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AUDIENCE S-1/A Filing

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                                                  As filed with the Securities and Exchange Commission on April 20, 2012
                                                                                                                                                       Registration No. 333-179016




                                                              UNITED STATES
                                                  SECURITIES AND EXCHANGE COMMISSION
                                                                         Washington, D.C. 20549


                                                                          Amendment No. 3
                                                                                  to
                                                                             FORM S-1
                                                                     REGISTRATION STATEMENT
                                                                               Under
                                                                      The Securities Act of 1933


                                                                        Audience, Inc.
                                                             (Exact name of Registrant as specified in its charter)



                       Delaware                                                          3674                                                    91-2061537
              (State or other jurisdiction of                               (Primary Standard Industrial                                       (I.R.S. Employer
             incorporation or organization)                                 Classification Code Number)                                     Identification Number)
                                                                          440 Clyde Avenue
                                                                        Mountain View, CA 94043
                                                                            (650) 254-2800
                         (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)


                                                                          Peter B. Santos
                                                               President and Chief Executive Officer
                                                                          Audience, Inc.
                                                                        440 Clyde Avenue
                                                                     Mountain View, CA 94043
                                                                          (650) 254-2800
                                     (Address, including zip code, and telephone number, including area code, of agent for service)


                                                                                   Copies to:
              Michael J. Danaher, Esq.                                                                                         Patrick A. Pohlen, Esq.
                 Julia Reigel, Esq.                                                                                          Andrew S. Williamson, Esq.
         Wilson Sonsini Goodrich & Rosati                                                                                      Latham & Watkins LLP
             Professional Corporation                                                                                              140 Scott Drive
                650 Page Mill Road                                                                                           Menlo Park, California 94025
             Palo Alto, California 94304                                                                                           (650) 328-4600
                   (650) 493-9300


Approximate date of commencement of proposed sale to the public:               As soon as practicable after the effective date of this Registration Statement.



If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box. 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer                      Accelerated filer                            Non-accelerated filer                                   Smaller reporting company 
                                                                                            (Do not check if a smaller reporting company)
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities
Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a) may determine.
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The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may
sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell securities and neither we nor the selling stockholders are soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated April 20, 2012

Prospectus


                    shares




Common stock
This is the initial public offering of common stock of Audience, Inc. We are offering        shares of common stock. The selling
stockholders identified in this prospectus are offering an additional         shares of common stock. We will not receive any
proceeds from the sale of shares to be offered by the selling stockholders. The estimated initial public offering price is
between              and            per share.

We have applied to list our common stock on The NASDAQ Global Market under the symbol ADNC. We are an emerging growth
company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, may elect to comply with certain
reduced public company reporting requirements for future filings.


                                                                             Per share                   Total

Initial public offering price                                                $                           $
Underwriting discounts and commissions                                       $                           $
Proceeds to Audience, Inc., before expenses                                  $                           $
Proceeds to selling stockholders, before expenses                            $                           $

We have granted the underwriters an option for a period of 30 days to purchase up to          additional shares of common stock
from us.

Investing in our common stock involves risks. See “ Risk factors ” beginning on page 11.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.

The underwriters expect to deliver the shares of common stock to purchasers on or about               , 2012.




J.P. Morgan                          Credit Suisse                               Deutsche Bank Securities

                                                Pacific Crest Securities
, 2012
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                                                   Table of contents
                                                                                                                               Page
Prospectus summary                                                                                                               1
The offering                                                                                                                     7
Summary consolidated financial data                                                                                              9
Risk factors                                                                                                                    11
Special note regarding forward-looking statements and industry data                                                             38
Use of proceeds                                                                                                                 39
Dividend policy                                                                                                                 39
Capitalization                                                                                                                  40
Dilution                                                                                                                        42
Selected consolidated financial data                                                                                            44
Management’s discussion and analysis of financial condition and results of operations                                           46
Business                                                                                                                        74
Management                                                                                                                      92
Executive compensation                                                                                                         102
Related party transactions                                                                                                     125
Principal and selling stockholders                                                                                             129
Description of capital stock                                                                                                   132
Shares eligible for future sale                                                                                                137
Material U.S. federal income tax and estate tax consequences to non-U.S. holders                                               140
Underwriting                                                                                                                   144
Experts                                                                                                                        150
Legal matters                                                                                                                  150
Where you can find more information                                                                                            150
Index to consolidated financial statements                                                                                     F-1


You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be
delivered or made available to you. Neither we, the underwriters nor the selling stockholders have authorized anyone to provide
you with information that is different. This document may only be used where it is legal to sell these securities. The information in
this document may only be accurate on the date of this document.
No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or
possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus
in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to
this offering and the distribution of this prospectus applicable to that jurisdiction.
Through and including                 , 2012 (the 25th day after the date of this prospectus), all dealers effecting
transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus.
This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an
unsold allotment or subscription.

                                                                  -i-
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                                              Prospectus summary
  This summary highlights information contained elsewhere in this prospectus and does not contain all of the information you
  should consider in making your investment decision. You should read this summary together with the more detailed
  information, including our financial statements and the related notes, elsewhere in this prospectus. You should also carefully
  consider the matters discussed in “Risk factors” beginning on page 11. Unless the context otherwise requires, we use the
  terms “Audience,” “we,” “us” and “our” in this prospectus to refer to Audience, Inc. and its consolidated subsidiaries.

