8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K/A

(Amendment #1)

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 30, 2007

CASCADE MICROTECH, INC.

(Exact name of registrant as specified in its charter)

OREGON	000-51072	93-0856709
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2430 N.W. 206th Avenue

Beaverton, Oregon 97006

(503) 601-1000

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

EXPLANATORY NOTE

On April 5, 2007, Cascade Microtech, Inc., an Oregon corporation (“Cascade”), filed a Current Report on Form 8-K to report that on April 3, 2007, Cascade, Gryphics Acquisition Corporation, a Minnesota corporation and a wholly-owned subsidiary of Cascade (“Merger Sub”), and Gryphics, Inc., a Minnesota corporation (“Gryphics”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), and that pursuant to the Merger Agreement, Gryphics was merged with and into Merger Sub, with Merger Sub continuing as the surviving corporation and a wholly-owned subsidiary of Cascade. This Form 8-K/A amends the Current Report on Form 8-K filed by Cascade on April 5, 2007 (the “Initial Form 8-K”) to include the required Item 9.01(a) Financial Statements of Business Acquired and the required Item 9.01(b) Pro Forma Financial Statements.

Cascade hereby amends and restates Item 9.01 of the Initial Form 8-K to read in its entirety as follows:

Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements of Business Acquired.

The financial statements of Gryphics, Inc., required by this Item 9.01(a) are attached hereto as Exhibits 99.1 and 99.2 and are incorporated herein by reference.

(b) Pro Forma Financial Statements.

The pro forma financial information required by this Item 9.01(b) is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

(d) Exhibits.

23.1	Consent of Cummings, Keegan and Co., PLPP, independent auditors for Gryphics, Inc.
99.1	Audited consolidated financial statements of Gryphics, Inc. for the years ending December 31, 2006 and 2005.
99.2	Unaudited interim consolidated financial statements of Gryphics, Inc. for three months ending March 31, 2007 and 2006.
99.3	Unaudited pro forma condensed combined financial statements for the year ended December 31, 2006 and the quarter ended March 31, 2007.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on June 19, 2007.

CASCADE MICROTECH, INC. (Registrant)
By	/s/ Steven Sipowicz
	Steven Sipowicz Vice President and Chief Financial Officer

EX-23.1

Exhibit 23.1

Cummings, Keegan & Co., P.L.L.P Certified Public Accountants and Business Advisors

June 18, 2007

Cascade Microtech, Inc.

2430 NW 206^th Avenue

Beaverton, OR 97006.

We consent to your inclusion of the audited financial statements of Gryphics, Inc. for the years ended December 31, 2006 and 2005 and the audit opinion letter dated February 19, 2007 on those statements in the 8K filing for Cascade Microtech, Inc. that you intend to submit to the SEC on June 18, 2007. Our consent applies only to this filing and we request that you obtain permission for any other use.

Cummings Keegan & Co., P.L.L.P.

www.ckco-cpa.com • Email: info@ckco-cpa.com

Suite 1625 • 600 South Hwy. 169 • St. Louis Park, MN 55426 • Phone: (952) 345-2500 • Fax: (952) 345-2566

7570 147th Street West, #120 • Apple Valley, MN 55124 • Phone: (952) 432-2218 • Fax: (952) 432-5535

EX-99.1

Exhibit 99.1

GRYPHICS, INC.

CONTENTS

December 31, 2006 and 2005

	Page
Independent Auditors’ Report	1
Balance Sheets	2-3
Statements of Operations	4
Statements of Stockholders’ Equity	5
Statements of Cash Flows	6-7
Notes to Financial Statements	8-11

Cummings, Keegan & Co., P.L.L.P Certified Public Accountants and Business Advisors

INDEPENDENT AUDITORS’ REPORT

Stockholders and Board of Directors

Gryphics, Inc.

Plymouth, Minnesota

We have audited the accompanying balance sheets of Gryphics, Inc. (a Minnesota corporation) as of December 31, 2006 and 2005, and the related statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gryphics, Inc. as of December 31, 2006 and 2005, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Respectfully submitted,

Certified Public Accountants

February 19, 2007

www.ckco-cpa.com • Email: info@ckco-cpa.com

Suite 1625 • 600 South Hwy. 169 • St. Louis Park, MN 55426 • Phone: (952) 345-2500 • Fax: (952) 345-2566

7570 147th Street West, #120 • Apple Valley, MN 55124 • Phone: (952) 432-2218 • Fax: (952) 432-5535

GRYPHICS, INC.

