,561 |  |
| Recovery of losses on accounts receivable                                                   |   | (24 | ) |   | (110 | ) |
| Changes in operating assets and liabilities:                                                |   |   |   |   |
| Trade and other accounts receivable                                                         |   | 4,081 |  |   | (10,782 | ) |
| Inventories                                                                                 |   | (861 | ) |   | (10,570 | ) |
| Prepaid expenses and other assets                                                           |   | (82 | ) |   | 339 |  |
| Accounts payable and accrued liabilities                                                    |   | 2,016 |  |   | (4,078 | ) |
| Deferred revenue                                                                            |   | (3,814 | ) |   | 4,107 |  |
| Accrued employee compensation                                                               |   | 3,570 |  |   | 723 |  |
| Deferred tax liability, long term                                                           |   | (8 | ) |   | (1,396 | ) |
| Other long-term liabilities                                                                 |   | 1,235 |  |   | (2,326 | ) |
| Net cash provided by (used in) operating activities                                         |   | 24,715 |  |   | (11,593 | ) |
| INVESTING ACTIVITIES:                                                                       |   |   |   |   |
| Purchases of property and equipment                                                         |   | (11,716 | ) |   | (13,121 | ) |
| Restricted cash                                                                             |   | (2,300 | ) |   | — |  |
| Net cash used in investing activities                                                       |   | (14,016 | ) |   | (13,121 | ) |
| FINANCING ACTIVITIES:                                                                       |   |   |   |   |
| Principal payments on long-term debt and short-term borrowings                              |   | (7,782 | ) |   | (6,890 | ) |
| Proceeds from long-term and short-term borrowings                                           |   | 6,475 |  |   | 11,230 |  |
| Proceeds from sale of common stock, net of offering costs                                   |   | — |  |   | 10,283 |  |
| Repurchase of shares                                                                        |   | (47 | ) |   | (319 | ) |
| Proceeds from issuance of common stock under equity compensation plans                      |   | 305 |  |   | 1,737 |  |
| Restricted cash - compensating balance                                                      |   | (1,750 | ) |   | — |  |
| Net cash (used in) provided by financing activities                                         |   | (2,799 | ) |   | 16,041 |  |
| Increase (decrease) in cash and cash equivalents from operations                            |   | 7,900 |  |   | (8,673 | ) |
| Effect of exchange rate changes on cash and cash equivalents                                |   | 408 |  |   | (543 | ) |
| Increase (decrease) in cash and cash equivalents                                            |   | 8,308 |  |   | (9,216 | ) |
| Cash and cash equivalents, beginning of period                                              |   | 28,739 |  |   | 29,289 |  |
| Cash and cash equivalents, end of period                                                    |   | $ | 37,047 |  |   | $ | 20,073 |  |

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Table of Contents

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Ultracapacitors: The Company’s primary focus, ultracapacitors, are energy storage devices that possess a unique combination of high power density, extremely long operational life and the ability to charge and discharge very rapidly. The Company’s ultracapacitor cells and multi-cell packs and modules provide highly reliable energy storage and power delivery solutions for applications in multiple industries, including transportation, automotive, information technology, renewable energy and consumer and industrial electronics. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | High-Voltage Capacitors: The Company’s CONDIS® high-voltage capacitors are extremely robust devices that are designed and manufactured to perform reliably for decades. These products include grading and coupling capacitors and capacitive voltage dividers that are used to ensure the safety and reliability of electric utility infrastructure and other applications involving transport, distribution and measurement of high-voltage electrical energy. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Radiation-Hardened Microelectronic Products: The Company’s radiation-hardened microelectronic products include high-performance, high-density power modules, memory modules and single board computers that incorporate our proprietary RADPAK® packaging and shielding technology and novel architectures that enable them to withstand environmental radiation effects and perform reliably in space. |

----

----

|                                                               |
|---------------------------------------------------------------|
|                                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                          |   | Three Months Ended |   | Nine Months Ended |
|                                                          |   | September 30, |   | September 30, |
|                                                          |   |   |   | 2012 |   |   |   | 2012 |
|                                                          |   | 2013 |   | (Restated) |   | 2013 |   | (Restated) |
| Numerator                                                     |   |   |   |   |   |   |   |   |
| Net income                                                    |   | $ | 6,027 |  |   | $ | 5,228 |  |   | $ | 9,154 |  |   | $ | 4,307 |  |
| Denominator                                                   |   |   |   |   |   |   |   |   |
| Weighted-average common shares outstanding                    |   | 28,884 |  |   | 28,736 |  |   | 28,857 |  |   | 28,511 |  |
| Effect of potentially dilutive securities:                    |   |   |   |   |   |   |   |   |
| Options to purchase common stock                              |   | 35 |  |   | 8 |  |   | 17 |  |   | 153 |  |
| Restricted stock awards                                       |   | 1 |  |   | 3 |  |   | 4 |  |   | 11 |  |
| Restricted stock unit awards                                  |   | 20 |  |   | — |  |   | 5 |  |   | 3 |  |
| Employee stock purchase plan                                  |   | — |  |   | 1 |  |   | — |  |   | 17 |  |
| Weighted-average common shares outstanding, assuming dilution |   | 28,940 |  |   | 28,748 |  |   | 28,883 |  |   | 28,695 |  |
| Net income per share                                          |   |   |   |   |   |   |   |   |
| Basic                                                         |   | $ | 0.21 |  |   | $ | 0.18 |  |   | $ | 0.32 |  |   | $ | 0.15 |  |
| Diluted                                                       |   | $ | 0.21 |  |   | $ | 0.18 |  |   | $ | 0.32 |  |   | $ | 0.15 |  |