  Business overview
  We are the leading provider of intelligent voice and audio solutions that improve voice quality and the user experience in
  mobile devices. We collaborate with leading auditory neuroscientists to understand the human auditory system and have
  developed purpose-built processors that combine science and technology to function like human hearing. Our low power,
  hardware-accelerated digital signal processors (DSPs) and associated algorithms substantially improve sound quality and
  suppress noise in mobile devices. As the primary driver of the mobile device market, the mobile phone continues to play an
  increasingly prominent role in peoples’ lives. Voice communication is a primary function of mobile phones, and we expect
  voice to increasingly complement touch as a core user interface, heightening the importance of voice and audio quality in
  mobile devices.
  The human auditory system is remarkable for its ability to isolate individual sources within a complex sound mixture, which we
  refer to as auditory intelligence. We have incorporated this auditory intelligence into an intelligent platform by employing
  computational auditory scene analysis (CASA), a scientific discipline dedicated to mapping the sound separation functions in
  human hearing, into a computational framework. This approach enables our products to intelligently characterize, group and
  isolate sounds to improve sound quality while suppressing noise. We believe that our approach addresses the challenge of
  providing clear and consistent voice and audio quality more effectively than other available solutions. We also believe that our
  highly scalable platform will enable us to create and drive differentiated user experiences, such as robust speech recognition
  and high-quality audio for mobile video communication.
  Our platform consists of our proprietary, purpose-built DSPs, analog and mixed signal circuits and algorithms for voice
  isolation and noise suppression. We also provide our proprietary AuViD graphical design tools to help original equipment
  manufacturers (OEMs) design in and tune our products in their efforts to bring mobile devices with the best voice and audio
  quality to market rapidly. Our technologies and tools are underpinned by our significant intellectual property, resulting in a
  strong foundation from which to extend the value of our platform through continued innovation and integration of adjacent
  voice and audio functionality.
  We were founded in 2000 and initially targeted the rapidly growing mobile device market, including mobile phones, media
  tablets and mobile PCs. We began production shipments in 2008 and, as of March 31, 2012, had sold over 160 million
  processors to our OEM customers. In addition to the mobile device market, we believe that our voice and audio technology is
  applicable to a broad range of other market segments, including automobile infotainment systems, digital cameras, digital
  televisions, headsets and set top boxes, although we have not yet released products for those specific market segments. We
  outsource the manufacture of our voice and audio processors to independent foundries and use third parties for assembly,
  packaging, test and logistics. We had total revenue of $5.7 million,


                                                                 -1-
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  $47.9 million, $97.7 million and $31.1 million for 2009, 2010, 2011 and the three months ended March 31, 2012, respectively.
  We had net income (loss) of $(16.8) million, $4.8 million, $8.3 million and $4.2 million for 2009, 2010, 2011 and the three
  months ended March 31, 2012, respectively.
  Historically, our revenue has been significantly concentrated in a small number of OEMs, contract manufacturers (CMs) and
  distributors and we expect that concentration to continue for the foreseeable future. In 2010 and 2011, CMs for Apple, Inc.
  (Apple), our largest OEM, represented 82% and 75% of our revenue, respectively, and Samsung Electronics Co., Ltd.
  (Samsung) represented 7% and 20% of our revenue, respectively. In the three months ended March 31, 2011 and 2012, our
  largest OEM and its CMs represented 95% and 62% and Samsung represented 5% and 36% of our revenue, respectively. We
  are undergoing a transition in our sales model with our largest OEM and have licensed semiconductor intellectual property
  (processor IP) to the OEM for its latest generation of mobile phones, and are continuing to sell processors to its CMs for older
  generations of mobile phones. We began receiving royalty revenue from this OEM in the three months ended March 31, 2012
  and we expect that our total revenue from this OEM and its CMs will decline as we receive a lower royalty per mobile device
  than the selling price of a stand-alone processor.

  Industry overview
  Mobile devices are ubiquitous today and play an increasingly prominent role in peoples’ lives. However, due to network and
  device limitations, voice quality has not improved significantly since the introduction of mobile phones. For example, the sound
  frequency range used by mobile devices has historically been constrained by narrowband, circuit switched networks, resulting
  in lower voice quality than in a face-to-face conversation. Mobile devices have historically been unable to adequately separate
  the user’s voice from background noise. As a result, users have had to tolerate noisy, poor quality voice communication. After
  years of mobile network infrastructure investments in bandwidth and connectivity, mobile network operators (MNOs) are
  turning their attention to voice and audio quality as a way to improve user experience, satisfaction and loyalty.
  The transition from narrowband to wideband communications has produced networks capable of carrying higher quality
  signals, and the sound quality delivered by these networks is poised for significant improvement. Advanced voice and audio
  solutions will also enable mobile devices to improve sound quality and enhance the user experience. As users increasingly
  become aware of these network and device improvements, they are demanding improved voice quality in the devices they
  depend upon, including smartphones, feature phones, media tablets and laptops. In addition, new applications and
  functionality, such as voice as a user interface, will require improved voice and audio quality. We expect that OEMs and
  MNOs will increasingly adopt advanced voice and audio solutions as they seek to differentiate future products and services.
  IDC, an independent market research firm, estimates that the market for mobile devices, including smartphones, feature
  phones, media tablets and mobile PCs, will grow to 2.6 billion units by 2015. This market is undergoing rapid change, and IDC
  expects fast growing market segments such as smartphones and media tablets to have 2010 to 2015 unit compound annual
  growth rates (CAGRs) of 28% and 50%, respectively, driving growth and changing user expectations for mobile devices.
  Dedicated voice and audio processors are expected to expand rapidly as a new category not only in mobile devices, but also
  in additional market segments into which we have not yet released products such as automobile infotainment systems,
  desktop PCs, digital cameras, digital televisions, headsets


                                                                -2-
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  and set top boxes. IDC estimates that voice and audio processor unit sales will grow from 63 million units in 2010 to over
  1.6 billion units in 2015, representing a CAGR of 92%.
  A variety of trends are driving demand for high-quality voice and audio solutions in mobile devices, including:
  • users expect more freedom in how and where they communicate;
  • users expect high-quality voice and audio in their mobile devices;
  • voice is becoming a preferred interface for mobile device applications;
  • users increasingly rely on their mobile devices for far-field interaction, where the mobile device is held remotely from the
    user, such as in speakerphone mode or video conferencing;
  • users’ perception of the HD video experience is impacted by poor quality audio;
  • OEMs continue to expand functionality in mobile devices; and
  • MNOs are deploying wideband communications networks.
  There are significant challenges in delivering high-quality voice and audio solutions in mobile devices, including:
  • mobile devices are used in noisy environments;
  • separation of voice from noise while preserving speech quality is very difficult;
  • a complete voice and audio solution cannot be provided without consistent voice isolation;
  • the size, cost and power constraints of mobile devices impose significant limitations on acoustics and signal processing;
    and
  • traditional voice and audio signal processing techniques are not scalable or adaptable to dynamic sound environments.

