Page 9 of 15 – SEC Filing
(e) No
Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to
such laws.
(f) Each
of Series One, VSO II, VIEX GP, VSO GP II and VIEX Capital is organized under the laws of the State of Delaware. Mr. Singer is
a citizen of the United States of America.
| Item 3. | Source and Amount of Funds or Other Consideration. |
The Shares purchased
by Series One were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in
the ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated
by reference herein. The aggregate purchase price of the 1,719,575 Shares beneficially owned by Series One is approximately $10,087,240,
including brokerage commissions. The aggregate purchase price of the 120,000 Shares underlying certain call options which are currently
exercisable and may be deemed to be beneficially owned by Series One is approximately $5,300, including brokerage commissions.
The Shares purchased
by VSO II were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the
ordinary course of business) in open market purchases, except as otherwise noted, as set forth in Schedule A, which is incorporated
by reference herein. The aggregate purchase price of the 1,967,808 Shares beneficially owned by VSO II is approximately $11,373,729,
including brokerage commissions. The aggregate purchase price of the 180,000 Shares underlying certain call options which are currently
exercisable and may be deemed to be beneficially owned by VSO II is approximately $7,950, including brokerage commissions.
| Item 4. | Purpose of Transaction. |
The Reporting Persons
acquired the Shares because they believe the Shares are meaningfully undervalued. The Reporting Persons are cognizant of the Issuer’s
financial and share price underperformance despite positive financial attributes of its business – namely nearly 80 percent gross
margins and a strong competitive position. The Reporting Persons believe in order for stockholder value to be maximized, the Issuer
must pursue one of two paths: either make immediate improvements to its financial model to accelerate profitability, or consider
leveraging its unique market position in a consolidating industry to pursue a strategic transaction where the Issuer is acquired
by another company. The Reporting Persons note that other companies have rewarded their stockholders by leveraging financial and
technological synergies to drive greater scale by pursuing strategic alternatives and consolidating into larger corporations. In
the nine months ended September 30, 2017, the Issuer has generated over $134 million in gross profit, or 77 percent of revenue,
but has been unable to earn an operating profit because of excessive operating expenses that consume all of this gross profit.
The status quo is not acceptable and the Reporting Persons are mindful of the upcoming nominating window for the election of directors.
The Reporting Persons also believe that Chairman and CEO Lee Chen and other Section 16 officers should immediately terminate their
routine 10b5-1 sales which, in the Reporting Persons’ view, do not align to stockholder value creation.
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