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |  |  |  |  |
|                                         |   | Three Months Ended |   | Nine Months Ended |
|                                         |   | September 30, |   | September 30, |
|                                         |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Outstanding options to purchase common stock |   | 543 |  |   | 920 |  |   | 743 |  |   | 549 |  |
| Unvested restricted stock awards             |   | 455 |  |   | 337 |  |   | 455 |  |   | 338 |  |
| Unvested restricted stock unit awards        |   | — |  |   | 20 |  |   | 13 |  |   | 17 |  |

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|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Beginning in the period in which the investigation revealed arrangements regarding extended payment terms for certain sales to three distributors, the Company determined it is appropriate to defer revenue recognition on all sales to these distributors from the period of shipment to the period in which payment is received. For these distributors, revenue recognition in the period in which payment is received was determined to be appropriate beginning in the fourth quarter of 2011. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Beginning in the period in which the investigation revealed return rights and profit margin protection for one distributor, the Company determined it appropriate to defer revenue recognition on all sales to this distributor until the distributor confirmed with the Company that they are not entitled to any further returns or credits.  For this distributor, the deferral of revenue on this basis was determined to be appropriate beginning in the fourth quarter of 2011.  In the third quarter of 2013, the distributor confirmed with the Company that they are not entitled to any further returns or credits, and previous sales of $9.5 million for which revenue had been deferred were recognized as revenue. |

|         |                                                                                                                                                                                                                                                                                          |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For the arrangements with the non-distributor customer to honor transfer of title at a date later than the customer's purchase order indicated, the Company determined it appropriate to defer revenue recognition to the period in which the Company agreed to honor transfer of title. |

|         |                                                                                                                                                                                                                                                                                                                             |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For the individual transaction where a customer was given extended payment terms which were not considered when revenue was originally recognized in the first quarter of 2011, revenue recognition in the period in which payment was received, which was in the second quarter of 2011, was determined to be appropriate. |

----

----

|                                                      |
|------------------------------------------------------|
|                                                      |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                 |   | Three months ended September 30, 2012 |
|                                                 |   | As previously reported |   | Restatement Adjustments |   | Restated |
| Revenue                                              |   | $ | 43,907 |  |   | $ | (1,194 | ) |   | $ | 42,713 |  |
| Cost of revenue                                      |   | 25,534 |  |   | (963 | ) |   | 24,571 |  |
| Gross profit                                         |   | 18,373 |  |   | (231 | ) |   | 18,142 |  |
| Operating expenses:                                  |   |   |   |   |   |   |
| Selling, general and administrative                  |   | 7,344 |  |   | (2 | ) |   | 7,342 |  |
| Research and development                             |   | 5,084 |  |   | — |  |   | 5,084 |  |
| Total operating expenses                             |   | 12,428 |  |   | (2 | ) |   | 12,426 |  |
| Income from operations                               |   | 5,945 |  |   | (229 | ) |   | 5,716 |  |
| Interest expense, net                                |   | (56 | ) |   | — |  |   | (56 | ) |
| Amortization of debt discount and prepaid debt costs |   | (16 | ) |   | — |  |   | (16 | ) |
| Income from operations before income taxes           |   | 5,873 |  |   | (229 | ) |   | 5,644 |  |
| Income tax provision                                 |   | 470 |  |   | (54 | ) |   | 416 |  |
| Net income                                           |   | $ | 5,403 |  |   | $ | (175 | ) |   | $ | 5,228 |  |
| Net income per share:                                |   |   |   |   |   |   |
| Basic                                                |   | $ | 0.19 |  |   | $ | (0.01 | ) |   | $ | 0.18 |  |
| Diluted                                              |   | $ | 0.19 |  |   | $ | (0.01 | ) |   | $ | 0.18 |  |
| Weighted average common shares outstanding:          |   |   |   |   |   |   |
| Basic                                                |   | 28,736 |  |   |   |   | 28,736 |  |
| Diluted                                              |   | 28,748 |  |   |   |   | 28,748 |  |