BALANCE SHEETS

DECEMBER 31, 2006 AND 2005

ASSETS

	2006			2005
Current assets
Cash	$	670,589		$	1,714,411
Accounts receivable		1,303,307			941,675
Inventories		566,943			417,444
Prepaid expenses		216,691			52,361
Total current assets	$	2,757,530		$	3,125,891
Property and equipment
Machinery and equipment	$	1,256,449		$	1,055,826
Computers		191,360			224,813
Office equipment and furniture		64,222			64,223
Leasehold improvements		55,342			55,342
	$	1,567,373		$	1,400,204
Less accumulated depreciation		(964,591	)		(778,812	)
Total property and equipment	$	602,782		$	621,392
Other assets
Patent fees, net of accumulated amortization in the amount of $127,099 and $95,052 at December 31, 2006 and 2005, respectively	$	388,343		$	341,638
Total other assets	$	388,343		$	341,638
Total assets	$	3,748,655		$	4,088,921

2

LIABILITIES AND STOCKHOLDERS’ EQUITY

	2006		2005
Current liabilities
Accounts payable	$	240,711	$	228,977
Accrued expenses		60,458		56,399
Accrued vacation		17,034		14,991
Accrued income tax		45,994		337,510
Other accrued expenses		71,126		69,591
Total current liabilities	$	435,323	$	707,468
Long-term liabilities
Deferred income tax	$	34,500	$	45,740
Total long-term liabilities	$	34,500	$	45,740
Total liabilities	$	469,823	$	753,208
Stockholders’ equity
Common stock, .01 par value: 10,000,000 shares authorized, 1,017,815 and 1,100,415 shares issued and outstanding at December 31, 2006 and 2005, respectively	$	10,178	$	11,004
Paid in capital		1,068,609		2,569,039
Retained earnings		2,200,045		755,670
Total stockholders’ equity	$	3,278,832	$	3,335,713
Total liabilities and stockholders’ equity	$	3,748,655	$	4,088,921

See Independent Auditors’ Report and Notes to Financial Statements.

3

GRYPHICS, INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

	2006			2005
	Amount			Amount
Revenues
Sales	$	7,693,938		$	6,855,687
Cost of goods sold		2,666,166			2,719,659
Gross profit	$	5,027,772		$	4,136,028
Selling expenses		1,179,461			903,744
Research and development		948,934			1,096,053
General and administrative expenses		798,682			762,447
Income from operations	$	2,100,695		$	1,373,784
Interest income		44,508			19,526
Income before provision for income taxes	$	2,145,203		$	1,393,310
Provision for income taxes
Currently payable	$	712,068		$	394,181
Deferred		(11,240	)		24,840
Total income taxes	$	700,828		$	419,021
Net income	$	1,444,375		$	974,289

See Independent Auditors’ Report and Notes to Financial Statements.

4

GRYPHICS, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

	Common Stock			Paid-in Capital			Retained Earnings (Accumulated Deficit)
Balance - December 31, 2004	$	11,004		$	2,569,036		$	(218,619	)
Net income		—			—			974,289
Balance - December 31, 2005	$	11,004		$	2,569,036		$	755,670
Stockholder redemptions		(826	)		(1,500,429	)		—
Net income		—			—			1,444,375
Balance - December 31, 2006	$	10,178		$	1,068,607		$	2,200,045

See Independent Auditors’ Report and Notes to Financial Statements.

5

GRYPHICS, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

	2006			2005
Cash flows from operating activities:
Net income	$	1,444,375		$	974,289
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		226,306			197,373
Amortization		32,047			25,715
(Increase) decrease in:
Accounts receivable		(361,631	)		(390,369	)
Inventories		(149,499	)		(83,948	)
Prepaid expenses		(164,330	)		320
Increase (decrease) in:
Accounts payable		11,734			(47,276	)
Accrued payroll		4,059			9,109
Accrued vacation		2,042			1,846
Accrued income tax		(291,516	)		337,510
Accrued expenses		1,535			24,149
Deferred income tax		(11,240	)		24,840
Other assets		—			6,451
Net cash provided by (used in) operating activities	$	743,882		$	1,080,009
Cash flows from investing activities:
Purchase of equipment and vehicles	$	(207,696	)	$	(389,027	)
Patent costs incurred		(78,753	)		(84,886	)
Net cash used in investing activities	$	(286,449	)	$	(473,913	)
Cash flows from financing activities:
Stockholder redemption	$	(1,501,255	)	$	—
Net cash used in financing activities	$	(1,501,255	)	$	—
Net increase (decrease) in cash and cash equivalents	$	(1,043,822	)	$	606,096
Cash - beginning of year		1,714,411			1,108,315
Cash - end of year	$	670,589		$	1,714,411

See Independent Auditors’ Report and Notes to Financial Statements.

6

GRYPHICS, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

(Continued)

	2006		2005
Supplemental disclosure of cash flow information:
Cash paid during the year:
Income taxes	$	1,156,465	$	63,898

See Independent Auditors’ Report and Notes to Financial Statements.