  Our solution
  We provide intelligent voice and audio solutions that substantially improve sound quality and suppress noise in mobile
  devices. We believe that our auditory intelligence approach addresses the challenge of providing clear and consistent voice
  and audio quality more effectively than other available solutions. Our platform consists of our proprietary, purpose-built DSPs,
  analog and mixed signal circuits and algorithms for voice isolation and noise suppression.

  Benefits to mobile device users
  Differentiated voice and audio quality. Our products substantially improve voice quality and reduce background noise on
  mobile devices wherever they are used.
  Consistent voice and audio experience.   Our products enable a more consistent voice and audio experience, regardless of
  the use case or surrounding noise environment.
  Robust speech recognition.       By combining our high-quality voice isolation capability with next generation, third-party speech
  recognition software, our intelligent voice and audio solutions improve the user experience with speech recognition
  applications.


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  Clarity of audio capture and playback.      We believe that demand for creating and viewing user-generated content will lead
  users to select devices that feature differentiated high definition (HD) audio and video capture.

  Benefits to the mobile device ecosystem
  Original equipment manufacturers.     OEMs can more effectively differentiate their mobile devices by providing a better user
  experience when our intelligent voice and audio solutions are incorporated into their products. Our solutions also help OEMs’
  mobile devices to meet specifications set by MNOs regarding voice and audio quality.
  Mobile network operators.     By improving the user experience, our processors can increase user demand for mobile
  communication services, enhance user satisfaction and promote user loyalty. Additionally, our processors’ noise suppression
  capabilities also have the potential to increase network capacity for MNOs by reducing the transmission of noise.
  Mobile operating system providers.  Mobile operating system providers benefit from our processors’ ability to intelligently
  analyze and understand the sound environment in support of speech recognition, multimedia and other applications.

  Our competitive strengths
  We believe that we are the leader in developing, integrating and delivering voice and audio solutions as a result of the
  following core strengths:
  Deep domain expertise in voice and audio communications.      Our team includes leading innovators in CASA, speech
  analysis and coding, spatial audio and acoustics, among other disciplines.
  Differentiated, scalable technology platform. Our proprietary platform offers high-quality voice and audio performance at low
  power by leveraging our purpose-built DSPs and algorithms. Our CASA-based architecture is scalable with compute power
  and across new applications and use cases.
  Strong relationships with industry-leading MNOs and operating system developers.          Our collaboration with leading MNOs
  provides us visibility into critical design specifications and development timelines, which helps to keep us at the forefront of
  technological innovation in voice and audio solutions. We also influence the design specifications for OEMs’ devices set by
  certain of these MNOs to increase demand for our products. We are actively engaged in various ways with leading MNOs,
  including AT&T Inc. (AT&T), China Mobile Limited (China Mobile), Orange plc (Orange), Sprint Nextel Corporation (Sprint
  Nextel), Telecom Italia SpA (Telecom Italia), Deutsche Telekom (T-Mobile), Verizon Wireless (Verizon) and Vodafone Group
  plc (Vodafone).
  Collaboration and repeat design wins with leading OEMs.   Through close, long-term relationships with OEMs, we gain both
  a unique understanding of their product roadmaps and an ability to influence design decisions. As of March 31, 2012, our
  processors had been incorporated in over 70 mobile device models that have reached commercial production, including those
  sold by leading OEMs, such as Apple through its CMs, HTC Corporation (HTC), LG Electronics Inc. (LG), Pantech
  Corporation, Ltd. (Pantech), Samsung, Sharp Corporation (Sharp) and Sony Corporation (Sony).
  Significant OEM design support capabilities.    We work closely with OEMs throughout their design processes, using our
  proprietary AuViD graphical design tools to integrate our solutions into their


                                                                 -4-
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  mobile devices, which enables us to improve design efficiency, increase productivity and establish differentiated design
  relationships with OEMs.
  Significant intellectual property portfolio in voice and audio technologies. Our intellectual property consists of core
  technology related to mapping the human auditory system within a computational framework, as well as the technology, tools
  and methods related to the implementation of these technologies in mobile devices.

  Our strategy
  Our mission is to be the leading provider of intelligent voice and audio solutions for the mobile device and consumer
  electronics markets. Key elements of our strategy include:
  • improving the user experience through innovation in voice and audio solutions;
  • improving and extending our proprietary platform with enhanced performance and additional capabilities;
  • developing and expanding relationships with OEMs to increase awareness of our solutions;
  • extending collaboration with leading MNOs and operating system developers to improve voice and audio quality in current
    and future generations of mobile devices; and
  • leveraging our technology leadership to penetrate new market segments where voice and audio quality impacts the user
    experience.

  Risk factors
  We are subject to a number of risks which you should be aware of before you buy our common stock, including the following:
  • we are substantially dependent on a single OEM and its CMs for our revenue and our relationship with this OEM is
    undergoing a significant transition from the sale of voice and audio processors to the license of our processor IP, which
    may have a material and negative effect on our business, financial condition, operating results and cash flows;
  • we depend on a small number of OEMs for a substantial portion of our revenue and the loss of, or a significant reduction in
    orders from, one or more of our OEMs could adversely affect our revenue and significantly harm our business, financial
    condition, operating results and cash flows;
  • if we are unable to diversify our revenue by maintaining or extending our relationships with our current OEMs or
    establishing new OEM relationships, our growth may be limited, and our business, financial condition, operating results and
    cash flows could be adversely affected;
  • we have a history of losses, and we may not be able to sustain profitability in the future;
  • our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our control,
    and you should not rely on our quarterly comparisons as an indicator of future performance;
  • the market for mobile device components is highly competitive and includes larger companies with significantly greater
    resources than we have. If we are unable to compete effectively, we may experience decreased sales or increased pricing
    pressure, which would adversely impact our business, financial condition, operating results and cash flows;


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  • if the market for mobile devices with improved sound quality and the demand for our products do not continue to grow as
    we expect, our business, financial condition, operating results and cash flows could be materially and adversely affected;
    and
  • if the average selling prices of our products decrease, our revenue and gross margins could decline.

