EFTA00307395.pdf

WTAS VALUATION SERVICES GROUP AliphCom Common Equity Valuation as of June 20, 2011 CONFIDENTIAL EFTA00307395 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 2o, 2011 Table of Contents Transmittal Letter Definition of Value Scope of Engagement Conclusion Statement of Limiting Conditions Certification Background Exhibit A: Company Overview Exhibit B: Historical Financial Analysis Exhibit C: Industry Overview Exhibit D: Economic Overview Exhibit E: Valuation Methodologies Company Valuation (Step 1) Allocation of Company Value to Each Ownership Class (Step 2) Selected Approaches Total Company Valuation Exhibit F: Income Approach Revenue, Expenses, and Profitability Income Taxes Cash Flow Items Discount Rate Residual Value Conclusion Exhibit G: Discounted Cash Flow Analysis Exhibit H: Weighted Average Cost of Capital Exhibit I: Guideline Company Ratios Exhibit J: Market Approach: Public Company Market Multiple Method Overview Search Criteria Analysis Conclusion Exhibit K: Market Approach: Public Company Market Multiple Method Analysis CONFIDENTIAL I WTAS LLC EFTA00307396 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of Julie 2o, 2011 Common Equity Valuation Exhibit L: Capitalization Rights Overview Exhibit M: Capitalization Table Exhibit N: Option Pricing Method Overview Analysis Black-Scholes Model Black-Scholes Model Assumptions Allocation of Value to Each Share Class Conclusion Exhibit 0: Option Pricing Method Analysis Exhibit P: Adjustment for Lack of Marketability William L Silber Study Management Planning, Inc. Study FMV Study Selected Marketability Discount Exhibit Q: Put Option Analysis Appendices Appendix 1: Guideline Company Tear Sheets Appendix 2: Studies Regarding Adjustments for Lack of Marketability Pre-IP0 Studies Restricted Stock Studies Appendix 3: Appraisers' Qualifications Appendix 4: Facts, Factual Assumptions, and Factual Representations Relied Upon in Our Valuation (Pursuant to Circular 230 Requirements) CONFIDENTIAL I WTAS LLC EFTA00307397 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 August 3, 2011 Mr. Michael Tamaru Chief Financial Officer AliphCom 99 Rhode Island Street, 3 ni floor San Francisco, CA 94103 Dear Mr. Tamaru: We have completed our analysis of the fair market value of the common equity of AliphCom ("Aliph" or the "Company") on a per share basis (the "Subject Interest") as of June 20, 2011 (the "Valuation Date"). We understand that our valuation of the Subject Interest, as developed in this report, will be utilized for tax planning and financial reporting purposes in conjunction with regulations of Section 409A of the Internal Revenue Code ("IRC") as well as Financial Accounting Standards Board ("PASS") Accounting Standards Codification ("ASC") Topic 718 - Compensation'. We have not been engaged to make any purchase or sale recommendations associated with the Company and this report should not be utilized for any other purpose. Our valuation is dependent on numerous factors both internal and external to the Company as of the Valuation Date. However, a willing buyer, taking into account its own facts and circumstances, might have a different assessment of value. Thus, we make no representation, nor should it be implied that the Company would he sold at the indicated value. Such price would be dependent on market conditions and negotiations between buyer and seller. DEFINITION OF VALUE For tax reporting purposes and in conjunction with Section 409A of the IRC, the standard of value utilized in our analysis is fair market value, which is defined as: The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of the relevant facts. This definition of value is supported by pronouncements from the Internal Revenue Service (the "IRS") and has been further established in numerous court decisions dealing with fair market value issues. For financial reporting purposes, the standard of value to be utilized in our analysis is fair value as defined in the Glossary of FASB ASC Topic 718 as follows: The amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale. We also considered recent Financial Accounting Standards Board discussions and activity related to refining this definition and other current staff positions / decisions. For the purposes of this valuation analysis, it was assumed that no material difference existed between the estimated fair market value and the fair value of the Company's common equity on a per share basis. Throughout the course of this report and the related analysis, it can be assumed that the terms "fair market value" and "fair value" are interchangeable. PASS ASC Topic 718 supersedes Statement of Financial Accounting Standards ("SPAS') No. 12311 CONFIDENTIAL I WTAS LLC 3 EFTA00307398 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June no, 2011 SCOPE OF ENGAGEMENT Where applicable, our valuation of the Subject Interest included an analysis of the Company's historical operating results, review of the industry in which the Company operates, research of comparable publicly traded companies, and a review of the Company's pro-forma forecast of future business operations. Consistent with Revenue Ruling 59-60 and standard practice, the following factors have also been analyzed and accorded due weight, where applicable: • The nature and history of the entity's business; • The general economic conditions and specific industry outlook; • The book value of the entity and its financial condition; • The earning capacity of the entity; • The entity's distribution history and capacity; • The existence of goodwill or other intangible value within the business; • Prior interest sales and the size of the interests being valued; and • The market price of companies engaged in the same or a similar line of business having their equity securities actively traded in a free and open market, either on an exchange or over-the- counter ("OTC"). We also considered differences between the Company's preferred and common shares with respect to liquidation preferences, conversion rights, voting rights, and other features. We also considered appropriate adjustments to recognize lack of marketability. Revenue Ruling 59-602 is the definitive source outlining the standard of value, approach, methods, and factors to be considered in valuing shares of the stock of a closely held entity similar to Palantir. Although initially presented for use in estate and gift tax calculations, Revenue Ruling 59-60 is regularly referenced and used in the valuation of closely held businesses for other tax reporting, and other purposes, and its principles are applicable in the valuation of most closely held businesses. In the course of our valuation analysis, we used financial and other information provided by management or obtained from private and public sources. We have accepted the financial data provided to us without verification as accurately reflecting the historical and projected financial position and operating results of the Company. 2 Revenue Ruling 54-6o, 2459-1 CB 237, modified by Revenue Ruling 65-193,1965-2 CB ro, and amplified by Revenue Ruling 77-287, 1977-2 CB 314, Revenue Ruling 8o-223, 248o-2 CB lot, and Revenue Ruling 83-120,1483-2 CIII7o. CONFIDENTIAL I VVTASLLC 4 EFTA00307399 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of Julie 2o, 2011 CONCLUSION Based on the information provided and the analysis conducted, and subject to the attached Statement of Limiting Conditions, it is our opinion that one common share of the Company as of the Valuation Date should be valued as follows: $0.77 (rounded) ZERO DOLLARS AND SEVENTY-SEVEN CENTS With regard to tax issues, pursuant to Internal Revenue Service requirements (Circular 230), please note that: • This opinion is limited to the tax issue addressed in the opinion (the valuation of the Subject Interest for tax reporting purposes). • Additional issues may exist that could affect the tax treatment of the subject transaction or matter. Our opinion does not consider or conclude on those additional issues. • With respect to any significant tax issues outside the limited scope of the opinion, the opinion was not written, and cannot be relied on by the taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. We appreciate this opportunity to perform this engagement and would be pleased to discuss our findings and the methodology used in the valuation. A copy of this report is retained in our files, together with the data from which it was prepared. Please do not hesitate to contact us if you have any questions or if we can be of further assistance concerning this engagement. Very truly yours, WTAS CONFIDENTIAL I WTAS LLC 5 EFTA00307400 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 Statement of Limiting Conditions The value conclusions related to the asset(s), propert(ies), business entit(ies), or business interest(s) (the "Subject Asset(s)") specified in our appraisal report / deliverable (hereafter referred to as the "Analysis") are governed by the following limiting conditions: t. No investigation of the legal description or matters, including title or encumbrances, will be made, and the owner's claim to the Subject Asset(s) is assumed to be valid and marketable. Further, unless otherwise specifically indicated, we have made the following assumptions: (i) the Subject Asset(s) is free and clear of any liens or encumbrances; (ii) the Subject Asset(s) meets full compliance with all applicable federal, state, and local zoning, as well as use, environmental, and similar laws and regulations; and (iii) all licenses, certificates, consents, or other legislative or administrative authority from any local, state, federal government, or private entity have been or can be obtained or renewed for any use on which the value conclusion is based in the Analysis. 2. WTAS LW ("WTAS") has relied upon information furnished by others, which is believed to be reliable. We have not independently verified the accuracy or completeness of the information. 3. During the course of our analysis, we were provided certain financial information, including estimates of cash flow, by management. We have not performed an examination, review, or compilation in accordance with standards prescribed by the American Institute of Certified Public Accountants and, therefore, do not express an opinion or offer any form of assurance on the cash flow data or their underlying assumptions. 4. The value conclusions are not intended to represent values for the Subject Asset(s) at any date other than the date of value specified in the Analysis. We assume no responsibility for changes in market conditions or physical factors that could affect the value of the Subject Asset(s) at a later date, or the inability of the owner to sell the Subject Asset(s) at the value specified in the Analysis. The Analysis has been prepared solely for the purpose stated, and should not be used for any other purpose or by any other person / party than to or for whom it is addressed and prepared. Our value conclusions are not intended to represent investment advice of any kind and do not constitute a recommendation as to the purchase price or sale of the Subject Asset(s). 6. Neither the Analysis nor any portion thereof (including, without limitations, any conclusions as to value, the identity of the appraiser, or the identity of WTAS) shall be disseminated to the public or third parties through advertising, public relations, news, sales, mail, direct transmittal, Securities and Exchange Commission disclosure documents, or any other media without the prior written consent and approval of WTAS. Possession of the Analysis, or a copy thereof, does not afford the holder the right to publication. The Analysis may not be used without the prior written consent of WTAS and Palantir. 7. Our engagement team is not required to give further consultation, testimony, or be in attendance in court with reference to the Subject Asset(s) in question or to update any report, recommendation, analysis, conclusion, or other document related to our services, unless additional arrangements are made. 8. Responsible ownership and competent property / asset management are assumed. S. CONFIDENTIAL I WTAS LLC 6 EFTA00307401 WTAS ALIPNCOM - COMMON EQUITY VALUATION REPORT As of Julie 20, 2011 Certification I certify, that to the best of my knowledge and belief: • The statements of fact contained in this report are true and correct. • The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. • WTAS and I have no present or prospective interest in the property that is the subject of this report, and have no personal interest with respect to the parties involved. • I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. • The engagement of WTAS and myself in this assignment was not contingent upon developing or reporting predetermined results, nor was the compensation received for completing this engagement contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the dient, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of the appraisal. • The undersigned have performed services with respect to interests in the Company within the three- year period immediately preceding acceptance of the valuation engagement. Prior services were the valuation of one common share of the Company as of February 28, 2009, February 28, 2010, February 10, 2011, March 28, 2011, and June 30, 2007. • The procedures, opinions, and conclusions developed constitute an Appraisal Report, in conformance with the Business Valuation Standards of the American Society of Appraisers. No persons, other than the appraisers acknowledged below, provided significant business appraisal assistance to the person(s) signing this certification. 07 1040%,„ r Petra Loer, CFA, ASA WTAS Tax ID Number: 26-1437743 Contributing Appraiser: Shirley Zhang CONFIDENTIAL I WTAS LLC 7 EFTA00307402 EXHIBIT A Company Overview ALIPHCOM — COMMON EQUITY VALUATION As of June 20.2011 8 EFTA00307403 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of Julie 20, 2011 Exhibit A: Company Overview Founded in 1998 and headquartered in San Francisco, California, Aliph originated as a leading developer of design-driven, noise-eliminating bluetooth headsets. Since inception, Aliph has refined its noise suppression technology3 for commercial applications. In December 2006, the Company introduced its award-winning Jawbone Bluetooth headset with Noise Shield nationwide. Since its launch, the Jawbone Bluetooth headset has become one of the best-selling Bluetooth headsets in the U.S. and is also sold in the U.K. The Company subsequently launched its low- and mid-price-range product series, the Jawbone Prime and Jawbone ICON series, in 2009 and early 2010, respectively, which featured headsets with innovative and sleek designs. Since its release, the Jawbone ICON series has received outstanding reviews and experienced strong sales volume through online and third-party retailers. As of the Valuation Date, Aliph has expanded its product lines from headsets to wireless speakers and speakerphones (the JAWBOX series), as well as new software applications and services. For instance, the Company introduced MyTalk in 2010, a web portal that allows users to download applications and software for enhanced setting control and connectivity with their devices. The Company also introduced a free mobile phone service called "THOUGHTS", which allows users to record and send instant voice messages to individual or group contacts (vs. traditional methods of texting and emailing). Furthermore, the Company expects to release its Armstrong activity band in July 2011, which will primarily target physically active urban adults. The Company's products received various accolades and awards, with the most recent being the winner of the 2010 Industrial Designer's Society of America ("IDSA") Design of the Decade. Going forward, management is forecasting significant growth from recently launched new products and services, expanding existing market segments, and developing new products. Based on discussions with management, the applicable target market for the Company's Armstrong activity band is significantly larger than previously anticipated. As such, management expects to achieve a larger sales volume of activity bands, which is reflected in the revised forecast for the current Valuation Date. Similarly, management also expects the stereo headphone line to achieve a higher sales volume from the Company's recently launched Jambox, which is expected to be sold globally going forward. Management expects bluetooth sales to remain flat and sales of its enterprise products to decline going forward. Overall, due to competitive pricing pressure, management is forecasting similar pricing points, and expects to achieve a similar long-term profitability margin as previously forecasted. In June 2011, Aliph secured its latest round of Series 5 preferred financing with JP Morgan Digital Growth Fund, LP. However, according to management, there were a couple of investors who were considering making additional Series 5 investments in the Company. As a result of the uncertainty related to these potential investments, we did not consider them in our analysis as of the Valuation Date. Based on discussions with management, the Series 5 preferred round of financing was not considered arms length, as the financing was not marketed to solicit other competing offers. In addition, the potential investors did not perform extensive financial due diligence of the Company, and the investors were personal friends of the Chief Executive Officer. As such, we did not rely upon the Series 5 preferred round of financing as an indication of value in arriving at our concluded value for the Company's common shares at the Valuation Date. Since inception, the Company has had seven rounds of preferred share financing, through which the Company had raised aggregate proceeds of approximately $118.5 million. Its primary investors at the Valuation Date included JP Morgan Digital Growth Fund, LP; Sequoia Capital; the Mayfield Fund; Khosla Ventures; Andreessen Horowitz Fund II, LP; and AH Capital Management, LW. As a result of the economic recession and investments the Company has made in development thus far, the Company incurred operating losses before interest expense and tax of approximately $17.6 million on revenues of approximately $86.8 million for the fiscal year ended December 31, 2010. However, going forward, the Company is forecasted to break even in the 2012 time frame, and revenues are projected to experience significant growth in the near term as the Company expects to see an increase in sales volume from its entry into new geographic markets and expansion in the new activity band market. 