----

|                                                      |
|------------------------------------------------------|
|                                                      |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                 |   | Nine Months Ended September 30, 2012 |
|                                                 |   | As previously reported |   | Restatement Adjustments |   | Restated |
| Revenue                                              |   | $ | 123,993 |  |   | $ | (9,238 | ) |   | $ | 114,755 |  |
| Cost of revenue                                      |   | 72,503 |  |   | (5,571 | ) |   | 66,932 |  |
| Gross profit                                         |   | 51,490 |  |   | (3,667 | ) |   | 47,823 |  |
| Operating expenses:                                  |   |   |   |   |   |   |
| Selling, general and administrative                  |   | 24,868 |  |   | 671 |  |   | 25,539 |  |
| Research and development                             |   | 15,974 |  |   | (26 | ) |   | 15,948 |  |
| Total operating expenses                             |   | 40,842 |  |   | 645 |  |   | 41,487 |  |
| Income from operations                               |   | 10,648 |  |   | (4,312 | ) |   | 6,336 |  |
| Interest expense, net                                |   | (138 | ) |   | — |  |   | (138 | ) |
| Amortization of debt discount and prepaid debt costs |   | (42 | ) |   | — |  |   | (42 | ) |
| Income from operations before income taxes           |   | 10,468 |  |   | (4,312 | ) |   | 6,156 |  |
| Income tax provision                                 |   | 1,903 |  |   | (54 | ) |   | 1,849 |  |
| Net income                                           |   | $ | 8,565 |  |   | $ | (4,258 | ) |   | $ | 4,307 |  |
| Net income per share:                                |   |   |   |   |   |   |
| Basic                                                |   | $ | 0.30 |  |   | $ | (0.15 | ) |   | $ | 0.15 |  |
| Diluted                                              |   | $ | 0.30 |  |   | $ | (0.15 | ) |   | $ | 0.15 |  |
| Weighted average common shares outstanding:          |   |   |   |   |   |   |
| Basic                                                |   | 28,511 |  |   |   |   | 28,511 |  |
| Diluted                                              |   | 28,695 |  |   |   |   | 28,695 |  |

----

|                                                                               |
|-------------------------------------------------------------------------------|
|                                                                               |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                          |   | Nine months ended September 30, 2012 |
|                                                                          |   | As previously reported |   | Restatement Adjustments |   | Restated |
| OPERATING ACTIVITIES:                                                         |   |   |   |   |   |   |
| Net income                                                                    |   | $ | 8,565 |  |   | $ | (4,258 | ) |   | $ | 4,307 |  |
| Adjustments to reconcile net income to net cash used in operating activities: |   |   |   |   |   |   |
| Depreciation                                                                  |   | 5,104 |  |   | — |  |   | 5,104 |  |
| Amortization of intangible assets                                             |   | 351 |  |   | — |  |   | 351 |  |
| Amortization of debt discount and prepaid debt costs                          |   | 42 |  |   | — |  |   | 42 |  |
| Pension cost                                                                  |   | 135 |  |   | — |  |   | 135 |  |
| Stock-based compensation expense                                              |   | 2,561 |  |   | — |  |   | 2,561 |  |
| Recovery of losses on accounts receivable                                     |   | (237 | ) |   | 127 |  |   | (110 | ) |
| Changes in operating assets and liabilities:                                  |   |   |   |   |   |   |
| Trade and other accounts receivable                                           |   | (16,673 | ) |   | 5,891 |  |   | (10,782 | ) |
| Inventories                                                                   |   | (4,700 | ) |   | (5,870 | ) |   | (10,570 | ) |
| Prepaid expenses and other assets                                             |   | 478 |  |   | (139 | ) |   | 339 |  |
| Accounts payable and accrued liabilities                                      |   | (3,892 | ) |   | (186 | ) |   | (4,078 | ) |
| Deferred revenue                                                              |   | 266 |  |   | 3,841 |  |   | 4,107 |  |
| Accrued employee compensation                                                 |   | (1,296 | ) |   | 2,019 |  |   | 723 |  |
| Deferred tax liability, long term                                             |   | 29 |  |   | (1,425 | ) |   | (1,396 | ) |
| Other long-term liabilities                                                   |   | (2,326 | ) |   | — |  |   | (2,326 | ) |
| Net cash used in operating activities                                         |   | (11,593 | ) |   | — |  |   | (11,593 | ) |
| INVESTING ACTIVITIES:                                                         |   |   |   |   |   |   |
| Purchases of property and equipment                                           |   | (13,121 | ) |   | — |  |   | (13,121 | ) |
| Net cash used in investing activities                                         |   | (13,121 | ) |   | — |  |   | (13,121 | ) |
| FINANCING ACTIVITIES:                                                         |   |   |   |   |   |   |
| Principal payments on long-term debt and short-term borrowings                |   | (6,890 | ) |   | — |  |   | (6,890 | ) |
| Proceeds from long-term and short-term borrowings                             |   | 11,230 |  |   | — |  |   | 11,230 |  |
| Proceeds from sale of common stock, net of offering costs                     |   | 10,283 |  |   | — |  |   | 10,283 |  |
| Repurchase of shares                                                          |   | (319 | ) |   | — |  |   | (319 | ) |
| Proceeds from issuance of common stock under equity compensation plans        |   | 1,737 |  |   | — |  |   | 1,737 |  |
| Net cash provided by financing activities                                     |   | 16,041 |  |   | — |  |   | 16,041 |  |
| Decrease in cash and cash equivalents from operations                         |   | (8,673 | ) |   | — |  |   | (8,673 | ) |
| Effect of exchange rate changes on cash and cash equivalents                  |   | (543 | ) |   | — |  |   | (543 | ) |
| Decrease in cash and cash equivalents                                         |   | (9,216 | ) |   | — |  |   | (9,216 | ) |
| Cash and cash equivalents, beginning of period                                |   | 29,289 |  |   | — |  |   | 29,289 |  |
| Cash and cash equivalents, end of period                                      |   | $ | 20,073 |  |   | $ | — |  |   | $ | 20,073 |  |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |
|                             |   | September 30, 2013 |   | December 31, 2012 |
|                             |   |   |
| Raw material and purchased parts |   | $ | 14,218 |  |   | $ | 13,114 |  |
| Work-in-process                  |   | 3,262 |  |   | 1,753 |  |
| Finished goods                   |   | 21,890 |  |   | 17,511 |  |
| Consigned finished goods         |   | 3,206 |  |   | 9,242 |  |
| Total inventories                |   | $ | 42,576 |  |   | $ | 41,620 |  |