  Corporate information
  We were founded in July 2000 in California under the name Applied Neurosystems Corporation and we changed our name to
  Audience, Inc. in June 2002. In June 2011, we reincorporated as a Delaware corporation under the name Audience, Inc. Our
  principal executive offices are located at 440 Clyde Avenue, Mountain View, California 94043. Our telephone number is
  (650) 254-2800. Our website address is www.audience.com. Information contained on, or that can be accessed through, our
  website is not incorporated by reference into this prospectus.
  “AUDIENCE,” “earSmart,” “hear and be heard,” “Fast Cochlea Transform,” “the world’s most intelligent voice processor,” “the
  future of voice is hear,” our logo and other trademarks or service marks of Audience appearing in this prospectus are the
  property of Audience, Inc. This prospectus contains additional trade names, trademarks and service marks of other
  companies. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a
  relationship with, endorsement of, or sponsorship of us by, these other companies.


                                                               -6-
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                                                     The offering
  Common stock offered by                   shares
  Audience

  Common stock offered by the               shares
  selling stockholders

  Over-allotment option                     shares
  Common stock to be                        shares
  outstanding after this offering

  Use of proceeds                   We intend to use the net proceeds to us from this offering for working capital and other
                                    general corporate purposes including research and development and the expansion of our
                                    product lines to penetrate new market segments where voice and audio quality impacts the
                                    user experience. We may also use part of the net proceeds to develop technology
                                    partnerships and to acquire other businesses, products or technologies. However, we do
                                    not have any agreements or commitments for any specific acquisition at this time. Our
                                    management will have broad discretion to use the net proceeds from this offering. We will
                                    not receive any proceeds from the sale of shares by the selling stockholders.
  Proposed NASDAQ Global            ADNC
  Market symbol
  The number of shares of our common stock to be outstanding following this offering is based on 14,345,060 shares of our
  common stock outstanding as of March 31, 2012, which excludes:
  • 4,584,897 shares of common stock issuable upon exercise of options outstanding as of March 31, 2012 at a weighted
    average exercise price of $4.96 per share;
  • 1,043,985 shares of common stock reserved for future issuance under our 2011 Equity Incentive Plan (2011 Plan) as of
    March 31, 2012;
  • 451,764 shares of common stock reserved for future issuance under our 2011 Employee Stock Purchase Plan (2011
    ESPP, and with our 2001 Stock Plan and 2011 Plan, collectively, Stock Plans), which will become effective on the effective
    date of the registration statement of which this prospectus is a part; and
  • 111,602 shares of common stock issuable upon the exercise of outstanding warrants as of March 31, 2012, at a weighted
    average exercise price of $3.63 per share.


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  Unless otherwise indicated, this prospectus reflects and assumes the following:
  • the automatic conversion of each outstanding share of our preferred stock into one share of common stock upon the
    closing of the offering;
  • the completion of a one-for-30 reverse split of our outstanding common and preferred stock;
  • the filing of our restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior
    to the closing of this offering; and
  • no exercise of the underwriters’ over-allotment option.


                                                                -8-
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                                       Summary consolidated financial data
  We derived our summary consolidated statements of operations data for 2009, 2010 and 2011 from our audited consolidated
  financial statements and related notes included elsewhere in this prospectus. Historical results are not necessarily indicative of
  future results. We derived our summary consolidated statements of operations data for the three months ended March 31,
  2011 and 2012 and our summary consolidated balance sheet data as of March 31, 2012 from our unaudited consolidated
  financial statements and related notes included elsewhere in this prospectus. Our unaudited consolidated financial statements
  were prepared on the same basis as our audited consolidated financial statements and include, in our opinion, all
  adjustments, which included only nonrecurring adjustments, that we consider necessary for the fair statement of the financial
  information set forth in those statements. The summary of our financial data set forth below should be read together with our
  consolidated financial statements and the accompanying notes to our consolidated financial statements, as well as “Selected
  consolidated financial data” and “Management’s discussion and analysis of financial condition and results of operations”
  appearing elsewhere in this prospectus.
                                                                                                                                Three months
                                                                    Year ended December 31,                                    ended March 31,
                                                          2009                 2010                     2011                  2011                     2012

                                                                                                                                    (unaudited)
                                                                               (in thousands, except share and per share data)
   Consolidated statements of
     operations data:
   Revenue:
     Hardware                                       $     5,749           $    47,920          $      97,668          $     28,540            $      19,409
     Licensing                                               —                     —                      —                     —                    11,699

     Total revenue                                        5,749                47,920                 97,668                28,540                   31,108
   Cost of revenue(1)                                     5,355                19,314                 45,707                10,414                   13,419

      Gross profit                                          394                28,606                 51,961                18,126                   17,689
   Operating expenses:
     Research and development(1)                          8,969                11,445                 21,578                 5,034                    5,668
     Selling, general and administrative(1)               8,058                12,217                 21,237                 3,969                    7,524

      Total operating expenses                           17,027                23,662                 42,815                 9,003                   13,192

   Income (loss) from operations                        (16,633 )               4,944                  9,146                 9,123                    4,497
   Interest income (expense), net                            11                   (17 )                   (8 )                  (3 )                      3
   Other income (expense), net                             (136 )                (139 )                 (843 )                (337 )                   (331 )

   Net income (loss)                                $ (16,758 )           $     4,788          $       8,295          $      8,783            $       4,169


   Net income (loss) per share attributable to
      common stockholders(2):
      Basic                                         $    (32.46 )         $         —          $         0.16         $          0.52         $         0.19
      Diluted                                       $    (32.46 )         $         —          $         0.14         $          0.46         $         0.16
   Weighted average shares used in computing net
      income (loss) per share attributable to
      common stockholders(2):
      Basic                                             516,299               619,640                 947,921               871,379                1,079,810
      Diluted                                           516,299               619,640               3,384,375             2,466,105                3,831,811
   Pro forma net income per share attributable to
      common stockholders (unaudited)(2):
      Basic                                                                                    $         0.64                                 $         0.30
      Diluted                                                                                  $         0.55                                 $         0.25
   Weighted average shares used in computing pro
      forma net income per share attributable to
      common stockholders (unaudited)(2):
      Basic                                                                                        14,153,101                                     14,284,990
      Diluted                                                                                      16,658,283                                     17,119,233