7

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

1. Summary of Significant Accounting Policies

a. Nature of Business - Gryphics, Inc. (the Company) is a design, engineering and manufacturer of high performance, electro-mechanical interconnection systems used primarily in the semiconductor industry throughout the world.

b. Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

c. Concentration of Credit Risk - At various times during the year, the Company has cash deposits in excess of federally insured limits. Management believes the cash requirements of the Company make it impractical to keep the balances below insured levels at all times.

d. Patent Fees - The Company capitalizes the cost of acquiring patents on certain products and processes. The Company amortizes these costs over an estimated useful life of 15 years. Amortization expense for the years ended December 31, 2006 and 2005 was $32,047 and $25,715, respectively.

e. Inventories - Inventories are stated at the lower of cost (determined on a first-in, first-out (FIFO) basis) or market. Work-in-process includes material, labor and manufacturing overhead and certain other administrative expenses. Work-in-process inventory is included in total inventory and amounted to $12,379 and $35,827 at December 31, 2006 and 2005, respectively. The balance of the inventory consists of raw materials and finished goods.

f. Property and Equipment - Property and equipment are recorded at cost. Depreciation is provided for by straight-line and accelerated methods over the estimated useful lives which are as follows:

Leasehold improvements	4-5 years
Software	3 years
Furniture and fixtures	5-7 years
Machinery and equipment	5-7 years

Renewals and replacements considered to be betterments are capitalized as additions to property and equipment and the replaced items are eliminated from the asset and accumulated depreciation accounts. The cost of assets sold or retired and the related depreciation are eliminated from the accounts at the time of the sale or other disposal, and the net gain or loss is credited or charged to operations.

Depreciation expense for the years ended December 31, 2006 and 2005 was $226,306 and $197,373, respectively.

8

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

(Continued)

1. Summary of Significant Accounting Policies (continued)

g. Income Taxes - Deferred income taxes are provided to reflect the timing differences that exist between financial statement and income tax reporting. These timing differences are due mainly to the use of accelerated methods of depreciation for income tax reporting.

Prior to March 31, 2001, the Company’s earnings and losses were included in the personal tax returns of the stockholders.

h. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The most significant areas which require the use of management estimates relate to the determination of the collectibles of accounts receivable, inventory obsolescence, and the lives of property and equipment.

i. Advertising - The Company incurred and expensed advertising costs of $19,561 and $28,121 during the years ended December 31, 2006 and 2005, respectively.

j. Shipping and Handling Costs - The Company includes shipping and handling costs in cost of sales.

k. Trade Accounts Receivable - Trade accounts receivable are stated at the amount management expects to collect from balances outstanding at year-end. Based on management’s assessment of the credit history with customers having outstanding balances and current relationships with them, it has concluded that realization losses on balances outstanding at year-end will be immaterial.

l. Allowance for Doubtful Accounts - An allowance for doubtful accounts has not been provided since all accounts receivable are believed to be collectible.

m. Research and Development - The Company expenses research and development costs. Included in expense for the years ended December 31, 2006 and 2005 was $948,934 and $1,096,053, respectively.

2. Simple IRA Plan

The Company started a Simple IRA Plan in January 1999. Eligible employees may choose to save a percentage of salary income on a pre-tax basis, subject to certain IRS limits. The Company matches 100% of the first 3% of wages for all eligible participants.

Employer contributions for the Simple IRA Plan totaled $44,067 and $38,087 for the years ended December 31, 2006 and 2005, respectively.

9

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

(Continued)

3. Commitments

On February 14, 1998, as amended June 14, 2000 and February 8, 2006, the Company entered into a lease agreement for its operating facility. The lease runs through September 30, 2010. The agreement requires the payment of minimum monthly rental of $4,563, until July 1, 2008 when the monthly rent will be raised to $4,815, plus all real estate taxes, special assessments, maintenance, repairs, operating expenses and insurance. Total rental expense was $78,379 and $79,752 for the years ended December 31, 2006 and 2005, respectively.

Future minimum lease payments for all operating leases having a term in excess of one year at December 31, 2006 are as follows:

For the Year Ended
2007	$	54,756
2008		56,265
2009		57,774
2010		43,331
Total	$	212,126

4. Employment Agreement

The Company had an agreement with its former president where he was eligible to receive stock appreciation rights (SARs). The SARs were to be authorized by the Board of Directors upon his anniversary of employment for each of his first three years and were to be equivalent to 1% per year of the total common stock interests of the Company. Any SARs awards which had not been made expired on termination of employment. Employment was terminated during 2002, thus only the first year SARs were awarded. A settlement agreement was reached between the parties during 2005 and no further liability remains at December 31, 2006.