3 Originally used for military applications, with its participation in a Defense Advanced Research Projects Agency (DARPA) program. CONFIDENTIAL I WTAS LLC 9 EFTA00307404 EXHIBIT B Historical Financial Analysis ALIPHCOM - COMMON EQUITY VALUATION As of June 20, 2011 10 EFTA00307405 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of JUlle 20, 2011 Exhibit B: Historical Financial Analysis Aliph's revenues rebounded in 2010 following the decline in 2009 as a result of the lackluster demand due to the economic recession. As of the Valuation Date, management expects its products to continue gaining traction in their primary markets. See the historical financial statement analysis below. Selected Historical Income Statement Data (in $0005) Year-to- Date Mar 2006 2007 2008 2009 2010 2011 Revenue $1,201 $55,708 $145,455 $70,434 $86,781 $28,477 Operating income (loss) (1,928) 4,608 6,821 (13,007) (17,636) (9,990) Net income (loss) (2,148) 3,300 2,791 (13,089) (17,663) (9,991) CONFIDENTIAL I WTAS LLC I I EFTA00307406 EXHIBIT C Industry Overview ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 12 EFTA00307407 WTAS ALIPHCOM— COMMON EQUITY VALUATION REPORT As of June no, 2011 Exhibit C: Industry Overview. The wireless communications equipment industry consists of two general sectors: the wireless handsets / headsets sector and the wireless infrastructure (network equipment) sector. The wireless handset sector consists of both analog and digital handsets, and is estimated to be the world's largest consumer electronic market. According to Datamonitor, the global wireless handset market reached total revenues of approximately $95.8 billion in 2009, representing a compound annual growth rate ("CAGR") of approximately 8.5% for the period spanning 2005 through 2009. Over the four-year period spanning from 2005 through 2009, more consumers dropped landline phones completely and instead relied on their wireless handsets for phone service, such that the volume of mobile handsets that were in use increased at a four-year CAGR of 10.7% from 2005 to 2009, and reached an approximate one billion units in 2009. Going forward, the performance of the wireless handset market is forecasted to continue to accelerate, with an anticipated CAGR of 10.1% for the five-year period spanning from 2009 to 2014, reaching a total market value of approximately $1,55.3 billion by the end of 2014. See below for additional details. Table 17: Global mobile phones market value forecast: $ billion, 2009-14 Year $ billion billion % Growth 2009 95.8 68.9 (3.7%) 2010 103.2 74.2 7.7% 2011 113.2 81.4 9.7% 2012 124.8 89.7 10.3% 2013 138.9 99.9 11.3% 2014 155.3 111.7 11.8% CAGR: 2009-14 Source: Datamonitor 10.1% DATAMONITOR • Sources: Standard & Poor's Industry Surveys (n, the Datamonitor Group, and information provided by management. CONFIDENTIAL I WTAS LLC 13 EFTA00307408 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 Figure 10: Global mobile phones market value forecast: $ billion. 2009-14 180 160 140 17n g 100 80 as 00 40 20 1 2010 2011 2312 2013 2014 Year S Dinar Growls 1 •— • • • 14 • 11 .10 • 8 • 6 .4 2 0 -2 -4 j Source: Datamonitor DATAMONITOR According to MI, the wireless infrastructure market is continuing to experience growth due to the expansion of fourth generation (4G) digital networks. The usage of these high-speed networks has been fueled by the growing demand for smartphones, such as Apple's 4G iPhone and Google Inc.'s Android- based G2. The rise in demand for smartphones has been largely driven by the significant growth in social networking, as these devices provide access to popular social networking websites such as Facebook, Twitter, and MySpace. In upcoming years, the demand for these devices will depend on product differentiation, as consumers require more customized, intelligent, and powerful applications. Geographically, the world's mature economies continue to play an important role in the wireless handset market; however, the number of new mobile subscribers in these developed countries is rapidly declining as penetration rates have reached relatively saturated levels. As a result, the focus of market growth has turned to emerging markets in regions within the Asia-Pacific, where low penetration rates and pent-up demand for network connectivity bode well for new subscriber acquisitions. According to Datamonitor, as of 2009, the Asia-Pacific region had the majority share (or approximately 55.2%) of the total wireless handsets sold globally. See the chart on the following page for details. CONFIDENTIAL I WTAS LLC 14 EFTA00307409 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 2o, 2011 Figure 3: Global mobile phones market segmentation II: % share. by value, 2009 ••,rnericas 180% Europe 269% Source: Datamonitor DATAMONITOR The number of unified communications CLIC") users is expected to increase from approximately 2.1 million in 2010 to approximately so million in 2015. Based on information provided by management, the increase will be driven by both enterprise and personal usage. Overall, the growth in headphone sales is expected to be primarily driven by an increase in smartphone usage. Participants operating in the wireless handset / headset industry include large public companies such as Motorola Mobility, Ines, Palm, Inc.6, Nokia Corp., Plantronics Inc., Research in Motion Ltd., Netgear Inc., and Logitech International SA, as well as a number of smaller companies such as AliphCom and BlueAnt Wireless. The continuing recovery of the worldwide economy is expected to continue to drive consumer demand for wireless products, which represents a significant market opportunity for companies in that space. s Effective January 4, 2011, Motorola Mobility, Inc., and Motorola Solutions, Inc. spun-off into two separate publicly traded companies. Motorola Mobility, Inc. primarily provides products and services to consumer and entertainment sectors. Motorola Solutions, Inc. primarily provides products and services to enterprise and government sectors. 6 As of July 1, 2010, Palm, Inc. was acquired by Hewlett-Packard Company. CONFIDENTIAL I VVTASLLC 15 EFTA00307410 EXHIBIT D Economic Overview ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 16 EFTA00307411 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 Exhibit D: Economic Overview 7 A fundamental consideration in the valuation of any business is the performance of the economy in which that business operates or from which it derives its benefits (i.e., revenues and profits). In the case of the Company, it is important to consider the performance and outlook of the economy in which it operates. Current economic concerns include global political upheaval, uncertainty related to European sovereign debt, quantitative easing, government stimulus programs, and a continually weak housing market Despite widespread agreement that the U.S. economy began to grow in late-2009, weak labor, retail, and housing markets in 2010 have caused the economic recovery to be slow. Furthermore, high household indebtedness is expected to continue to lead to weak demand in the retail markets. Please see below for further details. GROSS DOMESTIC PRODUCT According to the Economist Intelligence Unit CEIU"), the economic gross domestic product ("GDP") in the U.S. is expected to grow 2.9% in 2011 as the recovery continues and consumer confidence improves. The government has approved a $300 billion economic stimulus package, which was expected to continue to support economic growth in 2011. Quarterly Real GDP Growth 1.5% 1.0% 0.5% C..0% * MI . P.. .0% IP A/ / / / t lie le / •P re n0 , e,er -1.0% 1.5% -2-0% ECONOMIC INDICATORS The projected growth in GDP is also supported by a modest expansion in production, consumer spending, and manufacturing. The continually increasing economic indicators represent an increase in inventories and economic activity. Please see below for further information. Consolidated - Annual Change (2/10 - 2/11) Industrial Production Business Manufacturing Consumer . endin 5.81% 7.53% 3.77% 7 Sources: Capital IQ, Federal Reserve Board, the Bureau of Economic Analysis, the Bureau of Labor Statistics, the University of Michigan Consumer Sentiment Report, Institute for Supply Management, the Livingston Survey, the EIU, and Standard & Poor's Industry Surveys. CONFIDENTIAL I WTAS LLC 17 EFTA00307412 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of Julie so, 2011 HOUSING MARKET Since 2008, the subprime debt crisis has placed downward pressure on economic growth as significant losses from subprime loans have reduced the willingness of banks to loan funds to other financial institutions and consumers. Despite the stabilization of prices in the housing markets since 2008, many states hit hardest by the subprime crisis have yet to recover, resulting in a surplus inventory of homes available in the housing market. This has resulted in significant declines in new home construction and construction-related industries, which has also slowed economic growth. Home sales began to recover in late 2009; however, inventories remained high in 2010, which has kept home prices low. Furthermore, new housing starts have remained weak as excess housing inventory has been slow to sell. Iwo 21100 15 00 1000 5 00 New Home Starts (000's) ° FfitIMITI§Iffiiiii -.a -Eiia.mI$.;g.a. -4.,-a,..-a.a 2 ifillIkiiI/Ifill ›- . a.. -4a -a ..?.. . -A01-= -E- LABOR / CONSUMER STATISTICS According to EIU, the unemployment rate is expected to decrease to an average of 8.o% for fiscal year 2011. Reports from the Bureau of Labor Statistics indicate that the Consumer Price Index for All Urban Consumers increased 2.2% from February 2010 to February 2011. According to HU, consumer confidence has 'mproved in the first quarter of 2010 as consumer confidence reached its highest level since February 2008. In general, labor markets and consumer sentiment have improved but remain weak, which has resulted in slow economic recovery. 12.0% 10.0% IL 6.0% 40% 2.0% Unemployment Rate (%) ...% EltlittiiiiiiiiiifIttfifikglIiiiiffillui -••-•?. :: 2 pep reo -a -c•-p.r, 2 c.cee- onWr- 7I1-6 .fl e) e- 'fl?ss.7.-?.. .4 2 CONFIDENTIAL I WTAS LLC IS EFTA00307413 WTAS ALIPNCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 INTEREST RATES According to the December 2010 Livingston Survey, the interest rate on three-month Treasury bills is expected to increase from 0.2% in December 2010 to 0.4% by December 2011, before further increasing to 1.6% by December 2012. In addition, ten-year Treasury bond interest rates are expected to increase from 2.8% in December 2010 to 3.3% by December 2011. Current estimates for the ten-year Treasury bond interest rates anticipate an increase to 4.0% by December 2012. The U.S. Federal Reserve has kept long- term and short-term interest rates low in an effort to incentivize economic growth and prevent deflation. Please refer to the chart below. to Year (Weekly) Interest Rates 9.0% 8.0% 7.o% 6.o% 5.o% 4.o% 3.0% 2.0% 1.0% 0.0% 0 # ....\t",r. ., , ,t§:. 0 # cfe 49cP ce eb re le tie ..Nt.:„., ...\tr. ..0, # ....tx ..t„.. so 4",". .....\,;,,, .s\b\ ...t.,, # 1 55 , 43 le it 1 e s ...0 FINANCIAL MARKETS For the 12 months ended June 20, 2011, U.S. equity markets demonstrated strong gains. Please see below for annual market returns. 6/20/2010 6/20/2011 Return Dow Jones Industrial 10,450.64 12,080.38 15.6% Nasdaq 2,309.80 2,629.66 13.8% 5 00 1,117 .51 1,278.36 14.4% CONCLUSION The future performance of the Company is correlated with both the overall growth and performance of the economy. As noted above, the economy in which the Company operates is in the midst of an economic recovery. If the economic environment continues to improve, the Company will be well-prepared for further growth. However, if the economy dips back into a recession, the future outlook for the Company could be materially affected. CONFIDENTIAL I WTAS LLC 19 EFTA00307414 EXHIBIT E Valuation Methodologies ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 20 EFTA00307415 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of Julie 2o, 2011 Exhibit E: Valuation Methodologies COMPANY VALUATION (STEP 1) There is no universal formula to determine an appropriate value for an illiquid, non-controlling interest in a closely held company. Determination of value is a matter of judgment, which takes into consideration economic and market conditions, as well as investment opportunities that would be considered as alternatives to the interest being valued. The methods commonly used to value a closely held business include the following: Income Approach. This approach focuses on the income-producing capability of a business. The income approach estimates value based on the expectation of future cash flows that a company will generate — such as cash earnings, cost savings, tax deductions, and the proceeds from disposition. These cash flows are discounted to the present using a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the particular investment. The selected discount rate is generally based on rates of return available from alternative investments of similar type, quality, and risk. Market Approach. This approach measures the value of an asset or business through an analysis of recent sales or offerings of comparable investments or assets. When applied to the valuation of equity interests, consideration is given to the financial condition and operating performance of the entity being appraised relative to those of publicly traded entities operating in the same or similar lines of business, potentially subject to corresponding economic, environmental, and political factors and considered to be reasonable investment alternatives. The market approach can be applied by utilizing one or both of the following methods: • Public Company Market Multiple Method ("PCMMM"). This methodology focuses on comparing the subject entity to guideline publicly traded entities. In applying this method, valuation multiples are: (i) derived from historical or forecasted operating data of selected guideline entities; (ii) evaluated and / or adjusted based on the strengths and weaknesses of the subject entity relative to the selected guideline entities; and (iii) applied to the appropriate operating data of the subject entity to arrive at a value indication. • Similar Transactions Method. This methodology utilizes valuation multiples based on actual transactions that have occurred in the subject entity's industry or related industries to arrive at an indication of value. These derived multiples are then adjusted and applied to the appropriate operating data of the subject entity to arrive at an indication of value. Cost Approach. This approach measures the value of an asset by the cost to reconstruct or replace it with another of like utility. When applied to the valuation of equity interests in businesses, value is based on the net aggregate fair market value of the entity's underlying individual assets. The technique entails a restatement of the balance sheet of the enterprise, substituting the fair market value of its individual assets and liabilities for their book values. The resulting approach is reflective of a t00% ownership interest in the business. This approach is frequently used in valuing holding companies or capital-intensive firms. It is not necessarily an appropriate valuation approach for companies having significant intangible value or those with little liquidation value. ALLOCATION OF COMPANY VALUE TO EACH OWNERSHIP CLASS (STEP 2) As outlined in the American Institute of Certified Public Accountants ("AICPA") guidelines pertaining to the allocation of an enterprise's value, the three most commonly used methodologies for determining the value of a single class of equity capital in a privately held company include the following: Option Pricing Method ("OPM"). This approach allows for the allocation of a company's equity value (as determined in Step 0 among the various equity capital owners (preferred and common shareholders). The OPM uses the preferred shareholders' liquidation preferences, participation rights, dividend policy, CONFIDENTIAL I WTAS LLC 21 EFTA00307416 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 and conversion rights to determine how proceeds from a liquidity event shall be distributed among the various ownership classes at a future date. Per the AICPA guidelines: "'The option pricing method treats common stock and preferred stock as call options on the enterprise's value, with exercise prices based on the liquidation preference of the preferred stock. Under this method, the common stock has value only if the funds available for distribution to shareholders exceed the value of the liquidation preference at the time of a liquidity event (for example, merger or sale), assuming the enterprise has funds available to make a liquidation prefer ence meaningful and collectible by the shareholders...Thus, common stock is considered to be a call option with a claim on the enterprise at an exercise price equal to the remaining value immediately after the preferred stock is liquidated...the common implicitly considers the effect of the liquidation preference as of the future liquidation date, not as of the valuation date."8 Probability Weighted Expected Return Method ("PWERM"). This approach involves the estimation of future potential outcomes for the company, as well as values and probabilities associated with each respective potential outcome. The common stock per share value determined using this approach is ultimately based upon probability-weighted per share values resulting from the various future scenarios, which can include an IPO, merger or sale, dissolution, or continued operation as a private company. Per the AICPA guidelines: "Under a probability-weighted expected return method, the value of the common stock is estimated based on upon an analysis of future values for the enterprise assuming various future outcomes. Share value is based upon the probability-weighted present value of expected future investment returns, considering each of the possible future outcomes available to the enterprise, as well as the rights of each share class."9 Current Value Method. This approach involves allocating the company's current value (as determined in Step 1) among the various capital owners based on their respective liquidation preferences and conversion, dividend, and other rights under the assumption that all capital owners act in a manner that maximizes their financial return. Unlike the OPM and the PWERM approaches, this methodology is not forward-looking, and therefore fails to consider the possibility that the value of the company and the individual share classes will increase or decrease between the valuation date and a future date when the common shareholders receive a return on their investment (e.g., through a liquidity event such as an IPO or sale/merger). Per the AICPA guidelines: "Because the current-value method focuses on the present and is not forward-looking, the task force believes its usefulness is limited primarily to two types of circumstances. The first occurs when a liquidity event in the form of an acquisition or dissolution of the enterprise is imminent, and expectations about the future of the enterprise as a going concern are virtually irrelevant. The second occurs when an enterprise is at such an early stage of its development that (a) no material progress has been made on the enterprise's business plan, (b) no significant common equity value has been created in the business above the liquidation preference on the preferred shares, and (c) there is no reasonable basis for estimating the amount and timing of any such common equity value above the liquidation prefer erice that might be created in thefuture." 10 N American Institute of Certified Public Accountants 2004, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, p. 62-62. 