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                                                                                                                            As of March 31, 2012
                                                                                                                                                              Pro forma as
                                                                                                          Actual                 Pro forma(3)                adjusted(4)(5)

                                                                                                                          (in thousands, unaudited)
   Consolidated balance sheet data:
   Cash and cash equivalents                                                                          $  18,706              $         18,706            $
   Working capital                                                                                       39,124                        39,124
   Total assets                                                                                          55,326                        55,326
   Total debt and capital lease obligations                                                                  69                            69
   Convertible preferred stock warrant liability                                                          1,304                           —
   Total liabilities                                                                                     14,456                        13,152
   Convertible preferred stock                                                                           74,348                           —
   Common stock and additional paid-in capital                                                            4,583                        80,235
   Total stockholders’ equity (deficit)                                                               $ (33,478 )            $         42,174            $


  (1)    Includes stock-based compensation expense as follows:

                                                                                                                                                     Three months
                                                                                                 Year ended December 31,                            ended March 31,
                                                                                               2009           2010                 2011              2011           2012

                                                                                                                                                      (unaudited)
                                                                                                                        (in thousands)
        Cost of revenue                                                                  $       18        $         62       $     90          $      24       $         25
        Research and development                                                                132                 227            416                 81                142
        Selling, general and administrative                                                     133                 258            884                 90                370

           Total stock-based compensation expense                                        $      283        $        547      $     1,390        $     195       $        537



  (2)    See Note 6 to our consolidated financial statements for an explanation of how we arrived at our basic and diluted net income (loss) per share attributable to
         common stockholders and pro forma net income per share.

  (3)    The pro forma balance sheet data in the table above gives effect to the automatic conversion of all shares of our outstanding convertible preferred stock into
         shares of common stock upon the closing of this offering on a one for one basis. In addition, it assumes the reclassification of the convertible preferred stock
         warrant liability to additional paid-in capital.

  (4)    The pro forma as adjusted balance sheet data in the table above gives effect to our receipt of the estimated net proceeds from this offering at an assumed initial
         public offering price of $     per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated
         underwriting discounts and commissions and estimated offering expenses that we must pay.

  (5)    A $1.00 increase (decrease) in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page
         of this prospectus, would increase (decrease) each of cash and cash equivalents, working capital, total assets and total stockholders’ equity (deficit) by $      ,
         assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting
         discounts and commissions and estimated offering expenses that we must pay.



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                                                         Risk factors
An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties
described below together with all the other information contained in this prospectus, including our financial statements and the
related notes, before deciding whether to invest.

Risks related to our business and industry
We are substantially dependent on a single OEM and its CMs, for our revenue and our relationship with this OEM is
undergoing a significant transition from the sale of voice and audio processors to the license of our processor IP, which
may have a material and negative effect on our business, financial condition, operating results and cash flows.
We sell our products to Foxconn International Holdings, Ltd. and its affiliates (collectively, Foxconn) and Protek (Shanghai)
Limited and its affiliates (collectively, Protek), each a major CM that produces mobile phones containing our processors almost
exclusively for Apple. We also license our processor IP to this OEM. In 2010, 2011 and the three months ended March 31, 2012,
this OEM, Foxconn and Protek collectively accounted for 82%, 75% and 62% of our total revenue, respectively. We entered into
an agreement with Apple in 2008, which governs our relationship and under which we sell custom processors to Foxconn and
Protek and license our processor IP to this OEM for other mobile phones. For a detailed description of this agreement, see
“Business—Customers” beginning on page 87. Historically, we have sold Foxconn and Protek our processors on a purchase order
basis. We anticipate that Foxconn and Protek will continue to purchase our processors for multiple mobile phone models that they
produce but we expect their purchases to continue to decline over time as we continue to transition to a partial licensing model
with this OEM.
Commencing in the three months ended December 31, 2011, Apple has integrated our processor IP in certain of its mobile
phones, and we recorded our first royalty revenue in the three months ended March 31, 2012. Pursuant to our agreement, this
OEM will pay us a royalty, on a quarterly basis, for the use of our processor IP for all mobile phones in which it is used. We have
granted a similar license to this OEM for a new generation of processor IP; however, this OEM is not obligated to incorporate our
processor IP into any of its current or future mobile devices. For the new generation processor IP, the royalty this OEM is required
to pay us is subject to a lifetime maximum, after which we would not receive royalties for shipments of devices into which our
processor IP has been integrated. Under our agreement with this OEM, we have entered into statements of work to set forth terms
and conditions specific to licensing processor IP. Pursuant to both the agreement and statements of work, this OEM may cancel a
statement of work for a new custom processor upon 30 days prior written notice to us. This OEM has no obligation to, and we do
not know the extent to which the OEM will continue to, license our processor IP for integration into mobile devices it produces.
The per unit royalty that we are entitled to receive for the use of our processor IP is lower than the price we receive for our
stand-alone processors. We expect our total revenue from Foxconn and Protek to continue to decline over time as the mix of
revenue shifts from processor sales to royalties. If sales to other OEMs do not increase sufficiently to offset the decline, our total
revenue may also decline. Our future royalties may also be at risk with respect to future mobile device releases if the OEM to
which we have licensed our processor IP exerts pricing pressure on us, expends resources to develop an internal solution or
considers a solution that is incorporated in other audio components such as a baseband processor.

