Semiconductor components are the building blocks of electronic systems. Analog semiconductors monitor, regulate or transform physical properties, including voltage, current, temperature, pressure, weight, light, sound or speed into electrical signals that have a continuous range of values. Electronic systems rely on analog semiconductors to provide the interface between digital semiconductors and the physical world. Mixed-signal semiconductors combine elements of both analog and digital semiconductors, but are generally classified as analog semiconductors because of their analog content.

Analog and mixed-signal semiconductors are often used in applications and markets where users have unique requirements regarding performance specifications such as size, speed, accuracy and efficiency. As a result, the analog and mixed-signal semiconductor market is highly fragmented, providing smaller companies an opportunity to compete successfully against larger companies in certain market segments. According to “Semiconductor Forecast Worldwide: Forecast Database” published by Gartner Inc., an information technology research and advisory firm, on August 29, 2007, the market for analog semiconductors will grow from $16.4 billion in 2006 to $22.3 billion in 2011.

Sensors are a type of analog semiconductor that measures the strength or presence of a physical property such as voltage, current, temperature, pressure, weight, light, sound or speed. MEMS are microscopic structures integrated onto silicon that combine mechanical, optical or fluidic elements with electronics. These devices, when built into sensors, provide the direct measurement between the physical world variable and the electronic circuitry. In a typical sensor incorporating MEMS technology, the MEMS structure provides the active “sensing” function while the integrated analog circuitry provides the electrical interface.

Frost & Sullivan, an independent market research firm, estimates that the MEMS sensor market will grow at a compound annual rate of 14.8% from $1.8 billion in 2006 to $4.2 billion in 2012. The following tables set forth the actual and estimated total MEMS sensor revenue by market segment and product type for the period indicated, according to Frost & Sullivan.

The Company’s accelerometer products are used to measure tilt, shock, vibration and acceleration, and have a wide range of applications such as mobile phones, automotive safety systems and video projectors.

The Company combines proprietary thermal-based MEMS technology and advanced analog mixed signal processing circuitry design into a single chip using a standard complementary metal-oxide semiconductor, or CMOS, process.

Any product that requires the control or measurement of motion is a potential application for accelerometers. In automotive applications, accelerometers are being deployed in airbag, electronic stability control, rollover protection, and navigation systems.

In consumer applications, accelerometers are used in global positioning systems, video gaming systems and interactive toys. Industrial and medical applications include inclination sensing, earthquake detection and cardiac pacemakers.

The Company is a pioneer in providing accelerometers to the fast growing Chinese mobile phone market. The Company supplies its accelerometer products to a major phone manufacturer in China through one of its distributors.

The Company was among the first phone manufacturers in China to incorporate accelerometer functions into mobile phones.

Cost of goods sold increased by 109.4% to $6.4 million for the nine months ended September 30, 2007 from $3.1 million for the same period in 2006.

Overall operating expense increased by 70.2% to $7.2 million for the nine months ended September 30, 2007 from $4.2 million for the same period in 2006.

Income from operations was $5.2 million for the nine months ended September 30, 2007, compared to $1.9 million for the same period in 2006.

Net income was $4.7 million for the nine months ended September 30, 2007, compared to a net income of $0.8 million for the same period in 2006.