5. Income Taxes

The provision for income taxes (benefit) consists of the following:

	2006			2005
Current	$	712,068		$	394,181
Deferred tax liability		(11,240	)		24,840
Total	$	700,828		$	419,021

10

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2006 AND 2005

(Continued)

5. Income Taxes (continued)

The deferred tax liability is comprised of the following at December 31:

	2006			2005
Tax related to timing difference on depreciation	$	40,900		$	45,740
Tax benefits of other timing difference		(6,400	)		—
Net deferred tax liability	$	34,500		$	45,740

6. Related Party Transactions

The Company has entered into a joint development agreement with an entity, which became a 19% stockholder on March 30, 2001. The agreement covers certain technologies of the Company. The Company has received developmental monies as part of the agreement. The agreement also calls for non-competition and a license between the parties. The Company also received royalties over a five year period based on a percentage of sales of the products related to the license.

The above referenced corporate stockholder also purchased products from the Company. Sales to the stockholder totaled $59,569 for the year ended December 31, 2004, and there were no accounts receivable from this related corporation at December 31, 2006 or 2005.

7. Concentration Risks

The Company had one major customer from whom it generated approximately 56% and 53% of its total revenues for the years ended December 31, 2006 and 2005, respectively. The Company had outstanding receivables from this customer in the amount of $802,517 and $351,970 at December 31, 2006 and 2005, respectively.

The Company had two vendors whom accounted for 32% and 34% of purchases for years ended December 31, 2006 and 2005, respectively. The Company owed these vendors a total of $1,290 and $17,884 at December 31, 2006 and 2005, respectively.

8. Stockholder Redemption

During 2006 the Company’s Board of Directors authorized a partial stock redemption to it’s shareholders. The Company redeemed 82,600 shares for a total redemption of $1,501,255 during the year ended December 31, 2006.

11

EX-99.2

Exhibit 99.2

Unaudited interim consolidated financial statements of Gryphics, Inc. for the three months ended March 31, 2007 and 2006

The accompanying unaudited consolidated financial statements of Gryphics, Inc. as of March 31, 2007 and for the three-month periods ended March 31, 2007 and 2006 have been prepared in conformity with U.S. generally accepted accounting principles and reflect all material normal recurring adjustments. However, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the consolidated financial statements as of March 31, 2007 and for the three-month periods ended March 31, 2007 and 2006 include adjustments necessary for the fair presentation of the results of the interim periods presented. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

GRYPHICS, INC.

BALANCE SHEET

MARCH 31, 2007

ASSETS

(unaudited)

Current assets
Cash	$	998,430
Accounts receivable, net		994,247
Inventories		614,316
Prepaid expenses		168,038
Total current assets	$	2,775,031
Property and equipment
Machinery and equipment	$	1,275,249
Computers		195,891
Office equipment and furniture		80,202
Leasehold improvements		55,342
	$	1,606,684
Less accumulated depreciation		(1,009,091	)
Total property and equipment	$	597,593
Other assets
Patent fees, net of accumulated amortization in the amount of $135,759 at March 31, 2007	$	384,608
Total other assets	$	384,608
Total assets	$	3,757,232

2

LIABILITIES AND STOCKHOLDERS’ EQUITY

(unaudited)

Current liabilities
Accounts payable	$	273,890
Accrued expenses		38,776
Accrued vacation		21,602
Accrued income tax		1,186
Other accrued expenses		59,954
Total current liabilities	$	395,408
Long-term liabilities
Deferred income tax	$	32,197
Total long-term liabilities	$	32,197
Total liabilities	$	427,605
Stockholders’ equity
Common stock, .01 par value: 10,000,000 shares authorized, 1,017,815 shares issued and outstanding at March 31, 2007	$	10,178
Paid in capital		1,068,610
Retained earnings		2,250,839
Total stockholders’ equity	$	3,329,627
Total liabilities and stockholders’ equity	$	3,757,232

3

GRYPHICS, INC.

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND MARCH 31, 2006

(unaudited)

	2007 Amount			2006 Amount
Revenues
Sales	$	1,437,048		$	960,076
Cost of goods sold		597,977			398,468
Gross profit	$	839,071		$	561,608
Selling expenses		189,422			181,179
Research and development		273,694			270,554
General and administrative expenses		271,362			165,898
Income from operations	$	104,593		$	(55,973	)
Interest income		10,813			12,019
Income before provision for income taxes	$	115,406		$	(43,954	)
Provision for income taxes
Currently payable	$	66,915		$	(4,480	)
Deferred		(2,303	)		—
Total income taxes	$	64,612		$	(4,480	)
Net income (loss)	$	50,794		$	(39,473	)

4

GRYPHICS, INC.

STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND MARCH 31, 2006

(unaudited)

	2007			2006
Cash flows from operating activities:
Net income (loss)	$	50,794		$	(39,473	)
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		44,500			53,517
Amortization		8,660			7,553
(Increase) decrease in:
Accounts receivable		309,059			296,586
Inventories		(47,373	)		(91,872	)
Prepaid expenses		48,653			10,804
Increase (decrease) in:
Accounts payable		33,179			(435,282	)
Accrued payroll		(21,682	)		(7,921	)
Accrued vacation		4,569			—
Accrued income tax		(44,808	)		—
Accrued expenses		(11,172	)		(652	)
Deferred income tax		(2,303	)		—
Net cash provided by (used in) operating activities	$	372,076		$	(206,739	)
Cash flows from investing activities:
Purchase of equipment and vehicles	$	(39,310	)	$	(56,265	)
Patent costs incurred		(4,925	)		(14,856	)
Net cash used in investing activities	$	(44,235	)	$	(71,121	)
Net increase (decrease) in cash and cash equivalents	$	327,841		$	(277,860	)
Cash – beginning of period		670,589			1,436,551
Cash – end of period	$	998,430		$	1,158,691

5

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2007

1. Summary of Significant Accounting Policies

a. Nature of Business - Gryphics, Inc. (the Company) is a design, engineering and manufacturer of high performance, electro-mechanical interconnection systems used primarily in the semiconductor industry throughout the world.

b. Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

c. Concentration of Credit Risk - At various times during the year, the Company has cash deposits in excess of federally insured limits. Management believes the cash requirements of the Company make it impractical to keep the balances below insured levels at all times.

d. Patent Fees - The Company capitalizes the cost of acquiring patents on certain products and processes. The Company amortizes these costs over an estimated useful life of 15 years. Amortization expense for the period ended March 31, 2007 was $4,925.

e. Inventories - Inventories are stated at the lower of cost (determined on a first-in, first-out (FIFO) basis) or market. Work-in-process includes material, labor and manufacturing overhead and certain other administrative expenses. Work-in-process inventory is included in total inventory and amounted to $51,461 at March 31, 2007. The balance of the inventory consists of raw materials and finished goods.

f. Property and Equipment - Property and equipment are recorded at cost. Depreciation is provided for by straight-line and accelerated methods over the estimated useful lives which are as follows:

Leasehold improvements	4-5 years
Software	3 years
Furniture and fixtures	5-7 years
Machinery and equipment	5-7 years

Renewals and replacements considered to be betterments are capitalized as additions to property and equipment and the replaced items are eliminated from the asset and accumulated depreciation accounts. The cost of assets sold or retired and the related depreciation are eliminated from the accounts at the time of the sale or other disposal, and the net gain or loss is credited or charged to operations.

Depreciation expense for the period ended March 31, 2007 was $44,500.

6

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

(Continued)

1. Summary of Significant Accounting Policies (continued)

g. Income Taxes - Deferred income taxes are provided to reflect the timing differences that exist between financial statement and income tax reporting. These timing differences are due mainly to the use of accelerated methods of depreciation for income tax reporting.

Prior to March 31, 2001, the Company’s earnings and losses were included in the personal tax returns of the stockholders.

h. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The most significant areas which require the use of management estimates relate to the determination of the collectibles of accounts receivable, inventory obsolescence, and the lives of property and equipment.

i. Advertising - The Company incurred and expensed advertising costs of $3,844 during the period ended March 31, 2007.

j. Shipping and Handling Costs - The Company includes shipping and handling costs in cost of sales.

k. Trade Accounts Receivable - Trade accounts receivable are stated at the amount management expects to collect from balances outstanding at period-end. Differences between the amount due and the amount management expects to collect are reported in the results of operations of the year in which those differences are determined, with an offsetting entry to a valuation allowance for accounts receivable. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to accounts receivable.

l. Allowance for Doubtful Accounts - The Company provides for estimated future losses to incurred related to uncollectible receivables. The balance of the allowance netted against accounts receivable was $1,800 at March 31, 2007.

m. Research and Development - The Company expenses research and development costs. Included in expense for the period ended March 31,2007 was $273,694.

2. Simple IRA Plan

The Company started a Simple IRA Plan in January 1999. Eligible employees may choose to save a percentage of salary income on a pre-tax basis, subject to certain IRS limits. The Company matches 100% of the first 3% of wages for all eligible participants.

Employer contributions for the Simple IRA Plan totaled $6,895 for the period ended March 31, 2007.

7

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

(Continued)

3. Commitments

On February 14,1998, as amended June 14, 2000 and February 8, 2006, the Company entered into a lease agreement for its operating facility. The lease runs through September 30, 2010. The agreement requires the payment of minimum monthly rental of $4,563, until July 1, 2008 when the monthly rent will be raised to $4,815, plus all real estate taxes, special assessments, maintenance, repairs, operating expenses and insurance. Total rental expense was $19,824 for the period ended March 31, 2007.