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Our revenue from this OEM and its CMs may be difficult to predict as it is dependent upon sales of the OEM’s new mobile
devices, over which we have no control. On a period to period basis, our revenue from this OEM and its CMs may also fluctuate
as we are substantially dependent upon the timing of design cycles and product introductions. We anticipate that our revenue from
this OEM and its CMs may temporarily decline as users defer purchases in anticipation of new product launches, increase in the
quarter in which a new version of a mobile device is launched and subsequently decline over the course of the product’s lifecycle.
Our royalty revenue will lag the sales of mobile phones that integrate our processor IP by one quarter. We have limited rights to
audit the shipment data we receive, which limits our ability to verify calculated royalty revenue or seek redress for reports we
believe are not accurate, and we have no experience in testing and evaluating the accuracy of such data from this OEM.
We depend on a small number of OEMs for a substantial portion of our revenue and the loss of, or a significant reduction
in orders from, one or more of our OEMs could adversely affect our revenue and significantly harm our business,
financial condition, operating results and cash flows.
We sell our voice and audio processors to OEMs and license our processor IP to a single OEM. In 2010, 2011 and the three
months ended March 31, 2012, our largest OEM and its CMs, Foxconn and Protek, collectively accounted for 82%, 75% and 62%
of our total revenue, respectively, and Samsung accounted for 7%, 20% and 36% of our total revenue, respectively. Although we
are reliant on a small number of OEMs for our revenue in any period, the identity of those OEMs may change depending on the
timing of their mobile device releases, seasonal user purchasing patterns and launch dates set by MNOs. We expect our
operating results for the foreseeable future to depend on sales to a small number of OEMs and on the ability of these OEMs to sell
mobile devices that incorporate our processors. Our revenue may fluctuate from quarter to quarter as our sales are dependent
upon the timing of OEMs’ design cycles and product introductions. Substantially all of our sales to date have been made on a
purchase order basis, which permits our OEMs to cancel, change or delay product purchase commitments with little or no notice
to us and may make our revenue volatile from period to period. Our OEMs are generally not obligated to purchase from us and
may purchase voice and audio solutions from our competitors.
We typically work with OEMs to obtain design wins prior to the OEM entering into an agreement with an MNO to produce a given
mobile device. However, even if the design win is awarded, the OEM or MNO may cancel a given mobile device launch. Although
it would be time consuming for an OEM to design our products out of mobile devices currently in production, an OEM may seek to
do so or to establish a second source. We do not have agreements with our OEMs requiring them to incorporate our processors in
future mobile devices. Our OEMs are not obligated to complete the development or begin commercial shipment of any mobile
phones or media tablets that incorporate our processors.
These OEMs or their CMs may purchase fewer of our processors than they did in the past, alter their purchasing patterns, modify
the terms on which they purchase our products or decide not to purchase our products at all. Decreased purchases by our major
OEMs, whether for current or future mobile device models in which our products were included or otherwise, changes in their
purchasing patterns, modification of terms or a disruption or termination of our relationships with our major OEMs could adversely
affect our revenue and significantly harm our business, financial condition, operating results and cash flows. This type of loss
could also cause significant fluctuations in our results of operations because we have significant fixed expenses in the short term
and our sales and development cycle to obtain new design wins and new OEMs is long.

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If we are unable to diversify our revenue by maintaining or extending our relationships with our current OEMs or
establishing new OEM relationships, our growth may be limited, and our business, financial condition, operating results
and cash flows could be adversely affected.
We have historically derived a substantial majority of our revenue from sales to a small number of OEMs. We may be unable to
secure future design wins from these OEMs as they develop and introduce new products and, even if we do, existing OEM
product sales may decline and new mobile devices introduced by our current OEMs may not achieve market acceptance. We
cannot assure you that we will be able to sustain our revenue from our existing OEMs. Our OEMs typically buy our processors on
a purchase order basis and do not enter into long-term contracts or minimum purchase commitments that would obligate them to
continue to buy additional processors from us in the future. Although we seek to grow our OEM base through new design wins,
our sales and development cycle to obtain initial design wins from new OEMs is long and subject to uncertainties and we cannot
assure you that we will be successful in doing so. Even if we are successful in obtaining design wins with new OEMs, our existing
OEM customers may continue to account for a substantial portion of our sales in the future. If we are unable to generate repeat
business from our existing OEMs, generate revenue from new OEMs or expand into broader markets, our operating results would
be adversely affected.
We have a history of losses, and we may not be able to sustain profitability in the future.
Since our formation, we have recorded a net loss in every year prior to 2010. We had net losses of $14.5 million in 2008 and
$16.8 million in 2009. As of March 31, 2012, our accumulated deficit was $38.0 million. We anticipate continuing to spend
significantly to develop new processors and expand our business, including expenditures for additional personnel in sales and
marketing and research and development. As a public company, we will also incur significant legal, accounting and other
expenses as a result of regulatory requirements that did not apply to us as a private company. We may encounter unforeseen
difficulties, complications and delays and other unknown factors that require additional expenditures. Due to these increased
expenditures, we will have to generate and sustain higher revenue in order to maintain and sustain profitability. Our rate of
revenue growth may not be sustainable and we may not generate revenue in excess of our anticipated additional expenditures to
maintain profitability. Our expense levels are based in part on our expectations as to future sales and a significant percentage of
our expenses are fixed in the short term. If sales are below expectations, our operating expenses would be disproportionately high
relative to revenue, which would adversely impact our profitability. Although we achieved profitability during 2010, 2011 and the
three months ended March 31, 2012, we may not be able to sustain profitability in the future. Failure to sustain profitability may
require us to raise additional capital, which may not be available on terms acceptable to us, or at all.
Our operating results may fluctuate significantly as a result of a variety of factors, many of which are outside of our
control, and you should not rely on our quarterly comparisons as an indicator of future performance.
Our operating results may fluctuate due to a variety of factors, many of which are outside of our control. Our sales cycles are long
and unpredictable and our sales efforts require substantial time and expense. Our revenue is difficult to predict and may vary
substantially from quarter to quarter, which may cause our operating results to fluctuate significantly. We ship a significant portion
of our processors in the same quarter in which they are ordered such that small delays in receipt of purchase orders and shipment
of products could result in our failure to achieve our internal forecasts or stock market expectations. In any quarter, our revenue
may be largely attributable to the timing of our OEMs’ orders. Our OEMs often increase purchases of our processors as part of
product launches and the