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                          |   | GrossCarryingValue |   | AccumulatedAmortization |   | ForeignCurrencyAdjustment |   | NetCarryingValue |
| As of September 30, 2013                      |   |   |   |   |   |   |   |   |
| Patents                                       |   | $ | 2,476 |  |   | $ | (2,056 | ) |   | $ | — |  |   | $ | 420 |  |
| Developed core technology                     |   | 1,100 |  |   | (1,100 | ) |   | — |  |   | — |  |
| Patent license agreement                      |   | 741 |  |   | (741 | ) |   | — |  |   | — |  |
| Total intangible assets at September 30, 2013 |   | $ | 4,317 |  |   | $ | (3,897 | ) |   | $ | — |  |   | $ | 420 |  |

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                         |   | GrossCarryingValue |   | AccumulatedAmortization |   | ForeignCurrencyAdjustment |   | NetCarryingValue |
| As of December 31, 2012                      |   |   |   |   |   |   |   |   |
| Patents                                      |   | $ | 2,476 |  |   | $ | (1,903 | ) |   | $ | — |  |   | $ | 573 |  |
| Developed core technology                    |   | 1,100 |  |   | (1,100 | ) |   | — |  |   | — |  |
| Patent license agreement                     |   | 741 |  |   | (606 | ) |   | (39 | ) |   | 96 |  |
| Total intangible assets at December 31, 2012 |   | $ | 4,317 |  |   | $ | (3,609 | ) |   | $ | (39 | ) |   | $ | 669 |  |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |
| Balance at December 31, 2012             |   | $ | 25,416 |  |
| Foreign currency translation adjustments |   | 262 |  |
| Balance at September 30, 2013            |   | $ | 25,678 |  |

|                                          |
|------------------------------------------|
|                                          |  |  |  |  |  |  |  |  |
|                                     |   | Nine Months Ended |
|                                     |   | September 30, |
|                                     |   | 2013 |   | 2012 |
| Beginning balance                        |   | $ | 269 |  |   | $ | 258 |  |
| Product warranties issued                |   | 215 |  |   | 278 |  |
| Settlement of warranties                 |   | (212 | ) |   | (154 | ) |
| Change related to preexisting warranties |   | (143 | ) |   | (138 | ) |
| Ending balance                           |   | $ | 129 |  |   | $ | 244 |  |

----

|                                                                         |
|-------------------------------------------------------------------------|
|                                                                         |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                    |   | ForeignCurrencyTranslationAdjustment |   | Defined BenefitPension Plan |   | AccumulatedOtherComprehensiveIncome |   | Affected Line Item in the Statement of Operations |
| Balance as of December 31, 2012                                         |   | $ | 16,376 |  |   | $ | (3,845 | ) |   | $ | 12,531 |  |   |   |
| Other comprehensive income before reclassification                      |   | 1,391 |  |   | — |  |   | 1,391 |  |   |   |
| Amounts reclassified from accumulated other comprehensive income        |   | — |  |   | 142 |  |   | 142 |  |   | Cost of Sales, Selling, General and Administrative and Research and Development Expense |
| Net other comprehensive income for nine months ended September 30, 2013 |   | 1,391 |  |   | 142 |  |   | 1,533 |  |   |   |
| Balance as of September 30, 2013                                        |   | $ | 17,767 |  |   | $ | (3,703 | ) |   | $ | 14,064 |  |   |   |

----

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | Three Months Ended |   | Nine Months Ended |
|                                |   | September 30, |   | September 30, |
|                                |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Cost of revenue                     |   | $ | 2 |  |   | $ | 1 |  |   | $ | 32 |  |   | $ | 1 |  |
| Selling, general and administrative |   | 1,377 |  |   | 174 |  |   | (2 | ) |   | (308 | ) |
| Total gain (loss)                   |   | $ | 1,379 |  |   | $ | 175 |  |   | $ | 30 |  |   | $ | (307 | ) |