Future minimum lease payments for all operating leases having a term in excess of one year at December 31, 2007 are as follows:

For the Year Ended
2008	$	56,265
2009		57,774
2010		43,331
Total	$	212,126

4. Income Taxes

The provision for income taxes (benefit) consists of the following:

	2007
Current	$	66,915
Deferred tax liability		(2,303	)
Total	$	64,612

The deferred tax liability is comprised of the following at December 31:

	2007
Tax related to timing difference on depreciation	$	39,805
Tax benefits of other timing difference		(7,608	)
Net deferred tax liability	$	32,197

8

GRYPHICS, INC.

NOTES TO FINANCIAL STATEMENTS

(Continued)

5. Related Party Transactions

The Company has entered into a joint development agreement with an entity, which became a 19% stockholder on March 30, 2001. The agreement covers certain technologies of the Company. The Company has received developmental monies as part of the agreement. The agreement also calls for non-competition and a license between the parties. The Company also received royalties over a five year period based on a percentage of sales of the products related to the license.

The above referenced corporate stockholder also purchased products from the Company. Sales to the stockholder totaled $0 for the three months ended March 31, 2007, and there were no accounts receivable from this related corporation at March 31, 2007.

6. Concentration Risks

The Company had one major customer from whom it generated approximately 31% of its total revenues for the period ended March 31, 2007. The Company had outstanding receivables from this customer in the amount of $418,666 at March 31, 2007.

The Company had two vendors whom accounted for 29% of purchases for the period ended March 31, 2007. The Company owed these vendors a total of $32,007 at March 31, 2007.

7. Subsequent Event

The Company entered into an Agreement and Plan of Merger which was signed and in effect April 3, 2007. The Company stockholders’ received cash and stock in the acquiring publicly traded corporation.

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EX-99.3

Exhibit 99.3

Cascade Microtech, Inc.

Unaudited Pro Forma Condensed Combined Consolidated Financial Statements

The following unaudited pro forma condensed combined consolidated financial statements give effect to the acquisition of Gryphics, Inc. (Gryphics) by Cascade Microtech, Inc. (Cascade Microtech). These pro forma condensed combined consolidated statements are presented for illustrative purposes only. The pro forma adjustments described in the notes accompanying the statements are based upon available information and assumptions that we believe are reasonable. These unaudited pro forma condensed combined consolidated financial statements do not give effect to any potential cost savings or other operating efficiencies that could result from the acquisition. The pro forma condensed combined consolidated financial statements do not purport to represent what the consolidated results of operations of Cascade Microtech would actually have been if the acquisition had in fact occurred on the date we refer to below, nor do they purport to project the results of operations of Cascade Microtech for any future period or as of any historical dates.

Under the purchase method of accounting prescribed by Statement of Financial Accounting Standards No. 141, Business Combinations, tangible and identifiable intangible assets acquired and liabilities assumed are recorded at their estimated fair market values. The excess of the purchase price, including estimated fees and expenses related to the acquisition, over the net assets acquired is allocated to goodwill. The purchase price allocation is preliminary, subject to future adjustment and has been made solely for the purpose of providing the unaudited condensed combined consolidated financial information discussed below.

The unaudited pro forma condensed combined consolidated balance sheet as of March 31, 2007, was prepared by combining the historical consolidated balance sheet of Cascade Microtech and the historical balance sheet of Gryphics as of March 31, 2007, giving effect to the acquisition as if it occurred on March 31, 2007. The unaudited pro forma condensed combined consolidated statement of operations for the three months ended March 31, 2007 was prepared by combining the historical consolidated statement of operations of Cascade Microtech for the three months ended March 31, 2007 and the historical statement of operations of Gryphics for the three months ended March 31, 2007, giving effect for the acquisition as if it had occurred on January 1, 2006. The unaudited pro forma condensed combined consolidated statement of operations for the year ended December 31, 2006 was prepared by combining the historical consolidated statement of operations of Cascade Microtech for the year ended December 31, 2006 and the historical statement of operations of Gryphics for the year ended December 31, 2006, giving effect for the acquisition as if it had occurred on January 1, 2006. The operating results of Gryphics are included in Cascade Microtech’s statement of operations beginning on the date of acquisition, April 3, 2007.

These unaudited pro forma condensed combined consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of (a) Cascade Microtech, Inc. included in Form 10-Q as of and for the three months ended March 31, 2007 (filed May 10, 2007), (b) Cascade Microtech, Inc. included in Form 10-K for the year ended December 31, 2006 (filed March 16, 2007), and (c) Gryphics, Inc. included elsewhere herein.