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timing of those product launches may cause the timing of our orders with our OEMs to fluctuate. Our revenue depends on the
ability of OEMs to sell mobile devices that incorporate our processors. In addition, we expect our gross margins to fluctuate over
time depending on the mix of more recently introduced, higher margin products and older products that are subject to declining
margins, as well as the mix between sales of processors and license of our processor IP. For these reasons, comparisons of our
operating results on a period to period basis may not be meaningful. You should not rely on our past results as an indication of our
future performance. If our revenue or operating results fall below the expectations of investors or the securities analysts that follow
us, the price of our common stock may decline.
Other factors that are difficult to predict and that may affect our operating results include:
•   the timing and magnitude of shipments of our processors and the sale of mobile devices that have integrated our processor IP
    in each quarter;
•   the extent to which and the timing of when our OEMs launch new mobile devices incorporating our voice and audio
    processors;
•   deferral of purchases of existing mobile devices in anticipation of new devices from our OEMs;
•   the introduction of new mobile device operating systems or upgrades and their impact on sales of existing mobile devices;
•   the timing of product introductions or upgrades or announcements by us or our competitors;
•   the gain or loss of one or more design wins with one or more significant OEMs;
•   fluctuations in demand and prices for our voice and audio processors;
•   increases in the cost to manufacture, assemble and test our processors;
•   OEMs overbuilding inventories of mobile devices and reducing purchases of our solutions as they use their excess inventory;
•   efforts to reduce the cost and/or the bill of materials of OEMs’ mobile devices and the impact on our pricing;
•   our ability to anticipate changing demands and develop new technologies, products and improvements that meet OEM and
    MNO requirements on a timely basis;
•   production delays as a result of manufacturing capacity or quality issues;
•   unanticipated sales return reserves or charges for excess or obsolete inventory;
•   changes in industry standards in the mobile device industry;
•   any change in the competitive landscape of our industry, including consolidation or the emergence of new competitors;
•   general economic conditions in the markets in which we operate; and
•   other factors outside of our control.
For these reasons, comparisons of our operating results on a period to period basis may not be meaningful. You should not rely
on our past results as an indication of our future performance.

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The market for mobile device components is highly competitive and includes larger companies with significantly greater
resources than we have. If we are unable to compete effectively, we may experience decreased sales or increased
pricing pressure, which would adversely impact our business, financial condition, operating results and cash flows.
The market for mobile device components is highly competitive and we expect competition to intensify in the future. There are a
number of components in the voice and audio subsystem of a mobile device including baseband processors, audio codecs and
voice and audio processors. Currently, we only provide voice and audio processors and do not compete in other aspects of the
mobile device component market. In the future, we may elect to expand our offerings to include other subsystem components and
we would need to compete against companies offering those subsystem components. Companies that currently compete for sales
of other mobile device components may enter the voice and audio processor market with stand-alone components or components
with other functionalities and compete with us.
We currently face competition from a number of established companies that produce components for the mobile device audio
subsystem, including companies that produce dedicated voice and audio solutions, such as Maxim Integrated Products, Inc.
(Maxim), ON Semiconductor Corporation (ON Semiconductor), Qualcomm Incorporated (Qualcomm), Texas Instruments
Incorporated (Texas Instruments), Wolfson Microelectronics plc (Wolfson) and Yamaha Corporation (Yamaha). We also face
competition from smaller, privately held companies and could face competition from new market entrants, whether from new
ventures or from established companies moving into the areas of voice and audio subsystems that our products address. We also
compete against solutions internally developed by OEMs, as well as combined third-party software and hardware systems.
Each of our well established current and potential competitors have longer operating histories, greater brand awareness, a more
diversified OEM base, a longer history of selling voice and audio subsystem components to OEMs and significantly greater
financial, technical, sales, marketing and other resources than we have. As a result of their established presence in the industry,
some of our competitors have substantial control and influence over future trends in the industry, including acceptance of a
particular industry standard or competing technology. Many of our competitors benefit from long-standing relationships selling
voice and audio subsystem components to key decision makers at many of our current and prospective OEMs. Our competitors
may be able to leverage these existing OEM relationships to persuade our current and potential OEMs to purchase our
competitors’ products, regardless of the performance or features of our processors. Our competitors may also be able to devote
greater resources to the development, promotion and sale of products, which could allow them to introduce new technologies and
products to the market faster than we can. In addition, the lack of widely accepted objective measures and testing standards for
sound quality may make it difficult for OEMs and MNOs to assess the benefits of our solutions or differentiate our solutions from
those of our competitors.
Because many of our competitors have greater resources than we have and are able to offer a more diversified and
comprehensive bundle of products and services, these competitors may be able to adopt more aggressive pricing policies than we
can, through which they could deliver competitive products or technologies at a lower price than our processors. Due to the larger
production and sales volumes enjoyed by our larger competitors across multiple product families, our competitors may be able to
negotiate price reductions, production dates and other concessions from their suppliers that we cannot. If our competitors are able
to undercut our prices, we may be unable to remain competitive in the industry and lose sales or be forced to reduce our selling
prices. This could result in reduced gross

