12.

Subsequent Events

On January 29, 2013, the Company held the Special Meeting, at which its stockholders authorized the previously announced Asset Sale pursuant to and on the terms set forth in the Asset Sale Agreement. At the Special Meeting, the stockholders also approved the Dissolution and adopted the Plan of Dissolution.

On January 31, 2013, the Company completed the Asset Sale for a total purchase price of $18.75 million in cash (subject to a working capital adjustment as provided in the Asset Sale Agreement) and the assumption by Buyer of certain related liabilities. The transfer of the equity interests of the Company’s subsidiary in Shanghai is expected to occur at a later date following the receipt of Chinese regulatory approval. In connection with the closing of the Asset Sale, Buyer acquired substantially all of the Company’s operating assets, including substantially all of the Company’s accounts receivable, inventories and prepaid and other assets, and assumed most of the Company’s remaining current liabilities, including substantially all of the Company’s deferred revenue and accrued warranty obligations. As a result of the halting of further development and marketing of the IQstream Business and the completion of the Asset Sale, the Company no longer has any operating assets or revenue. In accordance with the Plan of Dissolution, the Company intends to retain a limited number of employees to assist with the wind down of the Company’s Business, including the disposition of the IQstream Business, the sale or monetization of the Company’s other remaining non-cash assets, and the satisfaction or settlement of its liabilities and obligations.

In connection with the closing of the Asset Sale and as set forth in the Asset Sale Agreement, the Company has agreed to indemnify Buyer and certain of its related parties for any damages arising out of any breach of any of our representations or warranties or failure to perform any of its covenants or agreements in the Asset Sale Agreement, its failure to fully or timely pay, satisfy or perform any of its retained liabilities or its failure to pay any taxes associated with the assets and subsidiaries being sold for periods prior to the closing date of the Asset Sale, including any capital gain or corporate income taxes resulting from the transfer of our China subsidiary. The Company’s aggregate indemnification liability for breaches of representation and warranties is limited to $2,812,500. The Company’s indemnification obligations expire no later than twelve months following the closing date of the Asset Sale.

On February 28, 2013, the Company paid a special cash distribution to its stockholders of $1.81 per share of Common Stock, or $52.3 million in the aggregate. As a result of having an accumulated deficit, the special cash distribution will be recorded as a reduction to additional paid-in capital.

On March 4, 2013, the Company announced that it intends to proceed with the Dissolution and to file the Certificate of Dissolution on March 7, 2013. In connection with the Dissolution and filing of the Certificate of the Dissolution, the Company will close its stock transfer books and discontinue recording transfers of the Common Stock at the close of business on March 7, 2013. On March 4, 2013, the Company also submitted a request to NASDAQ to suspend trading of the Common Stock on the NASDAQ Global Select Market effective as of the close of business on March 7, 2013, and notified NASDAQ that the Company intends to file a Form 25 with the SEC to delist the Common Stock from the NASDAQ Global Select Market on March 15, 2013. Upon the effectiveness of the Dissolution, the Company intends to cancel all stock option awards outstanding under the Company’s stock plans.