9 American Institute of Certified Public Accountants 2004, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, p. 39-60. m American Institute of Certified Public Accountants 2004, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, p.63. CONFIDENTIAL I WTASLLC 22 EFTA00307417 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June so, 2011 SELECTED APPROACHES The first step in valuing the Company's common shares was to determine the value of the Company's total equity (associated with all preferred and common equity). In arriving at a conclusion of value for the Company's equity, we considered all of the aforementioned valuation methodologies from Step 1: • Income Approach. The Company is an operating entity expected to generate future cash flows for its capital owners. Any future sale or transaction is expected to be based on the Company's future cash flow expectations. As such, the Income Approach was the primary methodology used in arriving at a value for the Company's equity. Please see Exhibits F and G for further details related to our analysis utilizing the Income Approach. • PCMMM of the Market Approach. This methodology was considered as a reasonableness check in our analysis, but ultimately not relied upon due to differences between the Company and the selected guideline companies. Specifically, the selected publicly traded guideline companies that are most comparable to the Company offer a broader range of products and services compared to those of the Company. In addition, the companies that operate in the Company's specific segment of the industry that were considered most similar to the Company in terms of operational profile and size were not publicly traded as of the Valuation Date. Please see Exhibits J and K for further details related to our use of the PCMMM of the Market Approach in our analysis. • Similar Transactions Method of the Market Approach. This methodology was considered but not used due to a lack of available data surrounding recent acquisitions of companies with operations similar to the Company. • Cost Approach. This methodology was considered but not used, as it does not accurately reflect the going concern value of the Company. The second step in valuing the Company's common shares was to allocate the Company's value from Step 1 among the various capital owners. In doing so, we considered the three valuation approaches outlined in Step 2: • OPM. As of the Valuation Date, there was a very wide range of possible future exit events, and forecasting specific probabilities and potential values associated with any future events would be highly speculative and imprecise. As such, we relied primarily upon the OPM in order to allocate the Company's total equity value among its equity owners. Please see Exhibits N and 0 for further details related to this methodology and its application in our analysis. • PWERM. The PWERM was considered but ultimately not used due to the uncertainty surrounding future potential liquidity events. Estimating the Company and common stock values, timing, and probabilities of such future events was considered to be highly speculative. • Current Value Method. The current value method was not utilized in our analysis, as the Company is not expecting an impending liquidity event. Given the lack of an imminent transaction, the current value method would fail to consider the possibility that the value of the company and the individual share classes could increase or decrease between the valuation date and a future liquidity event date. Since the Subject Interest is an interest in a closely held entity, we also considered appropriate adjustments to recognize the lack of marketability inherently present in interests of this type. Please see Exhibits P and Q for further details related to our analysis related to the concluded adjustment for lack of marketability applicable to the Subject Interest. CONFIDENTIAL I WTAS LLC 23 EFTA00307418 EXHIBIT F Income Approach Method ALIPHCOM - COMMON EQUITY VALUATION As of June 20. 2011 24 EFTA00307419 WTAS ALIPNCOM — COMMON EQUITY VALUATION REPORT AS of June 20,2011 Exhibit F: Income Approach A discounted cash flow analysis for the Company, presented in Exhibit G, was developed based on (i) discussions with management, (ii) a forecast prepared by Company management ("Management's Forecast"), (iii) historical financials for the Company, and (iv) guideline company / industry growth and margin indications (presented in Exhibit I). The forecasted cash flows represent the economics that both a minority and controlling shareholder would be able to realize and, therefore, were assumed to represent both a control and minority premise of value. In addition, the discount rate was developed considering the capital structure of the industry and the long-term expected capital structure of the Company. Since these were similar, the resulting value indication represents both a control, marketable and minority, marketable premise of value. The primary assumptions utilized in the discounted cash flow analysis are described below. Assumptions REVENUE, EXPENSES, AND PROFITABILITY Forecasted revenues and expenses were based on consideration of historical Company indications, discussions with management, Management's Forecast, and guideline company indications, and were each forecasted to trend toward long-term sustainable levels based on discussions with management. Overall revenue growth, expenses as a percentage of revenue, and operating profit estimates were determined to not be unreasonable based on guideline company indications and consideration of management's expectations for the Company. In addition, the risk associated with achieving the forecasted margins has been considered in the selected discount rate. Please see the table below and Exhibit G for further information. SELECTED FORECASTED REVENUE, EXPENSE, AND PROFITABILITY DATA ($000s) For the metl Yearn ea di 08 Deem be, 3t. 2011 2012 2013 2014 2015 2016 2017 2018 2010 Revenue 314 4.352 3270.930 3423.664 3586.043 2719.389 3805.480 31160.028 3930.823 2986. 6 73 yla growth 66.6% 87.4% 36.4% 3 8.3% 22.6% 12.0% 8.o% 7.o% 6.0% CAOR. 2013.2016 (6/0 13.1% CAGR.20, t -20t 9 (5-209 27.1% COGS 108.582 181.795 273.293 360.555 432.878 480.469 518.906 555.230 588.543 as %a/ revenue 75.1% 67.1% 64.5% 61.4% 60.2% 59.6% 59.6% 59.6% 59.6% Operating expenses 64.700 86.918 220.121 140.295 152.595 (64.290 177.465 189.888 201.281 as %a/revenue 44.8% 32.176 28.4% 23.9% 21.2% 20.4% 20.4% 20.4% 20.4% ENT (28.730) 2.226 29.850 86.093 133.913 160.730 173.557 185.706 296.848 es %alrettnew n9.9% 0.8% 7.0% 14.7% 18.6% 20.0% 20.0% 20.0% 20.0% INCOME TAXES Income tax expense was estimated based on an applicable combined federal and state tax rate. Benefits associated with any net operating losses ("NOLs") were also considered in our analysis. CASH FLOW ITEMS • Capital expenditures ("capes"). Capex includes expenditures on new and replacement £iced assets, and are deducted from net income to arrive at expected cash flow levels. Capex as a percentage of revenue were estimated to remain constant at a long-term sustainable level based on discussions with management and indications from guideline companies. • Depreciation. Depreciation includes the non-cash charges deducted from net income (included in the forecasted operating expenses). As this expense represents a non-cash charge, it is added CONFIDENTIAL I WTAS LLC 25 EFTA00307420 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 back to arrive at expected cash flow levels. Depreciation was estimated based on the Company's existing fixed asset balance at the Valuation Date and anticipated capital expenditures. The useful lives of the existing fixed assets and anticipated capital expenditures were estimated based on consideration of indications from the Company's historical financials, the composition of the subject fixed assets, and useful lives used by the guideline companies. a Debt-free net working capital ("DFNWC"). As a company's operations expand, additional working capital is generally needed to fund future growth and, as such, the annual change in requirements represents an additional cash outflow. The DFNWC needs were based on an analysis of the Company's historical DFNWC requirements and normalized guideline company indications, as weft as discussions with management. Forecasted DFNWC requirements were normalized to exclude excess cash, which was estimated based on three month of cash operating expenses. Furthermore, DFNWC requirements for 2011 were forecasted based on the assumption that the Company will hold sufficient cash to offset losses in the first year. Thereafter, DFNWC requirements incorporate certain assumptions related to the Company's cash conversion cycle (i.e. inventory, accounts receivable, and accounts payable turnover), which, according to management, was expected to be negative in 2011, but will turn slightly positive in 2012 as the Company achieves total revenues of approximately $270 million. DFNWC as a percentage of revenue was forecasted to trend toward approximately 10% to it% in the long-term based on guidance from management. With the exception of the cash balance, opening balance figures were taken from the Company's balance sheet as of March 3t, 2011, which was assumed to approximate that at the Valuation Date. The cash balance as of the Valuation Date was estimated based on information provided by management, and includes the cash proceeds from the most recent Series 5 round of financing (of approximately $40 million), which closed recent to the Valuation Date. Please see the table below and Exhibit G for further information. SELECTED FORECASTED CASH FLOW DATA ($000s) For the fiscal years to di og December 31. 2011 2012 2013 2024 2205 2016 2017 2028 2017 Depreciation 31.260 22.347 14.043 $3.8113 38.322 231.37o 833.622 225.650 $17.349 as %of lettnue 0.9% 0.9% 1.0% La% 1.2% 1.4% 1.6% 1.7% 3.7% Capital expenditures as %of manioc DFNWC as %of revenue 2.803 2.0% 5.430 8.473 2.0% 2.0% 11.739 34.388 16.110 37.399 18.616 10.733 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% For the fiscal years coding December 32. 2011 2012 2043 2011 2013 2016 2017 2001 2019 20.779 21.673 38.130 58.694 79.133 88.604 95.692 102.391 108.334 14.4% 8.0% 9.0% 10.0% 11.0% 11.0% 11.0% 11.0% 11.0% DISCOUNT RATE The discount rate applied to the Company's cash flows was based on a weighted average cost of capital rWACC"). The steps involved in calculating a WACC include estimating (i) the after-tax cost of equity; (ii) the after-tax cost of debt; and (iii) the appropriate capital structure. Each of these components is discussed below. Arithmetically, the formula for calculating the after-tax WACC is: (Cost of equity capital) x (Proportion of equity to total capital) plus (After-tax cost of debt capital) x (Proportion of debt to total capital) CONFIDENTIAL I WTAS LLC 26 EFTA00307421 WTAS ALIPMCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 Cost of Equity — Capital Asset Pricing Model To estimate The Company's cost of equity financing, the Capital Asset Pricing Model ("CAPM") was utilized. The CAPM measures the return required by investors given a company's risk profile. This model is expressed arithmetically by the following equation: Equity rate of return = Rf + (Rm - ROB + SSp + e The inputs required for the CAPM calculation are discussed in the following section. • Risk-free Rate (Rf). The risk-free rate is the return on a security that has no default risk, is uncorrelated with returns on any other economic indicators or financial markets, and provides a guaranteed rate of return. In theory, the best estimate of a risk-free rate would be the return on a zero-beta security or portfolio of securities. However, given the complexity of constructing such portfolio, the yield on a 2O-year Treasury bond at the Valuation Date was used to estimate the risk-free rate, as Treasury securities are generally viewed by investors as having virtually no default risk. • Equity risk premium ("ERP", Rm — Re. The ERP represents the difference between the expected return on the market portfolio (km) and the risk-free rate (Re. This excess return compensates investors for assuming the relatively higher risk inherent in the equity markets. There are several approaches used to estimate the ERP, including, but not limited to, considering both historical-looking (ex post) and forward-looking (ex ante) return data. The ERP used in the analysis was based on the supply-side long-horizon historical ERP as provided in Morningstar's Stocks, Bonds, Bills, and Inflation Valuation Yearbook. Long-term expected equity returns can be forecasted by use of supply-side models, which use historical data to predict forward-looking ERPs. Use of the supply-side long-horizon historical equity returns serves to eliminate the impact on equity returns resulting from changes in price to earnings ratios and earnings growth expectations. • Beta go. The beta is a coefficient that relates a specific company's systematic, or non- diversifiable, risk to the average risk of a fully diversified portfolio of stocks. A security with a beta of zero suggests that its price is not at all correlated with the market. A positive beta means that the asset generally follows the market (i.e., the security generally increases in value if the market goes up); while a negative beta indicates that the asset inversely tracks the market. A beta greater than one is generally considered riskier than the overall market, while a beta less than one is generally considered less risky than the general market. Beta is calculated using a statistical technique known as regression analysis, which estimates a statistical "best fit" in explaining movements in an individual stock's return in terms of the rate of return on the overall market; specifically, the beta represents the slope of the regression equation. In our analysis, the goo Index was utilized to represent the overall market. The amount of financial leverage has a direct impact on a company's beta. For example, the more leverage in a capital structure, the greater risk for default and the higher the probability of bankruptcy. Since equity shareholders are residual claimants on the assets of a company after debtholders have been paid, the required return to an equity holder increases commensurately with the level of default risk. As such, all else equal, a company with high debt levels will have a higher beta relative to one with less leverage. As such, we considered the appropriate capital structure for the Company (discussed below) in re-levering the betas of the guideline companies to estimate a beta specific to the Company. • Small stock premium ("SSp"). All else equal, investments in smaller companies are riskier than investments in larger companies and, as such, investors require an additional return to compensate for the additional risk. As such, we also considered factors such as the relative small size of the Company as well as an analysis of future growth expectations in our estimation of the Company's cost of equity financing. The SSp was based on Morningstar's Stocks, Bonds, Bills, CONFIDENTIAL I WTAS LLC 27 EFTA00307422 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of Julie 2o, 2011 and Inflation Valuation Yearbook and consideration of the Company's estimated market capitalization. • Other premium (e). An asset or security may warrant an additional premium to account for risk factors specific to the subject company (i.e., unsystematic or diversifiable risk) not captured in the ERP or SSp. The application of such premium is based on consideration of the risk of achieving the forecasted economic, among other factors. Cost of Debt/ Capital Structure At the Valuation Date, the Company had a minimal level of interest-bearing debt, a level of which was expected to continue into the long-term. As such, the selected WACC was assumed to approximate a rate reflective of the Company's long-term total capitalization. RESIDUAL VALUE A residual value estimates the value of the company's expected cash flows beyond the explicit forecast period, after a company has reached long-term sustainable growth and profitability levels. The calculation of the residual value is a key component in any appraisal, as it often accounts for a large portion of a company's total value. The residual value for the Company was calculated utilizing the Gordon Growth Model CGGM"). In applying the GGM, net cash flow available in the final year of the projection period CCFt") is calculated, increased by the long-term growth rate ("g"), and then divided by the discount rate ("k") less the estimated long-term growth rate (g). Arithmetically, GGM is defined as: Terminal year value = CFin / (k-g) In our analysis, a terminal growth rate was assumed based on historical growth levels, estimated growth for the Company over the forecast period, and industry / economic trends. This rate was subtracted from the appropriate discount rate described above to arrive at an expected terminal year capitalization rate. CONCLUSION Please see Exhibit G for our use of these assumptions in the application of the Income Approach in arriving at a value indication for the Company's invested capital. We deducted the balance of any interest-bearing debt as of the Valuation Date from this value to arrive at the value of the Company's total equity. CONFIDENTIAL I WTAS LLC 28 EFTA00307423 EXHIBIT G Discounted Cash Flow Analysis ALIPHCOM — COMMON EQUITY VALUATION As of June no, non 29 EFTA00307424 AliphCom Common Stock Valuation 00000 As of June 20.201 I Income Approach For the fiscal sears ending December 31. 20)1 2012 2013 20I4 2015 2016 2017 2018 2019 I) Revenue $144,552 $270,939 $.423,664 $586,943 5719,389 5805.489 $869,928 $930,823 $986,673 2) Coal °Pseuds sold 108.582 181.795 273.293 360.555 432.878 480.469 518.906 555.230 588.543 Cnoss nrawn 35,970 89,144 150,371 216,388 286,511 325.020 351,022 375,594 398.129 3) Operating expernes 64300 86,918 120,521 140,295 152.595 164,290 177.465 189,888 201,281 4) EDIT (28.730) 2,216 29,850 86,093 133,915 160.730 173,557 185,706 196.848 5) Inane tax expense 0 0 1,362 35.057 54.530 65.449 70.672 75.619 80.157 Net income (28,730) 2,216 28,487 51,036 79,385 95,281 102,884 110,086 116,692 6) ksi: Capital expenditures (1,537) (5,419) (8,473) (11,739) (14,388) (16,110) (17,399) (18,616) 09,733) 7) Hite Deprecation 669 2,347 4,041 5,883 8,311 11,370 13,6.22 15,650 17,249 8) less: Change in DFNWC 16,137 (897) (16,455) (20.565) (20.438) (9,471) 17,0881 (6.698) (6,143) Cash flows to be discounted (13,460) (1.743) 7,601 24,615 52,870 81.070 92,019 100,422 108.064 9) Partial period adjustment 13.460 Subtotal 0 (1,743) 7,601 24,615 52,870 81.070 92,019 100,422 108.064 Period 0.266 1.032 2.032 3.032 4.032 5.032 6.032 7.032 8.032 ID) Present slue factor 23.0% 0.946 0.808 0.657 0.534 0.434 0.353 0.287 0.233 0.190 Present slue olaftertax cash flows SO (51,408) $4,991 513,142 $22,949 $28,609 $26,401 $23,424 $3),493 Sian oldiscounteil cash dons $138,601 II) plc,: PreseN•alue of msidual 127,780 12) Min: Present •aiuc of tax heimit 3,743 Restricted cash 475 8) plc,: Excess cash Indicated value of ire flied capii.11 mourn. . r.irkvwble 1 roundvd) 15.860 less: Debt at the Valuation Moe 0 I00030:o.sosecactoo0- ttt m0, Lib] wndnh' 5286.500 ' The famcaded cash flows mixt-sent the economics that a minority shareholder would be able to realise. 30 EFTA00307425 AliphCom Common Stock Valuation 00000 As of Ju ne 20.2011 Income Approach For the fiscal wan ended December 31. For the lima wan ending December 31. AIM/Cale Business Model 20011 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenue $145,455 $70.434 $86,781 $144,552 $270,939 $423,644 $586,943 $719,389 $805.489 $869,928 $930, 3 $986.673 Con of gouda sold 100.624 44.487 60402 108,582 181.795 273.293 360.555 432.878 480.469 518,906 555.230 588.543 Gram mown 44,831 25947 26.379 35,970 89,144 150.371 =6,388 286,511 325.020 351,022 375,594 398.129 Operating experoes 38,010 38954 44915 64,705 86,918 120,521 140,295 152,595 164,290 177465 18908 201.281 EDIT 6,821 (13,007) (17,636) (28,730) 2,226 29,850 86,093 133,915 160,730 173,557 185,706 196.848 Income tax expense 0 0 1,362 35,057 54.530 65.449 70.672 75,619 80,157 Net laconic ($28.730) $2.226 $28,487 $51.036 $79.385 $95.281 $102,884 $110,086 $116,692 AL/regale Business Model (Common tilm) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Revenue 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Col of guds sold 69.2% 63.2% 69.6% 75.1% 67.1% 64.5% 61.4% 60.2% 59.6% 59.6% 59.6% 59.6% CHOW mown 30.8% 36.8% 304% 24.9% 32.9% 35.5% 38.6% 39.8% 404% 40.4% 40.4% 404% Operating experon 26.1% 55.3% 50.7% 44.8% 32.1% 28.4% 23.9% 21.2% 204% 20.4% 20.4% 204% EDIT 4.7% -18.5% -20.3% -19.9% 0.8% 7.0% 14.7% 18.6% 20.0% 20.0% 20.0% 20.0% Inane tax expense 0.0% 0.0% 0.3% 6.0% 7.6% 8.1% 8.1% 8.1% 8.1% Net income -19.9% 0.8% 6.7% 8.7% 11.0% 11.8% 11.8% 11.8% 11.8% For Ile Racal vain ended December 31, For Me fiscal }emending December 31. 