1

Cascade Microtech, Inc

Unaudited Pro Forma Consolidated Condensed

Combined Balance Sheet

as of March 31, 2007

	Cascade Microtech March 31, 2007			Gryphics Corporation March 31, 2007		Pro Forma Adjustments				Pro Forma Combined
Assets
Current Assets:
Cash and cash equivalents	$	2,650,239		$	998,430					$	3,648,669
Short-term marketable securities		43,738,229					(13,767,727	)	A		29,970,502
Accounts receivable, net of allowances		18,767,160			994,247						19,761,407
Inventories, net		15,505,600			614,316						16,119,916
Prepaid expenses and other		2,111,917			168,038		(147,439	)	B		2,132,516
Deferred income taxes		2,029,480									2,029,480
Total Current Assets		84,802,625			2,775,031		(13,915,166	)			73,662,491
Long-term marketable securities		6,596,929									6,596,929
Fixed assets, net of accumulated depreciation		8,599,854			597,593						9,197,447
Deferred income taxes		722,849					(722,849	)	C		—
Intangible Assets					384,608		(384,608	)	D		13,200,000
							13,200,000		E
Goodwill		1,294,607					14,402,814		E		15,697,421
Other assets, net		4,679,251									4,679,251
Total Assets	$	106,696,115		$	3,757,232	$	12,580,191			$	123,033,538
Liabilities and Shareholders’ Equity
Current Liabilities:
Current portion of capital leases	$	5,884		$	—					$	5,884
Accounts payable		5,614,208			273,889						5,888,097
Deferred revenue		1,008,674									1,008,674
Accrued liabilities		5,014,845			121,518		99,269		B		5,235,632
Total Current Liabilities		11,643,611			395,407		99,269				12,138,287
Capital leases, net of current portion		27,313									27,313
Deferred revenue		197,546									197,546
Deferred income taxes					32,197		3,810,550		C		3,842,747
Other long-term liabilities		1,742,885									1,742,885
Total Liabilities		13,611,355			427,604		3,909,819				17,948,778
Shareholders’ Equity:
Common stock		118,768			10,178		(10,178	)	F		118,768
							12,000,000		A		12,000,000
Additional paid-in capital		64,988,577			1,068,609		(1,068,609	)	F		64,988,577
Accumulated other comprehensive loss - unrealized											—
holding losses on investments		(4,266	)								(4,266	)
Retained earnings		27,981,681			2,250,840		(2,250,840	)	F		27,981,681
Total Shareholders’ Equity		93,084,760			3,329,628		8,670,373				105,084,760
Total Liabilities and Shareholders’ Equity	$	106,696,115		$	3,757,232	$	12,580,191			$	123,033,538

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

2

Cascade Microtech, Inc

Unaudited Pro Forma Condensed

Combined Consolidated Statement of Operations

for the year ended December 31, 2006

	Cascade Microtech Year Ended December 31, 2006			Gryphics Corporation Year Ended December 31, 2006		Pro Forma Adjustments				Pro Forma Combined
Sales	$	84,851,624		$	7,693,938					$	92,545,562
Cost of Sales		47,809,426			2,666,166						50,475,592
Gross Profit		37,042,198			5,027,772		—				42,069,970
Operating Expenses											—
Research and development		8,949,371			916,887						9,866,258
Selling, general, and administrative		24,948,878			1,978,143						26,927,021
Amortization of intangible assets					32,047		(32,047	)	A		1,763,571
							1,763,571		B
Total operating expenses		33,898,249			2,927,077		1,731,525				38,556,850
Income from operations		3,143,949			2,100,695		(1,731,525	)			3,513,120
Other income (expense)
Interest income		1,614,872			44,508		(472,346	)	C		1,187,034
Interest expense		(566	)								(566	)
Other, net		347,316									347,316
Total other income (expense)		1,961,622			44,508		(472,346	)			1,533,784
Income before income taxes		5,105,571			2,145,203		(2,203,870	)			5,046,904
Provision (benefit) for income taxes		1,495,140			700,828		(524,409	)	D		1,671,559
Net Income	$	3,610,431		$	1,444,375	($	1,679,461	)		$	3,375,345
Net Income per share:
Basic	$	0.31								$	0.27
Diluted	$	0.30								$	0.26
Shares used in computing net income per share
Basic		11,481,666					842,753		E		12,324,419
Diluted		11,959,110					842,753		E		12,801,863