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   | Three Months Ended |   | Nine Months Ended |
|                                |   | September 30, |   | September 30, |
|                                |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Cost of revenue                     |   | $ | (3 | ) |   | $ | (1 | ) |   | $ | (28 | ) |   | $ | 13 |  |
| Selling, general and administrative |   | (1,545 | ) |   | (357 | ) |   | (503 | ) |   | (100 | ) |
| Total gain (loss)                   |   | $ | (1,548 | ) |   | $ | (358 | ) |   | $ | (531 | ) |   | $ | (87 | ) |

|                                                                                                   |
|---------------------------------------------------------------------------------------------------|
|                                                                                                   |  |  |  |  |  |  |  |  |
|                                                                                              |   | September 30, 2013 |   | December 31, 2012 |
| Gross amounts of recognized assets (liabilities)                                                  |   | $ | (901 | ) |   | $ | 394 |  |
| Gross amounts offset in the condensed consolidated balance sheets                                 |   | 76 |  |   | 65 |  |
| Net amount of recognized asset (liability) presented in the condensed consolidated balance sheets |   | $ | (977 | ) |   | $ | 329 |  |

----

|                                 |
|---------------------------------|
|                                 |  |  |  |  |
|                            |   | Nine Months Ended |
|                            |   | September 30, |
|                            |   | 2013 |
| Expected dividends              |   | $ | — |  |
| Exercise price                  |   | $ | 6.80 |  |
| Expected volatility             |   | 68.6 | % |
| Average risk-free interest rate |   | 1.1 | % |
| Expected life/term (in years)   |   | 4.8 |  |
| Fair value per share            |   | $ | 3.72 |  |

|                                                                   |
|-------------------------------------------------------------------|
|                                                                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                              |   | Three Months Ended |   | Nine Months Ended |
|                                                              |   | September 30, |   | September 30, |
|                                                              |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Service-based restricted stock                                    |   | $ | 523 |  |   | $ | 369 |  |   | $ | 1,793 |  |   | $ | 1,216 |  |
| Performance-based restricted stock                                |   | 40 |  |   | (198 | ) |   | 82 |  |   | (37 | ) |
| Total compensation expense recognized for restricted stock awards |   | $ | 563 |  |   | $ | 171 |  |   | $ | 1,875 |  |   | $ | 1,179 |  |

----

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |  |  |
|                            |   | Three Months Ended |   | Nine Months Ended |
|                            |   | September 30, |   | September 30, |
|                            |   | 2012 |   | 2012 |
| Expected dividends              |   | $ | — |  |   | $ | — |  |
| Exercise price                  |   | $ | 5.58 |  |   | $ | 8.93 |  |
| Expected volatility             |   | 83 | % |   | 75 | % |
| Average risk-free interest rate |   | 0.16 | % |   | 0.12 | % |
| Expected life/term (in years)   |   | 0.5 |  |   | 0.5 |  |
| Fair value per share            |   | $ | 2.78 |  |   | $ | 3.79 |  |

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                   |   | Three Months Ended |   | Nine Months Ended |
|                                   |   | September 30, |   | September 30, |
|                                   |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Cost of revenue                        |   | $ | 228 |  |   | $ | 163 |  |   | $ | 762 |  |   | $ | 543 |  |
| Selling, general and administrative    |   | 332 |  |   | 213 |  |   | 1,337 |  |   | 1,586 |  |
| Research and development               |   | 159 |  |   | 129 |  |   | 523 |  |   | 432 |  |
| Total stock-based compensation expense |   | $ | 719 |  |   | $ | 505 |  |   | $ | 2,622 |  |   | $ | 2,561 |  |

----

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                            |   | Three Months Ended |   | Nine Months Ended |
|                            |   | September 30, |   | September 30, |
|                            |   | 2013 |   | 2012 |   | 2013 |   | 2012 |
| Service cost                    |   | $ | 207 |  |   | $ | 164 |  |   | $ | 618 |  |   | $ | 502 |  |
| Interest cost                   |   | 125 |  |   | 159 |  |   | 374 |  |   | 487 |  |
| Expected return on plan assets  |   | (383 | ) |   | (342 | ) |   | (1,145 | ) |   | (1,048 | ) |
| Prior service cost amortization |   | 11 |  |   | 11 |  |   | 33 |  |   | 32 |  |
| Deferred loss amortization      |   | 45 |  |   | 53 |  |   | 135 |  |   | 162 |  |
| Net periodic pension cost       |   | $ | 5 |  |   | $ | 45 |  |   | $ | 15 |  |   | $ | 135 |  |

