Vistance Networks, Inc.

We are a party to certain intellectual property claims and also periodically receive notices asserting that our products infringe on another party’s patents and other intellectual property rights. These claims and assertions, whether against us directly or against our customers, could require us to pay damages or royalties, stop offering the relevant products and/or cease other activities. We may also be called upon to indemnify certain customers for costs related to products sold to such customers. The outcome of these claims and notices is uncertain and a reasonable estimate of the loss from unfavorable outcomes in certain of these matters either cannot be determined or is estimated at the minimum amount of a range of estimates. The actual loss, through settlement or trial, could be material and may vary significantly from our estimates. From time to time, we may also be involved as a plaintiff involving intellectual property claims. Gain contingencies, if any, are recognized when they are realized.

We are also either a plaintiff or a defendant in certain other pending legal matters in the normal course of business. Management believes none of these pending legal matters will have a material adverse effect on our business or financial condition upon final disposition.

In addition, we are subject to various federal, state, local and foreign laws and regulations governing the use, discharge, disposal and remediation of hazardous materials. Compliance with current laws and regulations has not had, and is not expected to have, a materially adverse effect on our financial condition or results of operations.