31 EFTA00307426 AliphCom Common Stock Valuation 00000 ofJunt 20.2011 Income Approach BACKGROUND Primary sources of data utilised in developing the income approadi for AlipbCom ("Aleph" or the 'Company" include the following: (i) Discussions with management for growth and margin expectations: (ii) Forecast for fiscal years 2011 through 2016 provided by management OdaugemeM's Forecast"; (iii) Unaudited historical financials; and (iv) Guideline company infommtion. Management prepared its previous forecast in January 2011. The current Management's Forecast was prepared in April / May and involved significant research into total attires...61e markets for its products. unlike the previous version. According to management, the applicable target markets are large and management expects strong growth for the following product lines: (i) consumer bluelooth: (ii) stereo headphones: (iiil audio speakers: and (iv) wellness products. Specifically, the applicable market for the Company's activity bands is significantly larger than previously anticipated. As such. management expects to achieve a larger sales volume of activity bands. Similarly. management also expects the stereo headphone line to achieve a higher sales volume from the Company's recently launched Jambox. which is expected to be sold globally going forward. Management expects overall bludoath sales to rennin relatively flat (with sales growth in consumer bluetooth offsetting the decline in enterprise bluelooth). and sales of rts enterprise products todedine going fornard. I) REVENUE Revenues for fiscal yean 2011 through 2016 were estimated based on Management's Forecast. Near-term revenue growth was primarily driven by the launch of the Armstrong activity band. which was expected to be released in the second half of 2011. a well as growth in the stereo headphone line. Beyond 2016. revenue was forecasted to trend toward a long.term sustainable level bawd on guidance fro management. and reflects analysis of the potential market size and growth. Near-hero revenue growth was forecasted to be higher than guideline company growth rates; however. the risk associated with achieving the forccadeilecononues is reflected in the election of the discount rate. Overall long-term revenue growth esti:rates were determined to be reasonable based on guideline company indieatiorn. For the fiscal years ended 31, Year ta-date For lbe fiscal vent ending December3l. 2008 2009 2010 3131/2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 TOGS revenue $145,455 $70,434 $86,781 528,477 $144,552 $270,939 $423,661 5586,943 $719,389 $805,489 $869,928 $930,823 $986,673 Pnrenrk .51.6% 23.2% 66.6% 87.4% 56.4% 384% 22.6% 12.0% 8.0% 7.0% 6.0% GIG& 2013.2019 (6•yr) 15.1% CAGR. 2011.2019 (8471 27.1% Iteamns.lite no, ('heck CtlideillIC Collipan> Indications CAGRs CAGRs 2010.2013 2007.2012 Nlotow!., soluticins. Inc. nmf nmf Motorola Mobility Holding:. lac. 11.5% -8-3% Koss Corp. NA NA Nokia Corporation 1.8% -30% GN Store Nand A/S 9.0% -BS% Plantionim.. Inc. 11.2% 1.3% Research In Motion Limited 9.0% 30.8% Nelsear Inc. 16.4% 13.0% Logitedfinternational SA 8.2% 2.9% Max 16.4% 30.8% Min 1.8% 1.3% Average 9.6% 110% Median 9.0% 8.0% 32 EFTA00307427 AliphCom Common Stock Valuation (5000s) As of June 20.2011 Income Approach 2) COSTOF GOODS SOLD Cost of goods sold ("COGS, for fiscal years tÁ11 through 2016 were estimated based on Management's Forecast Management expects to olTer more software applications and services through 2016. which were expected to improve grass margins. Beyond 2016, COCA as a percentage of revenue was forecasted to trend downward to a leng.term sustainable level, as the Company expects the software component of the business to increase as a percentage of revenue. further imposing moss margins. COGS as a peneMage of revenue was determined to be reasonabk based on guideline compamy indications. For the fiscal yearn ended Year. December 31. to.date For the fists/ wan ending December 31. 2008 2009 2010 3/31,2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 Total out of goods sold' 5100.624 544.487 560.402 524.087 5108,582 5181,795 5273,293 5360,555 5432.878 5480.469 5518906 5555,130 5588,543 ar % of irvemic 69.2% 63.2% 69.6% 84.6% 75.1% 67.1% 64.5% 614% 60.2% 59.6% 59.6% 59.6% 59.6% Reitsonablenem Check Guideline Company Indications Range 430% to 80.8% Median 60.3% Average 61.2% 3) OPERAIING EXPENSES Operating expenses for fiscal wars 2011 through 2016 were based on Management's Forecast. Beyond 2016. total operating expenses were forecast to trend toward a long.temi sustainable level as a percentage of revenue tined on guidance horn management. Operating expenses as a peneMag, of revenue were determined to be reasonable tined on guideline company indications. For the fiscal wan ended Year December 31, to -date For the fiscal yeses. ending December 31, 20011 2009 2010 3131/2011 2011 2012 2013 2914 2015 2016 2017 2018 2019 Operoling expores' 538.010 538,954 544,015 514,380 564,700 586,918 5120,521 5140,295 5152,595 5164,290 5177,461 5189,888 5201,281 at % of ~nut 26.1% 55.3% 50.7% 50.5% 44.8% 42.1% 28.4% 23.9% 21.2% 20.4% 20.4% 20.4% 20.4% Reasonableness Check Guideline Company Indications Rang 164% to 53.8% 'Actin 26.6% /flew: 23.8% ' Ilheoncal lirancials exclude non.cash dean. 33 EFTA00307428 AliphCom Common Stock Valuation 150000 ofJunt 20.2011 Income Approach 4) EARNINGS BEFORE INTEREST EXPENSE AND TAX EBIT was calculated based on the forecasted revenues and expenses highlighted above and was detanitheil hi he reawnable bawd on guideline company indications. According to management. the Company\ , term EBIT margin is expected to be higher than the average and median of the guideline company indications as a result of the anticipated increase in software and service oifcrinp as a percentage of total revenue. The risk awl:toted with achieving the fort-canted economics is reflected in the selected discount rate. For the lineal wean ended December 31. Year- to-dale For the fluid wan ending December31. 2008 2009 2010 3/31/2011 2011 2012 2013 2014 2015 2016 2017 2018 2019 EBIT 56.821 ($13,007) ($17,636) ($9,990) ($28,730) szro 529,850 586,093 $133,915 5160,730 5173,557 5185,706 S196.848 ar % of manic 4.7% .18.5% .20.3% .35.1% •19.9% 0.8% 7.0% 14.7% MA% 20.0% 20.0% 20.0% 20.0% Reasonablenes, ['heck Guideline Company Indications Range 01% to 30.0% )4.Wsxn 13.8% A erase 12.6% 5) INCOME TAX EXPENSE. The elfective income tax late war. determined based on a blended federal and state lax rate for a company operating in California. Our analysis reflects the benelit Or net operating lanes generated during the fon:cast period. Benefits related to theexisting NOL at the Valuation Date was meandered separately in footnote 12. Federal tax rate 35.0% California tax rate For the focal vein ending December31. Effective lax rate 40.7% 2011 2012 2013 2014 2015 2016 2017 2018 2019 EBIT (from above) ($28,730) $2,226 529.850 586,093 $133,915 5160,730 5173,557 5185,706 $196.848 Beginning Not. botany 0 V3,730 26.504 0 0 0 0 0 0 Additional 28.730 0 0 0 0 0 0 0 0 Total Nt)1-s 28,730 V3,730 26.501 0 0 0 0 0 0 Use of NOLs 0 2,r6 26.504 0 0 0 0 0 0 Ending NOL balance 28,730 26,504 0 0 0 0 0 0 0 Unadjinted EBIT (28.730) 2,226 29,850 86,093 133,915 160,730 173,557 185,706 196.848 less: NOL used 0 (2.226) (26.504) 0 0 0 0 0 0 Adjusted EBIT (28,730) 0 3,346 86,093 133,915 160,730 173,557 185,706 196.848 Income tax expense $0 $0 $1,362 535,057 554,530 565,449 570,672 575,619 $80,157 ar % of Egli' 0.0% 0.0% 4.6% 40.7% 40.7% 40.7% 40.7% 40.7% 40.7% 34 EFTA00307429 AliphCom Common Stock Valuation 00000 Ax of Ju nt 20.2011 Income Approach 6) CAPITAL EXPENDITURES ("CAPEX") Capex throughout the lomat period were estimated to remain constant .a .ippioximately of :creme. which indications. estimated based on an analysis of the Company's Inimical indications and guideline company For the Meld wean ended December 31, For the Meal veers ending December 31, 2008 2009 2010 2011 2012 2013 2011 2015 2016 2017 3018 2019 Full•year capex 55,018 3987 51,198 52,891 35,419 58,173 511,739 514,388 516,110 517,399 518,616 519,733 Partial period adjustment x 194/365 Adjusted mom 51,537 35,419 58,173 511,739 511,388 516,110 517,399 518,616 519,733 Full.year caprx ar % of rnwnme 3.4% 1.4% 1.4% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Remonahlenem Cheek Guideline Company Indications 0.6% to 8.7% A•crap: 2.9% Median 2.2% 35 EFTA00307430 F: F. ge"liAiAri 0000,AZA4g 00,0, 20.122q4 _zn„ " 111111 "1 Q§ HI pARRARRARAi 1111111111g EFTA00307431 AliphCom Common Stock Valuation 00000 As ofJune 20.2011 Income Approach 8) ClIANGE IN DEBT.FREE NET Vit)RKLM:CAFT FAL ('''DENSIC") DEN WC requirements were normalized to exclude execs cash. which was estimated based on three month of cash operating operates. Furthermore. DFNWC requirements for 2011 were forecasted based on the assumption that the Company will hold sufficient cash to offset losses in the first war. Thereafter. forecasted DFNWC requirements incorporate certain amomptiorn related to the Company's cash conversion cycle (i.e.. inventory. accounts receivable. and accounts payable which, according to management. were expected to be negative in 2011. but will nun positive in 2012 as the Company achicsm total revenuers or approximately 5270 million. DFNWC as a percentage of revenue was forecasted to trend toward approximately 10% toll% in the long.= based on guidance from management. With the exception ol'the cash balance (excluding restricted cash)• opening balance figures were taken from the Company's estimated balance sheet as or 3:31,2011. which was :owned to approximate Mat as ol'the Valuation Date. The cash balance as of the Valuation Dale includes the cash proceeds from the most recent Series 5 round of financing (of approximately 539.5 million from IP Morgan Private Equity). which dosed recent to the Valuation Date. As of For the fiscal }emending December 31, 2008 2009 2010 Val.Dale 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cash (excluding restricted ash) $38,500 $34,111 529,017 $63,000 plus: Other current assets 7,773 10,345 21,445 29,551 less:Current liabilities (22,612) (24,663) (42,832) (39,775) plus: Sbartiemi debt 0 0 0 0 DFNWC $23,661 $19,793 57,630 $52,776 as % of annualird revenue 16.3% 28.1% 8.8% 36.5% less: Excess cash 19,1331 (9.078) (10,840) (15,8601 DFNWC (excluding excess cash) 514,528 $10,716 (53,210) 536,916 520,779 521,675 538,130 $58,694 $79,133 $88,604 595,692 $102,391 5108,534 as % of annualized revenue 10.0% 15.2% 25.5% 14.4% 8.0% 9.0% 10.0% 11.0% 11.0% 11.0% 11.0% 11.0% Change in DFNWC (source colcash) (516,137) 5897 516,455 520,565 520.438 59,471 57,086 56,698 56,143 Reammablenem Cheek Guideline Company Indications Sang 0.7% to 38.3% Average 17.0% Median 16.0% Excess cash is calculated bated on the three months of cash operating expenses 2008 2009 2010 2011 Operating expenses (including depreciation) $38,010 $38,954 $44.015 564,700 less: Depreciation (1A711) (2.644) (655) (1.2601 Annual cash operation expernes 536.532 $36,310 $43,360 563,440 multiply by: Sean of eashones 0.25 0.25 0.25 0.25 3.mocatch operating expenses 59,133 59.078 $10,840 515,860 37 EFTA00307432 AliphCom Common Stock Valuation 00000 ofJunt 20.201 I Income Approach 9) PARTIAL PERIOD ADJUSTMENT A partial pniod adjustment was made to reflect the fact that there are 194 clays remaining in fiscal year 2011. For the fiscal stars ending December 31, 2011 2012 2013 2014 2015 2016 2017 2018 2019 Net income (loss) CA') ($28,730) less: Estimated net loss from 111/I1 to Val. Dale 13460 Adjusted net income (lass) CW) (515,270) Cash flow adjustments Depreciation 0 (No adjustment needed as the opening fixed asset balance is the balance as of the Valuation Date( Capital expendituits 0 (Adjustownt applied in footnote 6 above.) DFNWC 0 (No adjustment needed since DEN WC balance is assumed to b.:as of thc Valuation Date] Sum of cash IloW JaijUallICI11% IA") S0 Partial period adjustment (B-A,C) $13,460 10) DISCOUNT RATE The discount rate was estimated based on the weighted average cost Dr capital CWACC') for the Company as 01 the Valuation Date. We incorporated an additional risk premium to Felled the risk or achieving the threaded economics. Concluded discount rate 13.0% II) RESIDUAL The residual value was calculated utilizing the Gordon Growth Method ("GGM') capitalizing cash flow in the final year of projection period over the sum of the discount rate less expected long-term growth. The longierm growth rate exceeds inflation in it reflects continued racket expansion beyond the explicit period. Alter-tax net cads flow in the lint yearn) S108,064 Ingested by: Long-term growth rate 6.0% 6.484 After-tax cash flow in the terminal year Of I) 3114548 divided by Cap rate Discount rate less: Long-term growth rate Residual 23.0% 6.0% 17.0% 3673,810 Period 8.032 Present value factor 0.190 Present value of rend al 3127,780 38 EFTA00307433 AliphCom Common Stock Valuation 00000 ofJune 20. 2011 Income Approach 12) NOL BENEFIT As noted in lbotnote 5. we have conudered the bate related to the use of the Company's existing NOLs at the Valuation Date. The usable federal NOL balance at the year ended December 31. 2010 was approximately S 13 million bated on information provided by management. The usable California NOL Same at the year ended December 31, 2010 was approximately $28.8 million based on information provided by manktment. Federal NOL balance 12/31/2010 California NOL balance 12/31/2010 313,000 28,800 For tie final vein ending December 31, 2011 2012 2013 2014 2015 2016 2017 2018 2019 Adjusted EBIT hon Footnote 5 ($28,730) SO $3.346 $86,093 3133,915 $160,730 $173,557 3185,706 5196.84$ less: Estimated interest expense 0 0 0 0 0 0 0 0 0 Estimated pre-tax income (28,730) 0 3,346 86,093 133,915 160,730 173,557 185,706 196,848 Begiming federal N()Ls 13,00D 13,000 13,000 9,654 0 0 0 0 0 plus: Additional federal N()Ls 0 0 0 0 0 0 0 0 0 Total allowable federal Mt, 13,000 13,000 13,000 9,654 0 0 0 0 0 Federal NOL used 0 0 3.346 9.654 0 0 0 0 0 Cumulative federal NOLs used 0 0 3.346 13,000 13,000 13,000 13,000 13,000 13,000 Tax saving+ at effective federal tax rate ("Al 31.9% 0 0 1.068 3,082 0 0 0 0 0 Pre.tax 114:0111C after use Dr NOLs 0 0 0 76,439 133,915 160,730 173,557 185,706 196.848 Besiming California NOLs $28,80D $28,800 328.800 $28,800 $0 SO SO SO $0 plus: Additional California NOLs 0 0 0 0 0 0 0 0 0 Total allowable California NOLs 28,80D 28,800 28.800 28,80D 0 0 0 0 0 California NOL used 0 0 0 28.8OD 0 0 0 0 0 Cumulative Califorma Wit used 0 0 0 28,800 28,800 28.800 28,800 28,800 28.800 Tax savinm at effective California tax rate ("B') 8.8% 0 0 0 2,534 0 0 0 0 0 Total tax savings (Federal and Cal:forma) (A B) 0 0 1.068 5,616 0 0 0 0 0 Period 0.266 1.032 2.032 3.032 4.032 3.032 6.032 7.032 8.032 Cost of equity/ present value factor (rounded) 22.5% 0.947 0.811 0.662 0.541 0.441 0.360 0.294 0.240 0.196 Discounted tax savings $0 $0 3707 53,036 SO SO SO SO SO Tolal value of NOI. In Waft! $3,743 ' The Company had no debt at the Valiance Date. and was assumed to haw no debt m the groan period. 39 EFTA00307434 EXHIBIT H Weighted Average Cost of Capital ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 40 EFTA00307435 AliphCom Common Sleek Valuation (USS millions) As or June 20.2011 Weighted Menge Cost of Capital ("WACC”) GUIDELINE: COMPANIES Ticker Company Name Bela Levered' Equity Slarket Value' Inn-rest Other Ilex% (Pt Stk. 13elsl ' Eie.)' Tax Rate' Unleveled Bela NISI Motorola Solutiore. Inc. 1.43 515,472 52,698 596 40.0% 1.29 MMI Motorola Mobility lloldinp. Inc. NMF 7,224 97 0 40.0% NMF KOSS Koss Corp. NMF 48 4 0 40.0% NMF NOK1V Nokia Coiporation 1.10 21,519 9,513 3.501 32.3% 0.78 CPSE:GN ON Store Nord A.'S 133 1,830 47 0 40.0% 1.31 PLT Planlronics. Inc. 137 1,659 0 0 22.1% 1.37 RIMM Research In Motion Limited 1.14 13,774 0 0 273% 1.14 NTGR Netgera Inc. 133 1,458 0 0 51.3% 1.53 LOCH Logilech International SA 139 2,019 0 0 14.7% 1.59 Slarket.weighted industry capilalitalion 80.3% 15.3% 4.4% Median indintiy capitaliration 98.7% 1.3% 0.0% Average industry capitaliration 92.9% 5.9% 1.2% Selected capitalintton (rounded) 100.0% 0.0% Markel Cap Weighted Beta 0.96 Median Bela 1.31 Average Bela 1.29 Selected Beta 1.31 $ULLECT CAPITAL STRUCTURE SUBJECT COMPANY Equity Interest Other Unlevered Slarket Bearing (Pt Lik, Tax Beta Bela Value Debt Elea Rate Levered CapiLd structure' 1.31 1000% 0.0% 0.0% 10.r/e 1.31 COST OF EOU1TY Equity Risk Small Stock Other Atter-Tas Risk-Free Rate' Premium' Beta Premium' Premiums' Cost of Equity Capital Assn hieing Mold: "ERF Cost of equity — Id+ (ERP'B) + SSp 4 e fl/ST OF DI:BI Coll of debt WEIGHTED AVERAGE COST OF CAPITAL 4.00% 5.96% 131 2.94% 8.00% 22.7% Average Cost Tax Rate Atter-Tas Of Debt° (per ahowl Cost or Debt 6.0% 40.7% 3.6% %of AfienTax Cost Weighted Told Cadlal OfCeilal Cost of Capital Equily 100.0% 22.7% 22.7% Debi 0.0% 3.6% 0.0% Weighted Average Cost or Capital 22.7% Concluded V. ACC (rounded) 23.0% Now Palm. Inc. rem ~inn by lictleneachnI Company as °frilly 1.2010 Motorola kn. spun in» no pablicly ernOn °moaner. Inkorrtin Soluernris Inc and Mnicnnb Mobility Holdrrnis. Inr..erlksine lawny 12011. Slid« (Oa &Onion:. is primarily provides parnurra aid salutinu » reica pm. mJ naterianum room. ?Manila Marini), »Wino: Inc primarily prin.*, Fordines an, aohnons ea ~nun/rani tor/trainmen sancta. ' Snare (nodal IQ. Ferny/a. ~his Mlmcakulatd tannin darn from Capital IQ. will, dat tactpionof PEE nr4 RIMM. nEiCE mind tension ntdrIE Enna. flan arm nigh On <spiral $11111.011C of On ndwrzy ar On Saloon* Mrs. ' Risk.inn rart Raid <a ',ono S Fran) ast. SdnIsSI ~PROM. RoSerra sorplynictir kinc.lendana ERP nos 2011 »Noun SRO, Yt.~ Small suet prernisni &Ina a noiroany mulct capitalization In che bill* des*. I ether prcmisn irnorpmern kindled die ink asannaern nub arhietinsche keened wooing, ' the nowt coo diati C4 biøel na aumiåenisx. of fte Nloadys Rannend narosnan hoed ,ic$1 a nee VnIninti INe 41 EFTA00307436 EXHIBIT I Guideline Company Ratios ALIPHCOM — COMMON EQUITY VALUATION As of June 20, non 42 EFTA00307437 AliphCom Common Stock Valuation As «June 20 2011 Guideline Company Ratios Ratios Min Max Motorola Mobility Iloldinm. Inc. Koss Corp. Nokia Corporation GN Store Nord Research In Pinninin" Inc" Motion Limited Neinar Inc LogItteb International SA Ticker Fiscal year end Revenue CAGRs. 3.Year MM1 December 31 KOSS June 30 NOKI V December 31 CPSE:GN December 31 PLT Man:h 31 RIMM February 26 NTGR December 31 LOGI Man:h 31 2007 NA 4.5% 233% 5.1% 10.1% 64.3% 23.8% 16.9% 0.0% to 75.0% 2008 NA 6.8% 203% 23.4% 4444 75.0% 18.2% 7.1% 2009 NA 44% 2" 4.714 4.5% 70.1% 6.2% 4,6% Average 17.5% 2010 -24A% 42% 46% -7:5% -32% 49.1% 7.4% 4444 Medlen 10.9% 2011 NA -7:3% 0.0% 2.7% 23.0% 16.9% 4.9% 2012 10.6% NA 46% 7.3% 9.1% 15.4% 25.1% 11.7% 2013 113% NA 1.8% 9.0% 112% 9.0% 16.4% 81% COGS as % or revenue 2004 NA 60.6% 61.9% 47.7% 483% 47.0% 67.9% 66.0% 43.0% to 802% 2005 NA 62.6% 65.0% 58.7% 563% 44.8% 66.2% 6&0% 2006 NA 61.1% 67.5% 52.0% 60.9% 45.4% 66.2% 65.7% Average 603% 2007 79.3% 61.2% 65.6% 48.3% 54.0% 48.7% 66.6% 64.2% Median 61.2% 2008 80.8% 57.3% 64.9% 48.1% 56.7% 53.9% 67.4% 68.6% 2009 79.9% 55.5% 67.3% 45.8% 50.1% 56.0% 70.1% 68.0% 2010 73.8% 58.5% 69.4% 43.0% 46.8% 55.7% 66.7% 64.4% Operating expen. as % of n cnue 2004 NA 19.2% 23.5% 43.2% 29.4% 24.2% n." 224% 16.4% to 53.8% 2005 NA 21.2% 21.4% 32.0% 28.5% 25.2% 21.8% 20.9% 2006 NA 18.7% 19.0% 43.0% 30.0% 27.4% 22.2% 222% Average 26.6% 2007 22.5% 20.6% 16.4% 45.7% 28.6% 21.9% 22.7% n.sx Median 23.8% 2008 26.4% 19.7% 22.7% 48.6% 30.4% 19.3% 23.8% 24.4% 2009 27.0% 23.8% 26.4% 53.8% 30.6% 20.2% 23.1% 263% 2010 26.0% 23.2% 25.0% 47.8% 31.1% 20.7% 21.8% 28.1% EBIT as % of revenue 2004 NA 20.3% 14.7% 9.1% 22.1% 28.8% 9.7% 11.6% 0.2% to 30.0% 2005 NA 16.2% 13.6% 9.3% 15.0% 30.0% 12.0% 11.1% 2006 NA 20.2% 13.5% 5.0% 9.1% 27.2% 11.7% 12.2% Average 13.8% 2007 -44% 18.2% 18.1% 6.0% 17.4% 29.4% 10.8% 13.0% Medlin 12.6% 2008 -7244 23.0% 124% 3.3% 12.9% 26.7% 8.8% 7.0% 2009 49% 20.6% 6.3% 0.4% 193% 23.8% 6.8% 5.7% 2010 0.2% 18.3% 5.6% 9.3% 22.1% 23.7% 11.6% 7.5% 2011 NA NA 1.0% 14.9% X1.2% 173% 11.6% 7.3% 2012 NA NA 2.0% 17.9% 202% 163% 113% 8.4% 2013 NA NA 3.7% 19.1% 20.0% 134% 11.4% 10.4% 43 EFTA00307438 AliphCom Common Stock Valuation As of J une 20. 