----

----

----

Table of Contents

|         |                                                                                             |
|---------|---------------------------------------------------------------------------------------------|
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |

|         |                                                                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | our ability to remain competitive and stimulate customer demand through successful introduction of new products, and to educate our prospective customers on the products we offer; |

|         |                                                                                                                                                                                                                          |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | dependence upon the sale of products to a small number of customers and vertical markets, some of which are heavily dependent on government funding or government subsidies which may or may not continue in the future; |

|         |                                                                                                                                             |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------|
| • | dependence upon the sale of products into China and Europe, where macroeconomic factors outside our control may adversely affect our sales; |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | risks related to our international operations including, but not limited to, our ability to adequately comply with the changing rules and regulations in countries where our business is conducted, our ability to oversee and control our foreign subsidiaries and their operations, our ability to effectively manage foreign currency exchange rate fluctuations arising from our international operations, and our ability to continue to comply with the U.S. Foreign Corrupt Practices Act as well as the anti-bribery laws of foreign jurisdictions and the terms and conditions of our settlement agreements with the Securities and Exchange Commission and the Department of Justice; |

|         |                                                                     |
|---------|---------------------------------------------------------------------|
| • | successful acquisition, development and retention of key personnel; |

|         |                                                                                                                                               |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|
| • | our ability to effectively manage our reliance upon certain suppliers of key component parts and specialty equipment and logistical services; |

|         |                                                                   |
|---------|-------------------------------------------------------------------|
| • | our ability to match production volume to actual customer demand; |

|         |                                                 |
|---------|-------------------------------------------------|
| • | our ability to manage product quality problems; |

|         |                                                                                          |
|---------|------------------------------------------------------------------------------------------|
| • | our ability to protect our intellectual property rights and to defend claims against us; |

|         |                                                                                               |
|---------|-----------------------------------------------------------------------------------------------|
| • | our ability to effectively identify, enter into, manage and benefit from strategic alliances; |

|         |                                                              |
|---------|--------------------------------------------------------------|
| • | occurrence of a catastrophic event at any of our facilities; |

|         |                                                                                              |
|---------|----------------------------------------------------------------------------------------------|
| • | occurrence of a technology systems failure, network disruptions, or breach in data security; |

|         |                                                                                    |
|---------|------------------------------------------------------------------------------------|
| • | our ability to obtain sufficient capital to meet our operating or other needs; and |

|         |                                                                                 |
|---------|---------------------------------------------------------------------------------|
| • | our ability to manage and minimize the impact of unfavorable legal proceedings. |

----

Table of Contents

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Beginning in the period in which the investigation revealed arrangements regarding extended payment terms for certain sales to three distributors, we determined it appropriate to defer revenue recognition on all sales to these distributors from the period of shipment to the period in which payment is received. For these distributors, revenue recognition in the period in which payment is received was determined to be appropriate beginning in the fourth quarter of 2011. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Beginning in the period in which the investigation revealed return rights and profit margin protection for one distributor, we determined it appropriate to defer revenue recognition on all sales to this distributor until the distributor confirmed with us that they are not entitled to any further returns or credits.  For this distributor, the deferral of revenue on this basis was determined to be appropriate beginning in the fourth quarter of 2011.  In the third quarter of 2013, the distributor confirmed with us that they are not entitled to any further returns or credits, and previous sales of $9.5 million for which revenue had been deferred were recognized as revenue. |

|         |                                                                                                                                                                                                                                                                        |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For the arrangements with the non-distributor customer to honor transfer of title at a date later than the customer's purchase order indicated, we determined it appropriate to defer revenue recognition to the period in which we agreed to honor transfer of title. |

|         |                                                                                                                                                                                                                                                                                                                             |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For the individual transaction where a customer was given extended payment terms which were not considered when revenue was originally recognized in the first quarter of 2011, revenue recognition in the period in which payment was received, which was in the second quarter of 2011, was determined to be appropriate. |

----

Table of Contents

----

Table of Contents

|         |                    |
|---------|--------------------|
| • | Executive Overview |

|         |                                                             |
|---------|-------------------------------------------------------------|
| • | Highlights of the Nine Months Ended September 30, 2013  |

|         |                       |
|---------|-----------------------|
| • | Results of Operations |

|         |                                 |
|---------|---------------------------------|
| • | Liquidity and Capital Resources |

|         |                                            |
|---------|--------------------------------------------|
| • | Critical Accounting Policies and Estimates |

|         |                                |
|---------|--------------------------------|
| • | Off Balance Sheet Arrangements |

----

Table of Contents

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | In March, at the Mid-America Trucking Show at the Kentucky Expo Center, we demonstrated our ultracapacitor-based Engine Start Module ("ESM"), which delivers quick-burst power to large diesel engines needed to crank in extreme weather, for class 4 to 8 trucks down to minus 40 degrees Fahrenheit. The ESM, which is being evaluated by more than 20 truck fleets, delivers power for hundreds of thousands reliable starts, and in most cases, will outlast the vehicle itself. |