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

3

Cascade Microtech, Inc

Unaudited Pro Forma Condensed

Combined Consolidated Statement of Operations

for the three months ended March 31, 2007

	Cascade Microtech Three Months Ended March 31, 2007			Gryphics Corporation Three Months Ended March 31, 2007		Pro Forma Adjustments				Pro Forma Combined
Sales	$	22,470,431		$	1,437,048					$	23,907,479
Cost of Sales		12,208,423			597,977						12,806,400
Gross Profit		10,262,008			839,071		—				11,101,079
Operating Expenses											—
Research and development		2,639,362			265,099						2,904,461
Selling, general, and administrative		6,769,870			460,784						7,230,654
Amortization of intangible assets					8,595		(8,595	)	A		440,893
							440,893		B
Total operating expenses		9,409,232			734,478		432,297				10,576,008
Income from operations		852,776			104,593		(432,297	)			525,071
Other income (expense)
Interest income		455,085			10,813		(138,952	)	C		326,946
Interest expense		(846	)								(846	)
Other, net		109,763									109,763
Total other income (expense)		564,002			10,813		(138,952	)			435,863
Income before income taxes		1,416,778			115,406		(571,250	)			960,934
Provision (benefit) for income taxes		368,492			64,612		(122,198	)	D		310,906
Net Income	$	1,048,286		$	50,794	($	449,051	)		$	650,028
Net Income per share:
Basic	$	0.09								$	0.05
Diluted	$	0.09								$	0.05
Shares used in computing net income per share
Basic		11,807,692					842,753		E		12,650,445
Diluted		12,207,076					842,753		E		13,049,829

See accompanying notes to unaudited pro forma condensed combined consolidated financial statements

4

CASCADE MICROTECH, INC.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED

FINANCIAL STATEMENTS

(In thousands, except per share data)

NOTE  1: ACQUISITION

On April 3, 2007, Cascade Microtech acquired 100% of the assets of Gryphics for an aggregate purchase price of approximately $26,015, which consisted of cash and from the liquidation of short-term marketable securities of $13,768, the fair value of 843 shares of stock issued of $12,000, plus acquisition costs of $247. The fair value of the shares of Cascade Microtech stock issued was determined to be $14.24 per share, using the average closing stock price for a reasonable period before and after the closing date of the acquisition. Acquisition related costs include our estimate for legal, accounting and other costs directly related to the merger.

The purchase price was allocated to the assets acquired and liabilities assumed based on management’s estimate of fair values. The excess of purchase price over the fair value of net assets acquired reflects the benefits from expansion of market opportunities and customer relationships. Our estimates and assumptions are subject to change. Certain items may impact the final purchase price allocation. Our preliminary evaluation is based on the following as estimated on the date of acquisition:

Purchase price:
Cash consideration			$	13,768
Value of stock exchanged				12,000
Direct acquisition costs				247
Total consideration				26,015
Allocated to:
Book values of net assets of Gryphics acquired	3,330
Adjustments to assets and liabilities fair value
Historical intangible assets	(384	)
Net Adjustment to Deferred Tax Liabilities	(4,534	)
Fair value of net tangible liabilities acquired				(1,588	)
Allocated to:
Identifiable intangible assets:
Developed technology (8 year useful life)	8,200
Customer relationships (7 year useful life)	3,700
Non-compete agreements (2 year useful life)	200
Trade name and Trademarks (10 year useful life)	1,100			13,200
Excess purchase price allocated to goodwill			$	14,403

5

NOTE  2: PRO FORMA ADJUSTMENTS TO THE CONDENSED COMBINED CONSOLIDATED BALANCE SHEET

(A) Adjustment to record the purchase of Gryphics, which includes estimates of $13.8 million in cash and from the liquidation of short-term marketable securities and $12 million in Cascade Microtech common stock.

(B) Adjustment to record the reduction of acquisition related costs in other prepaid expenses and increase accrued liabilities for direct acquisition costs.

(C) Adjustments to record deferred tax liabilities on acquired intangibles and to net long-term deferred tax assets against long-term deferred tax liabilities.

(D) Adjustment to account for the elimination of Gryphics’ historical intangible assets.

(E) Adjustment to record goodwill and the estimated fair value of identifiable intangible assets acquired. Identifiable intangible assets consist primarily of developed technology and customer relationships which will be amortizable over their useful lives. These lives are currently estimated to be between two and ten years. The fair value and useful life estimates of these assets is preliminary and subject to change.

(F) Adjustment to record the elimination of Gryphics’ equity.

6

NOTE  3: PRO FORMA ADJUSTMENTS TO COMBINED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(A) Adjustment to account for the elimination of Gryphics historical amortization of $32,047 and $8,595 for the year ended December 31, 2006 and the three months ended March 31, 2007, respectively, related to its intangible assets.

(B) Adjustment to record the amortization expense related to the identifiable assets acquired. Such assets consist primarily of developed technology, customer relationships, trade names and trademarks, and non-compete agreements, which are amortized over their estimated useful lives. These lives are currently estimated to be between two and ten years. The fair value and useful life estimates of these assets is preliminary and subject to change.

(C) To reflect the decrease in interest and other income (expense), net due to the reduction in interest income from the estimated use of cash and from the liquidation of short-term marketable securities of $13.8 million related to Cascade Microtech’s purchase of Gryphics.

(D) To reflect the pro forma tax effect as if the entities were combined as of the beginning of the earliest period presented.

(E) Reflects the issuance of 842,753 shares of Cascade Microtech, Inc. shares to Gryphics stockholders to complete the merger.

7