2011 Gaideline Company Ratio% Roek. Min Slas Motorvla Mohilily Iloldiags. Ine. Kon Corp. Nokia Corporation CN Store Nord ..VS Plaattunica Research In Motion Limited Nela" r Inc. Laakte!. International SA Tkker Capes as% of revenu.: MM1 KOSS NOK1V CPSE:GN PLT R1MM NTCR LOGI 2004 NA 3.3% 1.9% 3.9% 5.0% 8.1% 0.7% 2.7% 0.6% to 8.7% 2005 NA 2.9% 1.8% 2.5% 5.6% 8.7% 0.9% 3.0% 2006 NA 1.8% 1.6% 6.6% 3.0% 8.4% 1.0% 2.3% Average 2.9% 2007 0.8% 0.9% 1.4% 2.6% 3.1% 5.9% 1.4% 2.4% Media. 2.2% 2008 0.9% 1.3% 1.8% 2.4% 3.5% 7.5% 2.1% 2.2% 2009 0.6% 2.4% 1.3% 1.1% 1.0% 6.7% 0.6% 2.0% 2010 1.2% 2.0% 1.6% 1.8% 2.7% 5.2% NA 1.8% 2011 NA NA 1.2% 4.4% 2.3% 5.4% NA 2.2% 2012 NA NA 1.1% 4.1% 2.1% 4.9% NA 2.1% 2013 NA NA 1.1% 4.0% NA 4.1% NA 2.3% DFNWC w/ normalized cash as % of revenu 2004 NA 49:7.% 2.9% 14.6% 13.4% 3.9% 15.6% 12.1% 0.7% to 38.3% 2005 NA 35.2% 3.8% 35.6% 26.0% 21.7% 17.9% 14.6% 2006 NA 23.8% 44% 723% 26.1% 183% 19.8% 12.3% Average 17.0% 2007 NA 38.3% 2.0% 202% 29.3% 11.4% 19.8% 15.2% Media. !M0% 2008 -5,6% 22.9% 4.6% 18.6% 30.4% 15.0% 20.3% 15.2% 2009 43% 15.1% 5.8% 16.4% 283% 13.8% 18.7% 7.4% 2010 -63% 13.2% 0.7% 60.3% 21.1% 12.7% 20.9% 11.6% Noties; We excluded companim with CAGR indkations that were negative. We excluded companica with negative KIRT indications. this is not indieative of fatum prolitability expeetations lor die Company. DFNWC with narmalized cash indications that wem negative or smaler tinn 40% WCIC excluded. EFTA00307439 EXHIBIT J Market Approach: Public Company Market Multiple Method Overview ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 45 EFTA00307440 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of Julie 20, 2011 Exhibit J: Market Approach: Public Company Market Multiple Method OVERVIEW In the PCMMM, valuation multiples are calculated based on operating data from publicly traded guideline companies. Multiples derived from guideline companies provide an indication of how much a knowledgeable investor in the marketplace would be willing to pay for a company. The accuracy and applicability of the PCMMM depends on the comparability between the Company and the guideline companies. It is difficult to identify truly comparable publicly traded companies, as, in general, companies with publicly disclose financial results are diversified companies with different organizational, corporate, and financial strategies and structures. In our analysis, we considered the PCMMM but ultimately did not rely on this approach because most of the companies that operate primarily in the subject industry that are most similar to the Company are not publicly traded and, therefore, could not be incorporated in the PCMMM analysis. As such, the selected guideline companies perform a broader range of general industries activities and participate in the same general field as the Company. Although these companies have a limited degree of comparability, they are influenced by similar industry and market trends and economic conditions. Since most of the guideline companies are not directly comparable to the Company, we used the PCMMM as a reasonableness check against the value indication derived from the Income Approach. The following section describes our analysis related to the PCMMM, including detail on the selection of guideline companies and the calculation of market multiples. This analysis ultimately indicates that the value conclusion from the Income Approach is reasonable, based on a comparison of implied market multiples. SEARCH CRITERIA The first step in employing the PCMMM is to identify potential guideline companies to which to compare the Company. A global list of companies that could be considered similar to the Company was compiled for comparative purposes, utilizing a variety of sources, including (1) Capital IQ, (ii) Hoover's, (iii) Bloomberg, and (iv) discussions with management From an initial list of eligible publicly traded companies within the Company's industry, we selected publicly traded guideline companies based on consideration of: • Business descriptions; • Operations and geographic presence; • Financial size and performance; • Stock liquidity; and • Management recommendations regarding most similar companies. Since most of the guideline companies were not directly comparable to the Company with respect to size, products, and markets served, the guideline companies used in our analysis included the best available comparable companies that operate in the general industry and are engaged in similar operations as the Company, as these companies reflect the economic conditions and business risks for the industry in general. CONFIDENTIAL I WTAS LLC 46 EFTA00307441 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 2o, 2011 ANALYSIS Market multiples calculated for the guideline companies as of the Valuation Date are presented in Exhibit K. For the purpose of this analysis, we considered the Enterprise Value ("EV")n to forward twelve months ("FWD") revenue multiple indications for the guideline companies. Please see Exhibit K for the calculated and selected market multiples for the guideline companies, as well as the calculated implied multiple for the Company. As noted above, we did not rely on the PCMMM in our analysis, due to the differences between the Company and the guideline companies (comparability was limited). Specifically, the Company incurred operating losses in the last two years and was forecasting growth expectations much higher than those of the guideline companies. CONCLUSION The implied revenue multiple falls within the range of guideline company indications presented in Exhibit K and, accordingly, indicates that the value conclusion from the Income Approach is not unreasonable. Please see Exhibit K for further details. " Enterprise Value Invested capital value less cash, or the return to both debt and equity holders. By using EV multiples, valuation differences based solely on differences in cash balance are eliminated. CONFIDENTIAL I WTAS LLC 47 EFTA00307442 EXHIBIT K Market Approach: Public Company Market Multiple Method Analysis ALIPHCOM — COMMON EQUITY VALUATION As ofJune 20, 2011 48 EFTA00307443 AliphCom Common Stock Valuation ($000s) As of June 20, 2011 Market Approach Summary -- Public Company Market Multiple Method EVI Guideline Companies Tickers Fwd Revenue Motorola Solutions, Inc. MSI 1.44 Motorola Mobility Holdings, Inc. MMI 0.30 Koss Corp. KOSS NA Nokia Corporation NOK I V 0.20 GN Store Nord A/S ON 1.74 Plantronics, Inc. PLT 1.68 Research In Motion Limited RIMM 0.54 Netgear Inc. MGR 0.96 Logitech International SA LOGI 0.60 High 1.74 Low 0.20 Average 0.93 Median 0.78 Indicated value of invested capital from Income Approach (minority, marketable basis) less: Cash and cash equivalents balance at the Val. Date Indicated enterprise value (minority, marketable basis) divided by: Company indication2 Implied multiple $286,500 (63,000) 223,500 203,764 EV - Enterprise Value (invested capisol less cash): Fwd - Forward Cash and cash equivalents at the Valuation Date welt based on estimates provided by management. and includes the cash proceeds received from the Series 5 round of financing as of the Valuation Date. 2 The forwatd indication was estimated based on the Company's forecasted fiscal year 2011 and 2012 revenues for the twelve months period ending as ofJune 20, 2012. 1.10 Forward Indications Revenues Adjusted Bid Revenue 2011 Revenue $144,552 $,76930 2012 Revenue 210.939 126933 Revenue for tlw twelve months ending June 20. 2012 $,203,764 49 EFTA00307444 EXHIBIT L Capitalization Rights Overview ALIPHCOM - COMMON EQUITY VALUATION As of June 20, 2011 50 EFTA00307445 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 Exhibit L: Capitalization Rights Overview As of the Valuation Date, Aliph had issued seven classes of preferred shares, namely Series 5, Series 4, Series 3, Series 2, 1-A, and and one class of common shares. According to the Company's Amended and Restated Articles of Incorporation dated June 8, 2011 (the "Articles"), distribution or payment to shareholders in the event of liquidation follows an order of seniority. The order of seniority is as follows: (i) Series 4 and 5 preferred shareholders, (ii) Series 3 preferred shareholders, (iii) Series 2 preferred shareholders, (iv) Series preferred shareholders, (v) Series 1.-A and 1.-B preferred shareholders, and, finally, (vi) common shareholders. Based on the Articles and information provided by management, the Company's Series 4 preferred shareholders were entitled to receive a non-participating liquidation preference of $6.73 per share (or approximately 1.714x its purchase price of $3.926 per share). After all preferred share classes have received their tox liquidation preference, the Series 2 preferred shareholders are entitled to participate with common in the upside up to 2.0X their liquidation preference, such that the Series 2 preferred shareholders will receive up to 3.ox their liquidation preference in aggregate. As a result, the Series 2 shareholders would choose to convert to common when the proceeds upon conversion exceed 3x their liquidation preference. Similarly, all other preferred shareholders would choose to convert to common when the proceeds upon conversion exceed ix their liquidation preference. Based on discussions with management, all preferred shares shall accrue non-cumulative dividends as and if declared by the Board of Directors on an annual basis. If declared, all preferred shareholders (i.e. Series 5, 4, 3, 2,1-A, and i-C) shall be entitled to receive dividends at the rate of 8% of the applicable original issue price per share related to each preferred share class. According to the Articles, dividends shall be distributed to the preferred shareholders in the following order of seniority: (a) Series 4 and 5; (b) Series 3, (c) Series 2; (d) Series 1.-C; (e) Series 1.-A and i-B; and (0 common. Lastly, after the payment of dividends on the preferred shares, any further dividends declared or paid shall be distributed, pro rata, to the outstanding preferred shares (on an as-converted-to-common basis) and common shares. The original issue prices per share for Series 5, 4, 3, 2, 1-A, 1.-B, and 3.-C are $7.19113, $3.92600, $1.35/90, $0.17770, $0.80000, $0.86000, and $0.32921, respectively. As of the Valuation Date, no dividends had been declared. According to the Articles, upon any liquidation, dissolution, or winding up of the Company (after the debt holders have been paid in full their unpaid principal and interest), all preferred shareholders shall be paid their liquidation preferences plus any declared and unpaid dividends. As mentioned above, distribution or payment to shareholders follows an order of seniority. The order of seniority is as follows: (i) Series 4 and 5 preferred shareholders, (ii) Series 3 preferred shareholders, (iii) Series 2 preferred shareholders, (iv) Series 1-C preferred shareholders, (v) Series and 1-B preferred shareholders, and, finally, (vi) common shareholders. The Series 4 preferred shareholders are entitled to receive a non-participating liquidation preference of $6.73 per share (or approximately 1.714x its purchase price of $3.926 per share). After the preferred share classes have received their liquidation preferences, the Series 2 preferred shareholders are entitled to proceeds of up to an additional two times (2x) their liquidation preference. Based on our analysis, the aggregate liquidation preferences related to Series 5, 4, 3, 2, 1-A, 1.-B, and 1-C are approximately $39,999,999, $47,997,956, $29,999,999, $10,062,662, $1,000,000, $1,754997, and $7,654,525, respectively. All preferred shares are convertible into common on a one-for-one basis. The preferred shares automatically convert to common upon the closing of the sale of the Company's common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended (the "Securities Act"), other than a registration relating solely to a transaction under Rule 145 under such Securities Act or to an employee benefit plan of the Company, providing gross proceeds to the Company prior to deductions of underwriting discounts and expenses, in excess of $25 million. According to the Articles, for each class of preferred shares, where (i) Series and 1.-C preferred share classes are referred as "Class 1" in aggregate, (ii) Series 2 preferred share class is referred as "Class 2", (iii) Series 3 preferred share class is referred as "Class 3", (iv) Series 4 preferred share class is referred as "Class 4", and (v) Series 5 preferred share class is referred as "Class 5", with the agreement of holders of a majority of the then outstanding preferred shares of the respective class (voting on an as-converted basis), each share of CONFIDENTIAL I WTAS LLC 51 EFTA00307446 a WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of Julie 20, 2011 the particular class shall also automatically convert into common. As of the Valuation Date, Series represented a majority of Class I preferred shares. In general, all preferred shareholders shall have one vote for each share of common stock into which the preferred shares could then be converted, and common shareholders have the right to one vote per common share held. Additionally, the holders of preferred shares shall vote together with the common shares as a single class at any annual or special meeting of the shareholders, and may act by written consent in the same manner as the common stock. The preferred shares also have special voting rights. CONFIDENTIAL I WTAS LLC EFTA00307447 EXHIBIT M Capitalization Table ALIPHCOM - COMMON EQUITY VALUATION As of .1 une 20. 2011 53 EFTA00307448 AliphCom Common Stork Valuance10000 Capitalltaion Fable of.hoit 20.2011 '.1' Slated Moved 1.19•Idadoo MOMS earl) ea JO1 ISTAvOlvG Conversion timsidalims IltiviStmls PrOtrence AccoMor I.ro.Rata Shams Rath el Lod Commis Share Prearente Per Share & DIOdendo 1.1quWallon Intent Upon Clans of Shares °adamant of Term rtoI•n E tv Per Shore Tbrouph Term Per Shore Purer/nee Conyers:tom Senn 5 5.562 1.00 1502 $7.19115 PlOODIO 37.191I5 540.1100 151. &no 4' 7.132 I.011 7.132 6.73000 000000 6.73000 147.9.511 701. &Pim 3 22.191 1,00 22.191 1.35190 0.00003 1.35190 530.000 132% says:. 56.627 LOU 56.627 0.17770 000000 017770 $10463 33.655, Saito I-C 23.251 1,00 23.251 432921 0.0000) 032921 57455 134% Saks 1.8 2.037 1,00 2.037 0.86000 000000 086000 1.752 1.2% Sams la 1.250 LOU 1.250 0,00000 000000 040000 1400 0.781, AO Ptelimod 113.051 113.051 $134167 700% Cantata mibts 752 1.00 50,683 040000 000000 000000 SO 30.0% Toul commas 50.683 50.683 50 30.0% Tool 141.734 144034 $1141467 1000% Ilotatumadf2potau Taal Sulk hymn& llom Benched Slams Pnee Evans,: Stoics Sales 2 waist, Total Iota 2 morrasts 0 $0 .17770 so 0 so tow&nte WejeSed Sldk Callum. eaten 3.600.000 50.031:00 5002599 $108 3.600 Comma anti. 556.016 MOM 003609 28 556 Low Sato Comma tummies 4.156.016 5,003268 $136 4.156 Hoek Ante Wcoslud Sitik4 Commm ammo 117100 50115000 $001944 18 lilt Comma uarrailt - 0.17770 050401 0 0 Comma narrnils 639098 027800 0.19033 173 639 Comma namnIs 100800 0.34000 003971 36 100 Comemn isorrom 50=0 0.51000 002978 27 50 HO Rae Comma &moots 506298 5,027927 5253 907 ZOtSonte Wcieltal SOX Comecon ovum 705.737 1400500 5080031 SI 706 Comermcopoun - 000550 4102000 0 Commmoptions 1491.705 003000 040913 105 3.492 Commco <soon. 25100 005000 044011 25 Co/4mm %torn - 005500 002000 o a Comma swoon - 008000 000000 o a Comma commis - 0.10000 000000 0 Comnra (54sifit 4161.750 0.15000 001053 924 4162 Comnra (54sifit 1.092300 0.17770 001692 191 1493 Comma cplorn - &MOO 000000 0 Lem Sink Cotenant (Moor& 11476692 5010699 $1.228 11.477 HIM Sink Wcoeleed Sulk Conwroctogoxn - 025000 $,040000 SO 0 Comma opoom 6.811.816 027000 0,09821 1.839 6212 Commix, maxis 370.370 0.2970 040587 110 370 Commeo mem. 9.056.063 036000 0.17410 3.260 9456 Comma ccOrti 2.488.000 054000 007175 1.344 2.488 Ili)i Sa4.< Crimea ()maxis 13.726.269 $034993 16.551 11726 TotsCommon Options (lrms • HIM.) 34202.1111I Mlles 4 Imusbuicameagocc ps tro is docniultd lo teapftitnIntly1.7113 mbec 'gab, * InOtMote&53.924, 54 EFTA00307449 EXHIBIT N Option Pricing Method Overview ALIPHCOM - COMMON EQUITY VALUATION As of June 20. 2011 55 EFTA00307450 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of Julie so, 2011 Exhibit N: Option Pricing Method Overview In order to value the Company's common shares, we performed the following series of steps: Step 1. We determined the value of the Company's total equity (including preferred and common equity), as summarized in Exhibit F above. Step 2. Our analysis assumes that as the value of the Company increases, each equity holder benefits from certain value components. We determined the ranges of equity values at which the various Company stakeholders receive value. The maximum values of these ranges, or "break points", are based on the full liquidation preference amounts, the points at which options / warrant holders choose to exercise, and the points at which the preferred shareholders would be indifferent between converting their shares into common and retaining their preferred shares. For analysis purposes, the common options and warrants were grouped into two categories based on their respective strike prices. We calculated the weighted average strike price for both (i) options with a relatively lower strike price (the "Lower Strike Options") and (ii) options with a relatively higher strike price (the "Higher Strike Options"). Similarly, we calculated the weighted average strike price for both (i) warrants with a relatively lower strike price (the "Lower Strike Warrants") and (ii) warrants with a relatively higher strike price (the "Higher Strike Warrants"). Step 3. We used the Black-Scholes option pricing model to isolate the value allocated to each "range" (discussed in Step 2 above), calculated as the difference between the option values at each break point. The determination of the various inputs to the Black-Scholes option model (strike price, stock price, term, volatility, and risk-free rate) is described in detail in the sections below. Step 4. Based on the Company's capital structure (outlined in Exhibits L and M above) and the Articles, we calculated the percentage of each range attributable to each share class. For each range, the value allocable to each share class was then calculated by multiplying the value of each range by each security's respective percentage in which it shares in the range. Step 5. For each security, the value derived from each range was summed in order to determine the aggregate value of each share class. Step 6. The total value of each share class was divided by the security's respective fully diluted shares outstanding, in order to calculate the per share value for each security on a marketable basis. ANALYSIS As discussed in Step 3 above, we utilized several call options to isolate the value of each range in which the various share classes are allocated varying percentages. Please see the table on the following page for further details relating to each call option. CONFIDENTIAL I WTAS LLC 56 EFTA00307451 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT AS of June 20, 2011 DESCRIPTION OF CALL OPTIONS Call Option Description Call Option Call Option 02 Call Option 03 Call Option 04 Call Option as Call Option 06 Call Option 07 Call Option 08 Call Option 09 Call Option 010 Call Option ell Call Option 012 Call Option 013 Call Option 014 Call Option 015 Value above basic Series 5, 4 liquidation preference Value above basic Series 5, 4 and 3 liquidation preference Value above basic Series 5, 4, 3 and (ix) 2 liquidation prefere Value above basic Series 5, 4, 3, (ix) 2 and i-C liquidation pre Value above all liquidation preferences Value above exercise of common warrants (low strike) Value above exercise of common options (low strike) Value above exercise of common warrants (high strike) Value above Series i-C indifference threshold Value above exercise of common options (high strike) Value above Series 2 reaches participation cap Value above Series 2 indifference threshold Value above Series 3 indifference threshold Value above Series 4 indifference threshold Value above Series 5 indifference threshold The chart below details how the call options were utilized to arrive at the different components of value attributable to each of the Company's equity holders. The individual components of the chart below represent the ranges in which the various share classes are allocating varying percentages. COMPONENTS OF VALUE All * I N S I N u 00(invi nn • ^ , I , O a C . , . . . . . . . e n v . 