----

Table of Contents

|         |                                                                                                                                                                                                                                                                                    |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | In April, we announced that we are supplying ultracapacitors for an energy-saving braking energy recuperation system that American Maglev Technology is installing on light rail vehicles operated by the Portland, Oregon area's Tri-County Metropolitan Transportation District. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | In May, we announced Shanghai ISSON Power Quality Co., Ltd. installed 126 of Maxwell's 125V Heavy Transportation Modules in a power system that operates 26 ship-to-shore cranes for loading and unloading container ships at the Yangshan Deep-Water Port. This installation, one of the largest ultracapacitor installations in the world and the biggest in Asia, stabilizes voltage and smooths the fluctuation of the power output, for the electric cranes, allowing for uninterrupted operations. |

|         |                                                                                                                                                                                                                                                                          |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | In June, we announced a collaboration with Soitec on a California Energy Commission-funded, two-phase program to demonstrate the cost and efficiency benefits of combining an ultracapacitor-based energy storage system with Soitec's Concentrix™ CPV technology. |

|         |                                                                                                                                                                                                                                                                                                                                                                                  |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | In September, we announced that we were selected to supply ultracapacitors to Caterpillar for a high efficiency energy management system that supports Caterpillar's fuel-saving hydra-electric technology in the industry's largest ever hydraulic mining shovel. The 1,400 ton shovel's energy management system incorporates 98 of Maxwell's 125-volt ultracapacitor modules. |

|         |                                                                                                                                                                                                                                                                                                                |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Also in September, we announced a collaboration with Celadon, Inc., to provide ultracapacitors for remote controls. The ultracapacitors are expected to lower overall waste and create a worry free experience for end users, who no longer need to deal with remote control battery replacement and disposal. |

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |
|                                       |   | Quarter Ended |
|                                       |   | September 30, |
|                                       |   |   |   | 2012 |
|                                       |   | 2013 |   | (Restated) |
| Revenue                                    |   | 100 | % |   | 100 | % |
| Cost of revenue                            |   | 59 | % |   | 58 | % |
| Gross profit                               |   | 41 | % |   | 42 | % |
| Operating expenses:                        |   |   |   |   |
| Selling, general and administrative        |   | 18 | % |   | 17 | % |
| Research and development                   |   | 11 | % |   | 12 | % |
| Total operating expenses                   |   | 29 | % |   | 29 | % |
| Income from operations                     |   | 12 | % |   | 13 | % |
| Interest expense, net                      |   | — | % |   | — |  |
| Income from operations before income taxes |   | 12 | % |   | 13 | % |
| Income tax provision                       |   | — | % |   | 1 | % |
| Net income                                 |   | 12 | % |   | 12 | % |

----

Table of Contents

|                 |
|-----------------|
|                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|            |   |   |   | Quarter Ended |   |   |   |   |
|            |   | Quarter Ended |   | September 30, 2012 |   |   |   |   |
|            |   | September 30, 2013 |   | (Restated) |   |   |   |   |
|            |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Revenue         |   | $ | 51,197 |  |   | 100 | % |   | $ | 42,713 |  |   | 100 | % |   | $ | 8,484 |  |   | 20 | % |
| Cost of revenue |   | 30,084 |  |   | 59 | % |   | 24,571 |  |   | 58 | % |   | 5,513 |  |   | 22 | % |
| Gross profit    |   | $ | 21,113 |  |   | 41 | % |   | $ | 18,142 |  |   | 42 | % |   | $ | 2,971 |  |   | 16 | % |

----

Table of Contents

|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   |   |   | Quarter Ended |   |   |   |   |
|                                |   | Quarter Ended |   | September 30, 2012 |   |   |   |   |
|                                |   | September 30, 2013 |   | (Restated) |   |   |   |   |
|                                |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Selling, general and administrative |   | $ | 9,455 |  |   | 18 | % |   | $ | 7,342 |  |   | 17 | % |   | $ | 2,113 |  |   | 29 | % |

|                          |
|--------------------------|
|                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                     |   | Quarter Ended |   | Quarter Ended |   |   |   |   |
|                     |   | September 30, 2013 |   | September 30, 2012 |   |   |   |   |
|                     |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Research and development |   | $ | 5,450 |  |   | 11 | % |   | $ | 5,084 |  |   | 12 | % |   | $ | 366 |  |   | 7 | % |

----

Table of Contents

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |
|                                       |   | Nine Months Ended |
|                                       |   | September 30, |
|                                       |   |   |   | 2012 |
|                                       |   | 2013 |   | (Restated) |
| Revenue                                    |   | 100 | % |   | 100 | % |
| Cost of revenue                            |   | 61 | % |   | 58 | % |
| Gross profit                               |   | 39 | % |   | 42 | % |
| Operating expenses:                        |   |   |   |   |
| Selling, general and administrative        |   | 21 | % |   | 22 | % |
| Research and development                   |   | 11 | % |   | 14 | % |
| Total operating expenses                   |   | 32 | % |   | 36 | % |
| Income from operations                     |   | 7 | % |   | 6 | % |
| Interest expense, net                      |   | — | % |   | 1 | % |
| Income from operations before income taxes |   | 7 | % |   | 5 | % |
| Income tax provision                       |   | 1 | % |   | 1 | % |
| Net income                                 |   | 6 | % |   | 4 | % |

|                 |
|-----------------|
|                 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|            |   |   |   | Nine Months Ended |   |   |   |   |
|            |   | Nine Months Ended |   | September 30, 2012 |   |   |   |   |
|            |   | September 30, 2013 |   | (Restated) |   |   |   |   |
|            |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Revenue         |   | $ | 154,555 |  |   | 100 | % |   | $ | 114,755 |  |   | 100 | % |   | $ | 39,800 |  |   | 35 | % |
| Cost of revenue |   | 93,636 |  |   | 61 | % |   | 66,932 |  |   | 58 | % |   | 26,704 |  |   | 40 | % |
| Gross profit    |   | $ | 60,919 |  |   | 39 | % |   | $ | 47,823 |  |   | 42 | % |   | $ | 13,096 |  |   | 27 | % |