1 . " • 1 c 1 a * I N • a I N u n. tia I N u Conies.", P.3 * M . ' 1 - M . - 4 - • - • toe,bodennfloanwiltb na..) a ' q r y , . 1 4 ..Ciatere. Mead itmed•raltenmnimiblItb int) envy...* Anion.ficesalronnicilorl.0014.4110w) lbea.ole••••ncen•Ihrol.0 CMIP"An lenni.Cusaalfainiallaw) irmrtimolee•narroblIrmr44) 00.(telAn• itarsa nal (barna Sins ia 241 ..Slimming.. 00(tnekr.. %Sopa malfeapiusil Yr. alitilleMeqedim• COttnyl Pi •••••••C •Sp• 41•••0014•Haispnarma• COVVram sine.0•••••••etetinwe O•RIVeam • ISIOPenn t C.Oces 0101 firle•••INIPMelhataanes• Please see the sections on the following page for details related to specific assumptions used in the calculation of these call options, as well as details related to arriving at values for each of the Company's equity holders. CONFIDENTIAL I WTAS LLC 57 EFTA00307452 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 2o, 2011 BLACK-SCHOLES MODEL The Black-Scholes model was used to determine the value of the call options described above. The following outlines the history of the model and its primary inputs. • In 1973, Fisher Black and Myron Scholes derived what is today the most widely used and best-known theoretical model for the valuation of marketable options. • The Black-Scholes model calculates the value of an option based on five inputs: o The current value of the underlying asset o The investment cost or exercise price (also called the strike price) o The time to decision date or time to maturity of the option o The volatility of the underlying asset o The risk-free rate of interest The model is as follows: Risk neutral probability of current value of underlying asset (incorp. div. if applicable) > X at expiration (—A-1 —rg -t) x N(d2) Where: Expected value of underlying asset (incorporating consideration of dividends if applicable) if > X at expiration r a1/4_, Call value = St x N(di) — Xe Present value of cost of investment = Current value of underlying asset X = Exercise or strike price e = Base of natural logarithms (2.78128) (T-t) = Time to maturity, in years v = Annual standard deviation of return (commonly referred to as volatility) N 0 = Value of cumulative normal distribution at the points di and d2 = Risk factor [In (St/X) + (r + 0.3v2)(T-0] / v(T-00 d2 = Risk factor di — v(T-01/2 In = Natural logarithm r = Risk-free rate with time-to-maturity equal to expected time to liquidation event CONFIDENTIAL I WTAS LLC 58 EFTA00307453 a WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 BLACK-SCHOLES MODEL ASSUMPTIONS The following section details the specific assumptions and inputs used in the Black-Scholes model as it pertains to our valuation of each of the call options described above. MI option models utilize the same assumptions with regard to (i) current value of the underlying asset, (ii) volatility, (iii) risk-free interest rate, and (iv) time to maturity. The models, however, use different assumptions with regard to the strike price. Please see below for further details related to the inputs used in the call option models. Current Value of the Underlying Asset • For all call options, the current asset value was determined to be the total equity of the Company. As of the Valuation Date, the Company's equity value was determined to be $266,100,000 on a minority, marketable basis. Please see Exhibits F and G for further details related to the discounted cash flow analysis performed in arriving at this value for the total equity of the Company. Strike Price • As discussed in Step 2 of the Option Pricing Method Overview, we calculated the breakpoints at which various Company stakeholders receive value associated with their ownership interests. The strike prices were calculated based on the full liquidation preference amounts, the points at which the options/warrant holders choose to exercise, and the points at which the preferred shareholders would be indifferent between converting their shares into common and retaining their preferred shares. Please see the chart below and Exhibit O for further details related to the calculation of the strike. OPTION STRIKE PRICES Call Option Description Strike Price Call Option • I Value above basic Series 5, 4 liquidation preference 547,998 Call Option •2 Value above basic Series 5, 4 and 3 liquidation preference 77,998 Call Option •3 Value above basic Series 5, 4, 3 and (ix) 2 liquidation preferences 88,061 Call Option •4 Value above basic Series 5, 4, 3, (Ix) 2 and 2-C liquidation preferences 95,715 Call Option •5 Value above all liquidation preferences 138,467 Call Option •6 Value above exercise of common warrants (low strike) 141,974 Call Option •7 Value above exercise of common options flow strike) 150,257 Call Option •8 Value above exercise of common warrants (high strike) 171.437 Call Option •9 Value above Series I-C indifference threshold 175.953 Call Option •to Value above exercise of common options (high strike) 179,069 Call Option on Value above Series 2 reaches participation cap 179,994 Call Option •12 Value above Series 2 indifference threshold 199,983 Call Option •13 Value above Series 3 indifference threshold 338,453 Call Option •14 Value above Series 4 indifference threshold 1,367311 Call Option *is Value above Series 5 indifference threshold 1,458,816 Volatility of the Underlying Asset • Generally, the wider the fluctuations in the value of the underlying stock over time, the greater the time value of the option. Fluctuations add to the value of the upside and enhance the value of the option, theoretically infinitely, while downside fluctuations cannot drive the option below zero. • For all call options, a volatility input of 45% (rounded) was developed by analyzing the standard deviation of historical stock prices, as well as the implied volatilities of publicly traded companies with operations similar to the Company, detailed below. The concluded volatility represents estimated volatility for equity and was based on guideline company indications. The selected volatility attempts to incorporate the following factors: (i) matches the term of the option, (ii) the nature of the Company's operations, and (iii) greater risk than the guideline companies due to the lack of product and customer diversification. Consideration of factors (ii) and (iii) results in a selected volatility which is greater than the overall average/median of guideline company indications. Please see the chart on the following page for details related to the historical and implied volatility indications for the guideline companies. CONFIDENTIAL I WTAS LLC 59 EFTA00307454 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 HISTORICAL AND IMPLIED EQUITY VOLATILITIES OF THE GUIDELINE COMPANIES Comparable Company Ticker s Yr Historical 2 Yr Historical 3 Yr Historical Implied Volatility Motorola Solutions, Inc. MSI 56.0% 47.2% 60.6% 26.0% Motorola Mobility Holdings. Inc. MMI NA NA NA 42.0% Koss Corp. KO6S 26.1% 48.2% 55.7% NA Nokia Corporation NOKt V 37.2% 35.4% 41.9% 38.0% GIs:Store Nord A/S CPSE.-GN 25.8% 36.1% go.8% 29.0% Plantronics, Inc. PIS 28.3% 34.9% 50.6% 34.0% Research In Motion Limited RIMhl 46.6% 44.6% 58.9% gi.o% Netgear Inc. NTGR 48.5% 42.596 53.3% NA Lashed, International SA LOGI 35.8% 34.7% 44.2% 36.0% High 56.0% 48.2% 60.6% g 1 . o % Low 25.8% 34.7% 41.9% 26.0% Average 38.0% 40.5% 52.0% 36.6% Median 36.5% 39-3% 52.1% 36.0% Risk-Free Rate of Interest • Higher levels of interest rates in the economy tend to produce higher values for call options. One reason is that as interest rates increase, required rates of return also increase on all investments, including common stock. Concurrently, stock values decline, so that their expected total rates of return to the investor, including dividends and capital appreciation, will equate rates of return available in the market on other investments of comparable risk. Therefore, to the extent that the values of the underlying common stocks reflect efficient capital markets, the higher the level of interest rates, the higher the expected rate of appreciation in the value of the underlying stock. Moreover, as interest rates increase, so does an investor's carrying cost (or opportunity cost) for direct investment in the underlying stock, thus enhancing the attractiveness of the leverage feature of the stock option. • For all call options, the risk-free rate was based on the rate of treasury securities with the same term as the options (approximately two years), 0.4084%. Time-to-Maturity of the Option • The longer the time to expiration, the greater the stock's opportunity to appreciate in value, thus enhancing the option value. • The term of all call options was estimated to be approximately two years based on management's expectations for a future liquidity event. Using the assumptions outlined above, we arrived at the following values for the call options: Values as of Val. Date Call Option tet $238,943,110 Call Option •2 209.798,593 Call Option *3 200,322,563 Call Option *4 193,256,552 Call Option *5 156,658,146 Call Option *6 153,899,653 Call Option *7 147,538,681 Call Option *8 132,280,033 Call Option *9 129,213,023 Call Option *to 127,134,413 Call Option at 1 126,523,382 Call Option *12 113,968,598 Call Option *13 55,381,001 Call Option *14 908,525 Call Option *is 684,677 CONFIDENTIAL I WTAS LLC 60 EFTA00307455 WTAS ALIPHCOM— COMMON EQUITY VALUATION REPORT As ofJune so, 2011 ALLOCATION OF VALUE TO EACH SHARE CLASS By using the call options described above, we were able to isolate several components of value attributable to the Company's preferred and common shares. Please see the table below for the descriptions and formulas related to these components by class. value Description Formula Upside to all shareholder, beyond Seri s Sb indif. threshold Between Series sb indif. threshold and Series a's indif threshold Between Series 4's indif. threshold and Series 3's indif threshold Between Series 3's indif. threshold and Series a's indif. threshold Between Series a's indif. threshold and Series a's 3.ox tap Between Series a's 3.ox cap and exercise of common options (high) Call • so •ChIl ns Between exercise of common options (highland Series a-Cs indiL threshold Call irg • Call aro BetweenSeries r-Cs indif. threshold and exercise of common warrants (high) Call ail -Call so Betweenexerciseofcommon warrants (high) and exercise of common options Call •7 Chit s Between exercise of common options ilow)and exercise of common warrantsIC:ell en - Call .7 Between exercise of common warrants(low) and Series t-A pre& Call IS- Call s6 BetweenSeries i-A & r-B sod Series -Cs lig. pref. Call as - Call vs BetweenSeries i-Cs and Series 22 basic Ox) lig. pref. Call 13- Call t4 Between Serks 2b basic(.]) and Series 3's lig. pref. Call a2- Call v3 BetweenSeries VI sod Series gb S's lig. pref. Call -Call ea Series a & S's lig. pref. Campany value- Call Callers Call Ors • Call si Callers. Call • L4 Calls12. Call ars Calls.] -Callsra II I Sherbet classes All I, a, IC vats-A.Common warrants &options) a, IC pit a.A. Common Oriel warrants &options) a, 1.C, a.A.Common (ina warrants& options) a.A. Common (ineL rrrrr s options) a, 4C. I -8.1-A. Common Grata warrants&options) C. roX, Options Dow). Warrants (all), a. Common Options (low). Warrants (all). a. Common Options (low). Wa (low), a. Common Na (low), 2. Common 2. Com mon I -A. 1-3 -C 2 3 a.5 Using the assumptions outlined above, we arrived at the values of each component as follows: a ~ • • .5 SIINI toWw I man s IYNYa CON•841.111.111.01110,11.1011.1•1160. a• 1.11.4 Ogg WileneetWeete •:........•••••mion.osseniste.stels c gi "sty. Sig nen.. esaaaagraWl. an ..coanasy.ternsb latiorsnemna Ina 4naos.Wra.....CIPWAOW Ow) Vkl..••• 47.0•0.411 After calculating the values of each component (as illustrated in the figure above), we allocated these values to the appropriate clascPs (preferred and common) based on their respective ownership proportions. We then summed the values by class in order to determine the aggregate value for each class of preferred and common shares. Please see Exhibit 0 for further details regarding our calculation of the values for each class. CONFIDENTIAL I WTAS LLC 61 EFTA00307456 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 2o, 2011 CONCLUSION Using the assumptions outlined above, we arrived at the value of all of the Company's common shares of $50,498,200, or $1.00 per share. This value represents both a minority and control, marketable basis before giving any consideration to an applicable lack of marketability adjustment. In order to arrive at an appropriate adjustment for the lack of marketability inherent in the Subject Interest, we looked at two major sources of empirical evidence on adjustments for lack of marketability: (i) studies based on restricted stocks of companies whose unrestricted shares are freely traded and (ii) studies of private transactions prior to initial public offerings. Please see Appendix 1 for further details related to these marketability discount studies. In arriving at the concluded adjustment, consideration was given to the financial performance and nature of the Company and its early stage nature, sale/transfer restrictions associated with the common stock, the lack of voting rights associated with the common stock and the inability to influence decisions regarding the Company, the Company's dividend policy, and the expected holding period associated with the common stock, among other factors. Please see Exhibit P for our detailed analysis related to the concluded discount for lack of marketability. An adjustment for lack of marketability inherent in the Company's common shares was determined to be 22.5%.12 By applying a 22.5% adjustment for lack of marketability, we arrived at a value per share on a minority, non-marketable basis of $0.77 for the Company's common equity. " Please see Exhibit P for further discussion related to the concluder' adjustment for lack of marketability. The concluded adjustment for lack of marketability was further supported by a put option analysis as presented in Exhibit Q- CONFIDENTIAL I WTAS LLC 62 EFTA00307457 EXHIBIT 0 Option Pricing Method Analysis ALIPHCOM - COMMON EQUITY VALUATION As of June 20. 2011 63 EFTA00307458 3 1 CCMCCCCCMCCC IIIIIIIIMMII 1 11 I gCtig•CiCUCCCii fCCUCCifeCCCCCC mecestsceeccee fl it CCU CCii CCit iiiiiiiiii aaaaaailllilllif '3S1' eeeeeaaa '15A"4.2**-- R3. rninnteen" EFTA00307459 tent 1.4114440010$9 01~44~ ~1 .482,4«YA 0— CA- 1148:4044~~110~400 c.. sais,e • x." Nwe a -.lax -J.. o • 5189111411941Tir> da ...": 1 teaslitas C•11084144 41 fall004•43 CYONV4 Cale0". 04 CY 00..9 <1141144404 Cal 0$9•907 (L001404 felOpMe < al op...1. 1 a own re. Reset 04~941 hoontr 41 19%490 1~ %no Caen Cam. %des i 4 < ..w000 • Salmi.; 5. %la 2 5.4.3.1,4 It .4.1%, Creme 9. ion uo, Op.. 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Hypothetical willing buyers prefer investments that have quick access to a liquid market, as these investments can be both readily and efficiently converted into cash. Investors who hold interests in closely held entities may, in addition to the liability of holding a relatively illiquid investment, incur additional costs in terms of time and money, when trying to locate a willing buyer for such an interest. Therefore, with all other factors being equal, equity interests in closely held entities with marketability limitations sell at a substantial discount when compared to shares that actively trade on established markets. The applicability of an adjustment for lack of marketability is supported in guidance provided by the U.S. Securities and Exchange Commission ("SEC"). In a December 2005 speech at the AICPA National Conference on Current SEC and Public Company and Accounting Oversight Board ("PCAOB") Developments, Todd Hardiman, Associate Chief Accountant, noted the following: (Another) issue we address with frequency is ... the magnitude of the discount for...lack of marketability..Jes not enough to simply cite the average marketability discount used by rani investment banker or to highlight that the amount of the discount used falls within a broad range you noted in an academic study. As a starting point in evaluating these discounts, we try to understand the duration of the restrictions and the volatility of the underlying stock. Generally, the longer the duration and the higher the volatility, the higher the discount... It's important to note that if you are deriving a marketability discount from what you believe to be comparable companies, you need to ensure that the discount only gives effect to the lath of liquidity of the comparable companies' stock and not to other factors specific to the comparable companies such as the successful execution of a business plan or the reduction in risk associated with achieving projected results." The framework of our analysis addresses Hardiman's concerns. The following section describes references to specific studies incorporating comparisons of Company-specific factors (e.g., revenues, earnings, etc.), rather than conclusions based on averages from a "broad range...(from] an academic study." Two major sources of empirical evidence on adjustments for lack of marketability exist: (1) studies based on restricted stocks of companies whose unrestricted shares are freely traded and (ii) studies of private transactions prior to initial public offerings el PO"). While both the restricted stock and pre-IPO studies have been used by appraisers to derive adjustments for lack of marketability, we believe that there are a number of problems associated with relying on the pre- IPO studies. There are three common critiques related to using the pre-IPO studies, including the following13: t. The IPO stock prices used in the studies are affected by the hype and marketing efforts associated with bringing a new issue to market, thereby temporarily inflating the stock price following an IPO. There are also significant financial and reporting incentives for most pre-IPO companies to understate the true value of the stock in the pre-IPO transactions. These efforts ultimately exaggerate the magnitude of the calculated adjustment. 2. The transactions prior to the IPO are likely to be different in nature from those that take place at the time of the IPO or following the IPO. Prior to an IPO, buyers of shares are likely to be insiders who provide a service to the firm (e.g., employees). Therefore, a portion of the adjustment n Based on various articles and court cases, including: (I) John J. ICania, "Evolution of the Discount for lack of Marketability," Business Valuation Review, March 200!, (ii) Hall, Lance S., "The Search for the Holy Grail, Getting Away from the t5-Minute Discount Determination," The Value Examiner, July/August 2004, (iii) Estate of McCord, 120 T.C. No. 13, May 2003, and (iv) Bajaj, Denis, Ferris, and Sarin, "Finn Value and Marketability Discounts," 27 J. Corp. Law 89, Fall 2001. CONFIDENTIAL 1 WTAS LLC 71 EFTA00307466 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June so, 2011 indicated from these transactions is likely compensation for these services rather than compensation for lack of marketability. Furthermore, the data used in the pre-IPO studies use older less relevant data. 3. The transactions identified in the IPO studies suffer from a success bias. Those firms that are successful and have good prospects are usually the ones that complete the IPO process, while companies with poor prospects often elect to bypass the IPO process. Since the IPO studies only consider transactions involving companies that have successfully completed the IN) process, a number of transactions involving companies with worse prospects are ultimately excluded. Therefore, adjustments for lack of marketability indicated by pre-IPO studies tend to naturally select only the highest discount data. Based on these criticisms of the pre-IPO studies, we have ultimately relied upon the restricted stock studies as a basis from which to determine an appropriate adjustment for lack of marketability. As detailed in Appendix 1, many of the restricted stock studies are based on data from as far back as 40 years. We believe that the use of such dated studies as a primary basis for determining an adjustment for lack of marketability would result in an indication less reflective of the current market conditions. As a result, we have relied on restricted stock studies that have been published since 1991. These studies include the following: RESTRICTED STOCK STUDIES PUBLISHED SINCE 1991 William L. Silber 1981 — 1988 69 33.8% Management Planning , Inc. 1980 -1996 49 27.7% AMY (two-year holding period transactions) 1980 -1997 243 22.3% Hertzel — Smith 1980 -1987 106 20.1% Johnson 1991 - 1995 72 20.0% Our methodology for determining an appropriate adjustment for lack of marketability included the following steps: 1. Examination and further analysis of transaction detail that was available for the studies above. Detailed data related to the performance of companies covered in the studies and other information for the Silber, Management Planning, and FMV studies were available, and as a result, we relied on the information from these three studies as a starting point for our analysis. 2. For each of the studies, we sorted and analyzed the underlying data to focus on the companies most similar to the Company based on a variety of measures, including revenues, earnings, market capitalization, and total assets. For each study, we concluded a benchmark Company- specific adjustment for lack of marketability as a starting point. Please see the following several pages for further details. 3. The benchmark Company-specific adjustments were further adjusted based on additional factors described in the Selected Marketability Section below. WILLIAM L. SILBER STUDY The William Silber study examined 6g companies and separated them into two groups, one with companies whose indicated discounts were greater than 35% and one with companies whose discounts were less than 35%. The mean discount for the higher discount group (i.e., those with discounts greater than 35%) was calculated to be 54%. The mean discount for the lower discount group (i.e., those with discounts less than 35%) was calculated to be 14%. The overall average discount for the entire study was calculated to be 34%. The groups were evaluated according to several factors, as outlined below. For the purposes of our analysis, the Company was compared to the two groups and the overall average according CONFIDENTIAL I WTAS L1C 72 EFTA00307467 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As ofJune 20, 2011 to the same factors, and the appropriate group (or overall average) for each factor was selected. Please see the table below for details related to our analysis of the various factors considered and the resulting selected adjustment for lack of marketability. SILBER STUDY FACTORS AND SELECTED ADJUSTMENT FOR LACK OF MARKETABILITY Fatten. Restricted Stock Total. The size of the restricted block relative to total shares outstanding differed between the two groups. Earnings. The annual earnings differed between the two groups. Revenues. The average company size in terms of annual revenues differed between Market Capitalization. The average company size in terms of market capitalization differed between the two groups. Selected Ad ustment Discount Group Subject Interest/ Comparable Discount Comparable Lower Average Higher Company Group Discount 10.9% 13.6% 16.3% (common Lower 14.0% restricte d restricte d restricte d share $3.2 $0.9 $1.44 -Sty.? Higher 54.0% million million million loss million 3694 $40.0 $13.9 $86.8 Lower 14.0% million million million million $74.6 $54.0 $33.8 $286.5 Lower 14.0% million million million million 25.0% MANAGEMENT PLANNING, INC. STUDY The Management Planning, inc. study analyzed 49 private transactions occurring between 1980 and 1996. Five variables indicated clear tendencies with regard to the level of restricted stock discounts, and the 49 transactions were organized into quartiles for each of the five key variables. The five key variables are as follows: • Revenues. Companies with greater revenues, on average, tended to have lower restricted stock discounts than companies with lower revenues because larger companies are generally viewed as less risky than smaller companies. • Earnings. Companies with higher earnings, on average, tended to have lower restricted stock discounts than companies with lower earnings because greater earning power tends to mitigate risk. • Market Price / Share. Companies with higher market prices per share, on average, tended to have lower restricted stock discounts than companies with lower market prices because higher share prices are often associated with less speculative or risky companies. • Price Volatility. Price volatility is measured as the standard deviation of a company's month- ending stock price over the past 12 months divided by its average stock price over that time period. Companies with more volatile stock prices tended to have higher restricted stock discounts. • Earnings Stability. Companies with greater earnings stability, on average, tended to have lower restricted stock discounts than companies with lower earnings stability because greater earnings stability tends to mitigate risk. The earnings stability measure was based on reported net income for the ten years prior to each transaction and was measured as the "k-squared," or variance, of the observations related to each transaction. The Company was then compared to the data from the private transactions with respect to each of the five key variables in arriving at a Company-specific adjustment for lack of marketability based on the CONFIDENTIAL I WTAS LLC 73 EFTA00307468 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As ofJune 2o, 2011 Management Planning, Inc. data. Please see the table below for details related to our analysis of the five factors and the resulting selected adjustment for lack of marketability. MANAGEMENT PLANNING, INC. STUDY FACTORS AND SELECTED ADJUSTMENT FOR LACK OF MARKETABILITY Quartiles Company Comparable Fact or 1 2 3 4 Discount Average Revenues ($ millions) $114-042 $35.809 $1 8 . 05 7 $5-970 $ 86.781 Average Discount 22.7% 22.4% 31.9% 34.7% 22.7% Median Discount 21.8% 18.8% 31.5% 36.6% 21.8% Average Ea rn ings ($ millions) $4-297 81.226 $0.485 $o.253 -$17.663 Average Discount t8.0% 30.0% 30.1% 34-1% 34.1% Median Discount t6.1% 30.5% 32.7% 39.4% 39.4% Average Market Price / Share $21.02 $1 1-3 8 $7.98 $3-99 NA Average Discount 23.3% 24.5% 27.3% 37.3% NA Median Discount 23.3% 22.2% 29.5% 41.0% NA Average Price Volatility 9.44 17.69 25.34 46.46 NA Average Discount 22.0% 21.0% 33.3% 34.8% NA Median Discount 19.4% 19.2% 31.6% 34.6% NA Average Earnings Stability 0.88 0.63 0.22 0.02 NA Average Discount 16.4% 28.8% 27.8% 39.7% NA Median Discount 14.1% 26.2% 30.8% 44.8% NA Selected Adjustment 30.0% FMV STUDY The FMV study's analyzed 243 private transactions occurring between 1980 and 1997 and identified five variables that indicated clear tendencies with respect to the level of restricted stock discounts. The 243 transactions were organized into quintiles for each of the five key variables. The five key variables are as follows: • Revenues. Companies with greater revenues, on average, tended to have lower restricted stock discounts than companies with lower revenues because larger companies are generally viewed as less risky than smaller companies. • Market Value. Companies with greater market values, on average, tended to have lower restricted stock discounts than companies with lower market values because larger companies are generally viewed as less risky than smaller companies • Market Price / Share. Companies with higher market prices per share, on average, tended to have lower restricted stock discounts than companies with lower market prices because higher share prices are often associated with less speculative or risky companies. LI The ENV study analyzed a total of 597 transactions with six-month, one-year, and two-year holding periods. For the purposes of our analysis, we have used only the two-year holding period data, since the illiquidity of a security with a two-year holding period is more similar to that of a privately held non-controlling interest than a security with a one- year holding period. Therefore, hereafter, references to the FMV study refer only to those securities with a two-year holding period. CONFIDENTIAL i wras LLC 74 EFTA00307469 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 • Market Price Volatility. Companies with greater volatility tended to have higher restricted stock discounts than companies with lower volatility. • Total Assets. Companies with more assets, on average, tended to have lower restricted stock discounts than companies with fewer assets because larger companies are generally viewed as less risky than smaller companies. The Company was then compared to the data from the private transactions with respect to each of the five key variables in arriving at a Company-specific adjustment for lack of marketability based on the FMV study. Please see the table below for details related to our analysis of the five factors and the resulting selected adjustment for lack of marketability. FMV STUDY FACTORS AND SELECTED ADJUSTMEIVT FOR LACK OF MARKETABILITY Quint Iles Company Comparable Factor 2 3 4 5 Discount Av erage Revenues (S m illions) 5205.054 535.796 $13.026 $4.720 $0.484 886.783 Av erage Discount 17.0% 19.6% 21.5% 27.7% 25.7% 17.0% Median Discount 18.4% 15.0% 20.8% 27.1% 24.5% 18.4% Av erage Market Value (3 millions) $478.181 599.288 $53.623 226.147 510.833 8286.500 Av erage Discount 14.8% 18.4% 21.8% 23.6% 32.9% 148% Median Discount 12.7% 14.5% 20.0% 23.0% 33.5% 12.7% Av erage Market Price /Share $21.29 59.62 $6.07 $3.67 81.43 NA Av erage Discount 13.1% 18.7% 20.3% 24.7% 34.8% NA Median Discount 10.6% 14.5% 18.4% 24.1% 35.0% Na Av erage Market Price Volatility 0-37 0.56 0.70 0.84 1.49 • Av erage Discount 14.2% 15.5% 22.0% 26.7% 34.5% NA Median Discount 13.4% 14.1% 21.1% 25.3% 35.2% NA Av erage Total Assets (8 millions) 813145.940 543.556 516.694 37.938 22-875 $97.920 Av erage Discount 14.8% 15.1% 24.1% 27.5% 30.1% 14.8% Median Discount 12.5% 14.0% 24.1% 26.3% 32.0% 12.5% Selected Adjustment (rounded) 15.0% CONFIDENTIAL I WTAS LLC 75 EFTA00307470 WTAS ALIPHCOM— COMMON EQUITY VALUATION REPORT As of June 20, 2011 SELECTED MARKETABILITY DISCOUNT In arriving at a Company-specific adjustment for lack of marketability, we used the data from the Silber, Management Planning, and FMV restricted stock studies, all of which were published after 1991. We placed the most weight on the indications from the Management Planning, Inc. and FMV studies, since these studies utilize more recent data than the Silber study. Based on our analysis of the underlying data from the Silber, Management Planning, and FMV restricted stock studies, we arrived at a benchmark Company-specific adjustment for lack of marketability as detailed in the table below. SUMMARY OF RESTRICTED STOCK STUDIES Discount djustme:t (above) William L Silber 33.8% 27.7% fl 25.0% 30.0% Management Planning, Inc. FMV 22.3% 15.0% Selected Company-Specific Adjustment 22.5% Although the above analysis has allowed us to consider and make adjustments for a number of important factors (e.g., earnings, assets, volatility, etc.), additional factors not considered in the above analysis also impact the magnitude of the concluded adjustment for lack of marketability. We have analyzed each of these factors and discussed their impact on the concluded adjustment for lack of marketability below. • Financial Statement Analysis. Larger companies with historically stable earnings and greater profitability warrant lower adjustments. The effects of these factors have already been captured in our analysis of the transactions in each of the restricted stock studies above. Therefore, this factor does not further impact the concluded adjustment for lack of marketability. • Dividend Policy. Based on conversations with management, the Company is not expected to pay dividends. For the purposes of our analysis, we examined the benchmark transactions in the Management Planning and FMV studies. The benchmark transactions for both the Management Planning and FMV studies involved companies with distribution policies primarily involving no distributions or minimal levels. Therefore, this factor would not be expected to affect the adjustment. • History and Nature of the Company. Companies that maintain a less positive economic outlook warrant a higher adjustment for lack of marketability. The Company was assumed to have a similar risk profile as the benchmark companies in the Management Planning and FMV studies. As such, this factor would not have any impact on the adjustment for lack of marketability. • Management. The reputation and experience of the management of the Company are important attributes considered by investors. In our analysis, the management of the Company was considered to be competent and experienced. As a result, this factor does not impact the concluded adjustment for lack of marketability. • Amount of Control in Transferred Shares. Greater levels of control over company activities and/or larger member interests would tend to decrease the adjustment for lack of marketability. The Subject Interest is one common share — a non-controlling interest with respect to the Company's management and operations. Therefore, this factor does not affect the adjustment for lack of marketability. • Transfer or Sale Restrictions. As provided in Revenue Ruling 59-60, restrictive agreements are a factor to be considered with other relevant factors in determining fair market value. Ownership interests that have sale restrictions require higher than average adjustments for lack of marketability. Based on the Company's Second Amended and Restated Right of First Refusal Agreement (the "Agreement"), existing shareholders and the Company may exercise their right of CONFIDENTIAL I WTAS LIC 76 EFTA00307471 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June 20, 2011 first refusal in any transfers of shares. According to the Agreement, after the intent to transfer was notified, the Company has up to 30 days to purchase the shares subject to transfer. Thereafter, existing shareholders have up to 30 days to purchase the shares. Since the only sales / transfer restriction associated with shares subject to transfer is the 60-day period that allows the Company and existing investors to exercise their right of first refusal, this factor would not have a material impact on the adjustment. • Holding Period. Interests in companies with long or indefinite holding periods require higher than average adjustments for lack of marketability. Based on discussions with management, the Company is expected to experience a liquidity event in approximately two years, which is similar to the holding period for the benchmark transactions in both the Management Planning and FMV studies (two years). Therefore, this factor would not affect the adjustment. • Redemption Policy. Interests in companies with a history or policy of redeeming shares warrant a lower adjustment, as this would give the holder of such an interest a potential cash-out option. The Company does not maintain redemption policies for the common shares, and there are no expectations for redemptions in the future. Therefore, this factor does not impact the adjustment for lack of marketability. Based on the selected benchmark Company-specific adjustment for lack of marketability, and making no additional adjustments based on the factors outlined above, we have concluded an adjustment for lack of marketability of 22.5% to apply to the Subject Interest. It is important to emphasize that the adjustments for lack of marketability derived from the studies described above are related to securities in entities that were, or were soon to be, publicly traded. In other words, the prospect of liquidity was known and understood to the buyers and sellers of the interests in the studies. In comparison, the expectation of a market for the Subject Interest was not certain at the Valuation Date, especially considering the Company's current status as an emerging business. Therefore, it is logical to expect that the adjustment for lack of marketability for a closely held interest would be greater than that which is derived from the most recent restricted stock studies. CONFIDENTIAL I WTAS LLC 77 EFTA00307472 EXHIBIT Q Put Option Analysis ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 78 EFTA00307473 AliphCom Common Stock Valuation (000s) Black-Schott% Model As of June 20. 2011 Put Option — Reasonableness Check for Selected !Marketability Adjustment died marketability adiustment: Put option •alue &ruled by: Value of the Company's equity Implied marketability adjustment Compares to selected marketability adjustment 570,079 $286,500 24.5% 22.5% 1.119**Schole9. Pommel, IF lump—m..441r call option) ci.SiN(di) • Xe'T "N(s12) di — (1r4St/X)*(r +.5(42)(T4))/(9Cr•l)n ) Q — dn • v1~9r0 Put-Call Parity ~ DesgMtn Amount — c, • Si + XeCT" lapea (I) SS- Value of the Company's total equity 5286,500 (2) X- Value of the Company's total equity S26,500 (3) (14) — Time until expiration bears) 2.00 (4) v Volatility (standard deviation) 45.0% (5) R,, — Risk.fnx rate 0.41. OurpW Snnbol De SUrn Amount Pi — Value of put option 5'70,079 — Value of all option 572.409 de Risk factor (see formula above) 0.331 N(de) Standard normal cumulative distribution of di 63.0% de Risk factor (see formula above) -0.305 N(ch) Standard normal cumubtive distribution ofd; 38.0% (4) (5) The equity value of the Company was Cal imalcd based on the dn vand cash llow analysis performed as of the Valuation Date. The strike price n the value of the Company's lotal equity. The term of the option was estimated to be approximately 2 years based on the Company's expectations with regard to an exil strategy soh as an IN) or liquidation event. The concluded equity solatdily was based on guideline company indications. The risk.free rate was based on the rate of treasury securities with the same Inn as the option. 79 EFTA00307474 APPENDIX 1 Guideline Company Tear Sheets ALIPHCOM — COMMON EQUITY VALUATION As of June no, 2011 80 EFTA00307475 ONE PAGE TEARSHEETS MOTOROLA SOLUTIONS, INC (NYSE:MSI) %NIT I N. 1.011%1 %I 10 T. %Amok talihes. pn.ntkIts boums, and IMIKO.C11111a cartmenacion pelas) ad atace7 far «arma a) t'imam calme. adask. Ils produis inchdetorchk aman ort um itaPt8 ,64`)174181111,181471)111119111.h: 189081111114datolCh.dispenhatelt. 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Minai ateinhanaatut leehrap Comma 461Ftkerbef of Etuttwe Commune Dirent (aima et Ank kLkal ('toirra ad Nembet of Lucane Commue« La. 0rØ draina fl émos entama« & Nemneak ()mana. Maki cf dama Mamie .7rd Marte elronfeanekk leakrtip Manas Maur. 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Mea 6.1430 1,7110 0.4140 3410 nele.Fra NWC 6.1150 1301.0 04010 0410 )...rs Tt« DS 020 5360 len 4.0140 1834.0 1.7030 244/9.0 68100 7,0610 04639 6.110.0 1.274 No ROE 1.41110 1.012.0 0110 915.0 134 1.61 wu, ("sud 4 Dale il Cce. leatidt lac Mima Mina LI, %Apt Sunky knatnai Theataset Natal lervestarta. 