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|                                     |
|-------------------------------------|
|                                     |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                |   |   |   | Nine Months Ended |   |   |   |   |
|                                |   | Nine Months Ended |   | September 30, 2012 |   |   |   |   |
|                                |   | September 30, 2013 |   | (Restated) |   |   |   |   |
|                                |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Selling, general and administrative |   | $ | 32,945 |  |   | 21 | % |   | $ | 25,539 |  |   | 22 | % |   | $ | 7,406 |  |   | 29 | % |

|                          |
|--------------------------|
|                          |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                     |   |   |   | Nine Months Ended |   |   |   |   |
|                     |   | Nine Months Ended |   | September 30, 2012 |   |   |   |   |
|                     |   | September 30, 2013 |   | (Restated) |   |   |   |   |
|                     |   | Amount |   | % ofRevenue |   | Amount |   | % ofRevenue |   | Increase |   | %Change |
| Research and development |   | $ | 16,851 |  |   | 11 | % |   | $ | 15,948 |  |   | 14 | % |   | $ | 903 |  |   | 6 | % |

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|                                                              |
|--------------------------------------------------------------|
|                                                              |  |  |  |  |  |  |  |  |
|                                                         |   | Nine months ended September 30, |
|                                                         |   | 2013 |   | 2012 |
| Total cash provided by (used in):                            |   |   |   |   |
| Operating activities                                         |   | $ | 24,715 |  |   | $ | (11,593 | ) |
| Investing activities                                         |   | (14,016 | ) |   | (13,121 | ) |
| Financing activities                                         |   | (2,799 | ) |   | 16,041 |  |
| Effect of exchange rate changes on cash and cash equivalents |   | 408 |  |   | (543 | ) |
| Increase (decrease) in cash and cash equivalents             |   | $ | 8,308 |  |   | $ | (9,216 | ) |

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|         |                                                            |
|---------|------------------------------------------------------------|
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |

|         |                         |
|---------|-------------------------|
| Item 4. | Controls and Procedures |

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|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | we did not maintain adequately designed controls to ensure accurate recognition of revenue in accordance with GAAP. Specifically, controls were not effective to ensure that deviations from contractually established sales terms were authorized, communicated, identified and evaluated for their potential effect on revenue recognition. Further, we did not adequately train and supervise sales personnel to ensure that such personnel were appropriately conscious of the requirement to communicate deviations from contractually established sales terms to finance and accounting personnel in order for revenue recognition in our financial statements to be accurately recorded; and, |

|         |                                                                                                                                                                                                                                                                                                                                 |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | We did not perform a robust fraud risk assessment taking into consideration the various ways that fraud may be perpetrated to misappropriate assets or facilitate fraudulent financial reporting.  We failed to identify controls specifically designed to prevent and detect fraud risks relating to revenue recognition. |

|         |                                                                                                                                                                                                                                                                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | improving procedures to ensure the proper communication, approval and accounting review of deviations from sales contracts, and provide periodic training and a formal revenue recognition policy to sales personnel and others involved in negotiating contractual sales terms, in order to improve awareness and understanding of revenue recognition principles under GAAP; and, |

|         |                                                                                                                                                                                                                                 |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | implementing an improved fraud risk assessment process to consider specific ways in which asset misappropriation or fraudulent financial reporting might occur and ensure controls are identified to address the risk of fraud. |

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Table of Contents

|         |                   |
|---------|-------------------|
| Item 1. | Legal Proceedings |

|          |              |
|----------|--------------|
| Item 1A. | Risk Factors |

|         |          |
|---------|----------|
| Item 6. | Exhibits |

|        |
|--------|
|        |  |  |
|   |   |   |
| 31.1   |    | Certification of Principal Executive Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * |
|   |   |   |
| 31.2   |    | Certification of Principal Financial Officer pursuant to Rule 13a-14(a) (Section 302 Certification) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * |
|   |   |   |
| 32     |    | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 Certification), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * |

|   |                 |
|---|-----------------|
| * | Filed herewith. |

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|        |
|--------|
|        |  |  |  |  |
|   |   |   | MAXWELL TECHNOLOGIES, INC. |
|   |   |   |   |   |
| Date:  | October 24, 2013 |   | By: | /s/ David J. Schramm |
|   |   |   |   | David J. Schramm |
|   |   |   |   | President and Chief Executive Officer |
|   |   |   |   |   |
| Date:  | October 24, 2013 |   | By: | /s/ Kevin S. Royal |
|   |   |   |   | Kevin S. Royal |
|   |   |   |   | Senior Vice President, Chief Financial Officer, Treasurer and Secretary |