1111)tatessan. MN %mi Mal ablars. In. øt VmpArd Gant lix Canar Roonbal %M'a*. Lk Mairy lade Belém /*ta. Ottply<3. MM Musa % 373 11.N% 173 101. .115 6686 24111 51.0% 113 5.10% 1.8 4.11% 12: 11.3 /.1,17) 113 11e. 07 0.1% S'une Clette EFTA00307476 MOTOROLA MOBILITY HOLDINGS, INC. (NYSE:MMI) M,e, out `.11, Ito Orr, T . proud:. 0.41001,630. pruoxis. and ectricrs Sr noble aid wry line direal cantroncutro. nlemstrutt and retolunmon apricots:cis 104 <4014040'. incbmk pn0knnlNaun oosy c...pal Il ea, strlalsw.asutpluata tu.cdra ihr Ankodep.autr pin. a. wet .t. Lehi:hood File.ds tome pairolrocoacrsa elm nee. au, Casta sokasoas rap ,I1.102poralcu'oswalo. in tic Imo:. Ow Mme.nMlupodlleNur. 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(NASDAQ(:M:KOSS) Koss fro rs r.o :3343,13, rra it tit a. and ails 49.4o bessctkones and fdle01 .43345504" proatli. conouly offers 19,11194919.94. 09.1flect 1.043.41e. Itletumeneocaots 1/0.9%)%. 09.90 nos< sloo4/19u wi rki. Istonoleemes...o.1 nutp..41 to.00diey> of Amain*. Ss.~6y 0.9/491/..s ea 11.5 K4.3 Chain Ida 1 Sri ets rNu3s seeslo ON 'Kos' Nuesi Rues: Waists nil» 'Ds eally Wee. lbe lee/emel. sterol lead :Yak"). tevosati 44.1.1019.1 slat sham. deryrtestol49te....t.titaty ex, lone>. o ewes.. mil euleoul set4eke). Tic svogny oho • st)pcm.10.94 a~lon Sc rcoie 10 school syszerm. 4.1.1dasolly lo OW/ 1113301.314343. Koss Corpuratettidesiresno ns n WINK useamoonsily ohm/01Sn /0909)01).)14 ) 45 seslipeNcto destnberloss lb{ <ompany 4.34 tounk0 en 1951 and s baud mMiqu49. ~mat SUR Rialla Webra E4443~ 19.91~ ~I Mal 124i 4302010 isrinas 11OSTy (tow 919-becon Lanai fuel 0sonx UM ref 301,411 301 »II -LT itwank 0 ane NA NA Pao NI> Vercisso %maw. 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((VALLE/ AVALLE1 AVALUC 7:• EFTA00307484 APPENDIX 2 Studies Regarding Adjustments for Lack of Marketability ALIPHCOM — COMMON EQUITY VALUATION As of June 2o, 2011 90 EFTA00307485 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 Appendix 2: Studies Regarding Adjustments for Lack of Marketability Two major sources of empirical evidence on adjustments for lack of marketability exist: (i) studies of private transactions prior to public offerings and (ii) studies of restricted stocks. The results of pre-IPO and restricted stock studies are important to the determination of an appropriate adjustment for lack of marketability, since in each study the share price analyzed reflected the buyer's ability to gain access to a public market within a readily foreseeable, defined time period, ranging from a few months to a few years. Minority shareholders in privately held companies do not enjoy as favorable an investment. Their shares have no immediate or predictable access to a public market, and the value of those shares suffers accordingly. PRE-IPO STUDIES In general, pre-IPO studies compare the prices paid in arm's-length transactions for private stocks immediately prior to (i.e., within five months 00 a public offering with the prices at which the stocks went public. Generally, the adjustments for lack of marketability for interests in closely held companies with little likelihood of going public in the foreseeable future should be higher than for pre-IPO stocks. Emory Studies is Using data from the investment bank Robert W. Baird & Company, John Emory measured the differences in prices of private and public transactions of companies' stock from 1980 through 2000. The Emory studies compared the prices of stock transactions occurring within flue months prior to an IPO to the subsequent LEO price. Emory noted that the discounts found in these studies occur where a high degree of marketability is probable but not certain, and observed that these companies were generally perceived as sound financial investments and likely to go public in the near future; as such, he argued that marketability discounts for the more typical company's stock, with extremely limited marketability and dim prospects for the company being sold or having a near-term WO would tend to be higher than those indicated in his study. These studies indicated a median discount of 4796 and an average discount of 46%. The figure on the following page summarizes all of Emory's studies. A review of the figure on the following page reveals that (i) the most recent data (1997 — 2000) was based on a very large number of qualifying transactions and (ii) this data reflected the highest mean and median marketability discounts ever recorded (with the exception of the original study in 1980 - 198O. The trend of increasing discounts would likely have continued as the investment environment had turned decidedly more conservative after 2000 and risk of all sorts (including lack of marketability) was being penalized at increasing levels in the marketplace. is From John D. Emory Sr., F.R. Dengel 111, and John D. Emory Jr., 'Expanded Study of the Value of Marketability as Illustrated in Initial Public Offerings of Common Stock; May 1997 through December 2000," Business Valuation Review, December 2001, pp. 4-20; and John D. Emory Sr., F.R. Dengel III, and John D. Emory Jr., "The Value of Marketability as Illustrated in Initial Public Offerings of Dot-Com Companies," Business Valuation Review, September 2000, pp. 111-121. CONFIDENTIAL I WTAS LLC 91 EFTA00307486 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20, 2011 EMORY MARKETABILITY DISCOUNTS Study ge of I Prospectuses Reviewed s of Qualifying rill Discount Mean Transactions 1980.81 97 12 59% ,., 68% 1985-86 130 19 43% .J 43% 1987-89 98 21 38% an 4396 1989-90 157 17 46% -1 .4 0% 1990-92 266 30 34% 4133% -43% 1992-93 443 49 45% e l 1994-95 318 45 43% 41% 1995-97 732 84 43% 41% 1997-00 1,847 266 so% 52% All Transactions 4,088 Willimommilk 46% _Au 47% Valuation Advisors Studyt6 Brian Pearson of Valuation Advisors conducted pre-IPO studies in 1999, 2000, and 2001. These studies included a review of more than 500 IN) prospectuses. For the 1999 study, these transactions were screened to exclude transactions with warrants or options. The 2000 and 2001 studies were also updated to reflect discounts associated with convertible preferred stock. In each case, the discounts were computed for different time periods prior to the IN). The studies indicated that, generally, the discounts were larger as the holding period until the IN) increased, often substantially so. The average one-year discounts from the 1999 through 2001 studies are shown below. VALUATION ADVISORS DISCOUNTS [1999 52% [2000 47% [2001 22% Pearson noted that the lower marketability discounts in 2001 reflected favorably on the quality of the companies that went public and did not necessarily mean that marketability discounts were generally lower; riskier companies generally could not complete an IPO in 2001. ie From Brian V- Pearson, 'The zoo! Marketability Discount Study," CPA Expert, Spring 2002; Pearson, t2000 Marketability Discounts as Reflected in Initial Public Of Business Valuation Update, September 2001; Pearson, '1999 Marketability Discounts as Reflected in Initial Public Offerings," CPA Expert, Spring 2000. CONFIDENTIAL I VVTASLLC 92 EFTA00307487 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June so, 2011 RESTRICTED STOCK STUDIES The restricted stock studies, summarized in the figure below, examined the difference in prices paid for restricted stocks and their unrestricted, freely traded counterparts. An owner of restricted stock, also referred to as letter stock or Rule 144 stock, is restricted from selling the stock in the public market until a certain period lapses, at which time the stock becomes fully marketable. In general, the restricted stock studies indicated that restricted stocks trade at a discount from the prices of their freely traded counterparts due to their restricted marketability. As shown in the figure below, the average discount for lack of marketability indicated by these studies ranged from 20.0% to 35.6%, with an overall central tendency of 29.4%. Generally, the discounts for lack of marketability for interests in closely held companies should be higher than for restricted stocks, since there is no readily-established market in which the equity interests could be sold within a known period of time. The figure below summarizes the average and median discounts from the restricted stock studies. SUMMARY OF RESTRICTED STOCK STUDIES [SEC Studies (non-reporting OTC companies [Gelman Study [Moroney Study $Maher Study [Trout Study [Standard Research Consultants Study [Silber Study [Management Planning, Inc. Study [FMV Study [Hertzel - Smith Study [ Johnson Study [ Average a Average Discount Median Discount 32.6% NA 33.0% 33.0% 35.6% 33.0% 35.4% 33.3% 33.5% NA NA 45.0% 33.8% NA 27.7% 28.9% 22.3% 20.1% 20.1% 13.3% 20.0% NA 29.4% 29.3% The following is a brief description of each of the restricted stock studies: • SEC Institutional Investor Studr. In 1971, the Securities and Exchange Commission ("SEC") published the Institutional Investor Study. The study provided considerable evidence that substantial value is attributable to the right to sell stock in the usual markets at any time, with the result that restrictions on the flexibility of sale result in additional price discounts. Based on more than 350 private transactions of stock subject to Rule 144 of the Securities Act of 1933, which regulates the public sale of restricted shares by requiring a minimum holding period of two years before such shares can be sold in a public market, the SEC study found that these restricted securities sold at substantial discounts from their unrestricted counterparts. These companies were analyzed based on trading market, class of institution, sales and earnings. The study concluded mean and median discounts of 26.0% and 24.0%, respectively, along with the following observations: o There is an exchange effect (New York Stock Exchange and American Stock Exchange listed companies have lower discounts). o The higher the sales of the issuer, the lower the discounts. o Companies with higher earnings have lower discounts. 17 From 'Discounts Involved in Purchases of Common Stock (1966-1969), "Institutional Investor Study Report of the Securities and Exchange Commission, MEL Doc. No. 64, Part 5, 92nd Congress, ist Session, 1971, pp. 2444-2456. CONFIDENTIAL I WTAS LLC 93 EFTA00307488 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As ofJune 2o, 2011 This study found that the average marketability discount was 32.6% for non-reporting over-the- counter ("OTC") companies (OTC companies are more likely to resemble most closely-held companies). The study concluded that companies with stocks listed on national exchanges had lower discounts than companies with stocks traded OTC. • Gelman Study's. The Gelman Study reviewed the prices paid by four closed-end investment companies specializing in restricted securities from 1968 to 1970. This study found that the average and median marketability discounts were 33.0% and that nearly 60.0% of the discounts were at or greater than 30.0%. • Moroney Snide. In his study, Moroney reviewed the prices paid for restricted stocks by ten registered investment companies. The average and median marketability discounts indicated by his analysis were 35.6% and 33.0%, respectively. • Maher Study". Maher's study reviewed restricted stock transactions from 1969 to 1973. The mean discount for these years was 35.4% and the median was 33.3%. • Trout Study2'. In his analysis of letter stocks purchased by mutual funds, Trout developed a multiple regression model that attempted to estimate the appropriate marketability discount for a particular company. His analysis indicated an average marketability discount of 33.5% and corroborated the SEC study's conclusion that stocks listed on national exchanges had lower discounts than OTC stocks. • Standard Research Consultants Stude. In 1983, SRC reviewed 28 private placements of restricted stocks occurring from 1978 to 1982, indicating discounts ranging from 7.0% to 91.0%, with a median of 45.0%. Further, SRC concluded that the earnings pattern of the issuer was an important factor associated with the size of the discounts. Companies that displayed five or more years of successive profits were able to sell their securities at substantially smaller discounts (a median of 34.0%) than companies with one or more years of losses in the five years prior to the sale. Further, companies with the largest revenues had the smallest discounts (a median of 36.0%). • Silber Study23. In a 1991 article in the Financial Analysts Journal, Silber found an average discount of 33.8% for 6g private placements of common stock of publicly traded companies between 1981 and 1988. He also found a direct relationship between the size of the discount and the size of the block of the private placement relative to total shares outstanding. • Management Planning, Inc. Study~4. A study conducted by Management Planning, Inc. analyzed restricted stocks of public companies from 1980 through 1996. This extensive study examined several factors including size, revenue growth and stability, trading volume, and many others. After eliminating financial institutions and under-performing entities from the sample, the average restricted stock discount was 27.7%. The study concluded with the following observations: o Companies with greater revenues exhibited lower discounts. o Companies with higher earnings exhibited lower discounts. o Companies with a higher market price per share exhibited lower discounts. o Companies with lower price stability exhibited higher discounts. o Companies with higher earnings stability exhibited lower discounts. IS From Milton Gelman, "An Economist-Financial Analyst's Approach to Valuing Stock of a Closely Held Company," Journal of Taxation, June 1972, pp. 353-54. gcb From Robert E. Moroney, "Most Courts Overvalue Closely Held Stocks," Taxes, March 1973, PP- 144.54- 2 ° From J. Michael Maher, "Discounts for Lack of Marketability for Closely-Held Business Interests," Taxes, September 1976, p. 562-71. 2, From Robert It. Trout, "Estimation of the Discounts Associated with the Transfer of Restricted Securities," Taxes, June 1977, pp. 381-5. 21 From "Revenue Ruling 77-287 Revisited," SRC Quarterly Reports, Spring 1983, pp. 1.3. s From William L Silber, "Discounts on Restricted Stock: The Impact of Illiquidity on Stock Prices," Financial Analysts Journal, July-August 1991, pp. 60-64. 24 From Robert P. Oliver and Roy H. Meyers, "Discounts Seen in Private Placements of Restricted Stock: The Management Planning, Inc., Long-Term Study 098o-1996r (Chapter 5) in Robert F. Reilly and Robert P. Schweihs, eds. The Handbook of Advanced Business Valuation (New York: McGraw-Hill, 2000). CONFIDENTIAL I WTAS LLC 94 EFTA00307489 WTAS ALIPHCOM — COMMON EQUITY VALUATION REPORT As of June so, 2011 • PMV Studyn. FMV conducted a study on discounts associated with restricted stocks. The study was based on approximately 597 private placements of restricted common stock from 1980 through 2008, which include transactions with holding periods of six-month, one-year, or two-year. However, as previously mentioned, we have selected only those transactions with a two-year holding period (243 total transactions). The study confirmed the findings of the SEC Institutional Investor Study in that the size of the discount is often related to the amount of earnings, sales, and the presence/nature of a rading exchange. The range of discounts from the study related to the two-year holding period was negative 29.6% (a premium) to 71.0%, with an overall mean and median of 22.3% and 20.1%, respectively. • Hertzel — Smith Studya6. Hertzel and Smith conducted a study on discounts associated with restricted stocks. The study was based on approximately 106 restricted stock transactions taking place between 1980 and 1987. The overall average discount for the study was 20.1%. • Johnson Study!. Johnson conducted a study on discounts associated with restricted stocks. The study was based on approximately 72 restricted stock transactions from 1991 through 1995. The overall average discount for the study was 20.0%. 25 From FMV Restricted Stock Study. 26 From Michael Henze] and Richard L. Smith, "Market Discounts and Shareholder Gains for Placing Equity Privately," The Journal of Finance, June 1993, PP- 459-485. 27 From Bruce Johnson, "Restricted Stock Discounts, 1991-95," Shannon Pratt's Business Valuation Update, March 1999, pp. 1.3. CONFIDENTIAL I WTAS LIC 95 EFTA00307490 APPENDIX 3 Appraisers' Qualifications ALIPHCOM — COMMON EQUITY VALUATION As of June 20, 2011 96 EFTA00307491 WTAS wtas.com Petra N. Loer Managing Director— San Francisco Email: Office: 415.764.2740 Fax: 415.762.7534 Education: • UC Berkeley. BS (Business Administration, Global Trade Management) Affiliations: • CFA Institute •American Society of Appraisers (ASA) •Association for Corporate Growth (ACG) • Financial Women's Association Petra Loer is a member of the Valuation Services Group at WTAS. Her experience includes the valuation of closely-held businesses, business interests, intangible assets, intellectual property, debt instruments, and derivatives. These engagements span a variety of purposes, including financial reporting, tax planning and reporting, mergers and acquisitions, litigation support, strategic planning, and restructuring. Her client basis ranges from small closely held businesses to multi-billion dollar multinational public companies, in industries as diverse as manufacturing to technology. Before joining WTAS, Petra was a member of the Valuation Services practices at a national consulting firm and an international accounting firm. Petra holds the Chartered Financial Analyst (CFA) and Accredited Senior Appraiser (ASA) designations. Petra teaches national valuation training for WTAS and contributes to the firm's publications focused on key valuation topics. Additionally, she serves on the Advisory Board of World Bridges, an Oakland-based nonprofit organization. 97 EFTA00307492 APPENDIX 4 Facts, Factual Assumptions, and Factual Representations Relied Upon (Pursuant to Circular 23o Requirements) ALIPHCOM - COMMON EQUITY VALUATION As of June 20, 2011 98 EFTA00307493 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT ofJune 20.2011 Appendix 4: Facts, Factual Assumptions, and Factual Representations Relied Upon in Our Valuation (Pursuant to Circular 23o Requirements) Initial Rz el o; LIHSPOI N Rgf Total Enterprise Analysis General Company information Historical financial information • Forecasted financial information • Discount rate • Debt balance at the Valuation Date • Public Company Market Multiple Method • Guideline company indications Details related to the recent round of financing 10 Management and Company-provided board presentations Historical financials for the Company and discussions 10 with management 26 27 31 I Management's Forecast; discussions with management, and guideline company indications Bloomberg, Capital IQ, and Morningstar Valuation Yearbook Estimated balance sheet at the Valuation Date and discussions with management 47 Bloomberg and Capital IQ 33 Bloomberg and Capital IQ 10 The Articles and discussions with management mmon Stock Analysis • Capitalization table • Option and warrant detail Conversion rights, dividends, preferences, and voting rights Current value of underlying asset Strike price • Time to an exit event 55 Capitalization table as of the Valuation Date 55 Capitalization table as of the Valuation Date and discussions with management Capitalization table as of the Valuation Date, the 52 Articles, discussions with management, and the Agreement 6o 6o Based on the implied value of the Company's total equity Based on each preferred share class' indifference point 1 and/or the preferred liquidation preferences Management CONFIDENTIAL I WTAS LLC 99 EFTA00307494 WTAS ALIPHCOM - COMMON EQUITY VALUATION REPORT As of June 20. 2011 CONTINUED • Expected Return 6i Bloomberg • Volatility 6o Capital IQ and Bloomberg • Adjustment for lack of Discussions with management, historical financials, and marketability 63 pre-IPO and Restricted Stock studies CONFIDENTIAL I WTAS LLC 100 EFTA00307495