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margins, increased sales and marketing expenses or our failure to increase or maintain market segment share, any of which could
seriously harm our business, financial condition, operating results and cash flows.
Our ability to compete effectively depends on a number of factors, including:
•   our processors’ scalability, performance, quality, ease of use and cost effectiveness relative to those of our competitors’
    products;
•   our success in developing and creating demand for new and proprietary technologies to offer products and features previously
    not available in the marketplace;
•   our success in identifying new markets, applications and technologies;
•   our ability to attract, retain and support other OEMs and to establish and maintain relationships with MNOs;
•   our ability to recruit and retain engineering, sales and marketing personnel;
•   our products’ interoperability with various data access protocols and other voice and audio subsystem components of mobile
    devices;
•   our ability to continue to establish greater name recognition and build upon our reputation in the industry;
•   our ability to respond effectively to aggressive business tactics by our competitors, including selling at lower prices or asserting
    intellectual property rights, irrespective of the validity of the claims; and
•   our ability to protect our intellectual property.
If the market for mobile devices with improved sound quality and the demand for our products do not continue to grow
as we expect, our business, financial condition, operating results and cash flows could be materially and adversely
affected.
Our processors are designed to address the sound quality challenges faced by users with their mobile devices. OEMs and MNOs
may decide that the costs of improving sound quality outweigh the benefits, which could limit demand for our solutions. Users may
also be satisfied with existing sound quality or blame poor quality on their MNOs’ networks. The market for our products is
evolving rapidly and is technologically challenging, and our future financial performance will depend in large part on growth of this
market and our ability to adapt to user, OEM and MNO demands. Our current products are solely focused on improving the sound
quality of mobile devices. Consequently, we are vulnerable to fluctuations in or the absence of demand for products that improve
sound quality. A number of factors could adversely affect the growth in the market or the demand for our products, including the
following:
•   introduction of new mobile devices with different components or software that provide the same function as our products;
•   internally developed solutions that reduce the demand for our products;
•   improved wireless network technology that performs similar functions to those currently performed by our solutions;
•   lack of user acceptance of sound quality improvements that we may develop or our inability to timely develop product
    enhancements that satisfy user requirements;
•   OEM budgetary constraints or reduced bill of materials spending on sound quality solutions; and

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•   OEM design constraints for sound quality solutions and tradeoffs they face in the design process.
If the average selling prices of our products decrease, our revenue and gross margins could decline.
Consistent with trends in the semiconductor industry, we have reduced the price of our products in the past and may do so in the
future. Because of the resources available to and the broader product portfolios of many of our large, established competitors,
erosion in average selling prices throughout our industry could have a larger impact on our business than on these large
competitors. We may also elect to sell lower priced products to address the requirements of mobile devices with lower price
points, which could cause our average selling prices, revenue and gross margins to decline. Our average selling prices and gross
margins may vary substantially from period to period as a result of the mix of products we sell during any given period and the
relative proportion of royalty revenue. As a result, our revenue and gross margin results in any period may fall short of investors’
and securities analysts’ expectations and our stock price may decline.
If the average selling prices for our existing products decline without offsetting cost reductions and we are unable to introduce and
develop significant demand for higher margin processors, we may be unable to maintain our gross margins.
If we are unsuccessful in developing, selling or licensing new products that achieve market acceptance, our ability to
attract and retain OEMs could be impaired, our competitive position could be harmed and our revenue could be reduced.
We compete in a market characterized by rapid technological change, frequent new product introductions, changing OEM needs,
evolving MNO requirements and increasing user demands. We expect technical requirements of voice and audio solutions in
mobile devices to evolve rapidly. Improvements in existing technologies and applications may reduce or eliminate the need for our
products. The role played by our products may also be filled by products combining voice and audio processing and other aspects
of the voice and audio subsystem. Improvements in other emerging technologies, such as reduction of background noise through
MNO network components, could have a similar effect. Our future growth depends on our ability to anticipate future market needs
and to successfully design, develop, market and sell new products that provide increasingly higher levels of user experience,
performance, functionality and reliability, that meet the cost expectations of our OEMs. We may also need to expand our product
portfolio to perform some of the other functions of the voice and audio subsystems in mobile devices to achieve widespread
market acceptance. Developing our products is expensive and the development investment may involve a long payback cycle. We
believe that we must continue to dedicate a significant amount of resources to our research and development efforts to maintain
and extend our competitive position.
Our new products must address technological changes and evolving industry standards and may not achieve market acceptance.
In the event that new products require features that we have not developed or licensed, we will be required to develop or obtain
such technology through purchase, license or other arrangements. If the required technology is not available on commercially
reasonable terms, or at all, we may incur additional expenses in an effort to internally develop the required technology.
We cannot assure you if or when the products and solutions on which we have focused our research and development
expenditures will become commercially successful or generate a sufficient return. Despite our efforts to develop new and
successful voice and audio processor solutions, our

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competitors, many of whom have greater financial and engineering resources than we do, may be able to introduce new
processors or develop new technologies more quickly than we can. If our investments in research and development do not
provide the desired returns in a timely manner or if the new solutions we develop do not achieve market acceptance, our ability to
attract and retain OEMs could be impaired, our competitive position could be harmed and our revenue could be reduced. In
addition, we may not have sufficient resources to maintain the level of investment in research and development required to remain
competitive or succeed in our strategy.
Our sales cycles can be long and unpredictable. Our sales efforts often require substantial time and expenses and are
often more than a year in advance of the first commercial sale of the mobile devices including our products.
Our sales efforts involve educating our current and prospective OEMs and MNOs about the use and benefits of our processors as
compared to sound quality solutions they currently use or other solutions that are available. OEMs often undertake a significant
design, evaluation and test process that can result in a lengthy sales cycle that ranges from nine to 12 months, but has, in some
cases, exceeded 12 months from initial contact to the award of a design win. We spend substantial time and resources on our
sales efforts without any assurance that they will result in a design win or that the mobile device will be produced at scale. The
award of design wins by our current and prospective OEMs are frequently subject to bill of material constraints, multiple approvals
and a variety of administrative, processing and other delays. Purchases of our processors may also occur in connection with a
new product launch, which may be delayed or postponed indefinitely. Once we secure a design win, it may be 12 to 24 months
before the OEM begins commercial production of a corresponding mobile device and we begin to generate revenue. The effect of
these factors tends to be magnified in the case of substantial mobile device redesigns that are unrelated to our products.
The selection processes for mobile device designs are lengthy and can require us both to incur significant design and
development expenditures and dedicate significant engineering resources in pursuit of a single OEM opportunity. We may not win
the competitive selection process and may never generate any revenue despite incurring significant design and development
expenditures. These risks are exacerbated by the fact that some of our OEMs’ products likely will have short life cycles. Failure to
obtain a design win could prevent us from supplying an entire generation of a product. This could cause us to lose revenue and
require us to write off obsolete inventory and could weaken our position in future competitive selection processes.
Our lengthy and uncertain sales cycles make it difficult for us to predict when OEMs may purchase and accept products from us or
sell mobile phones that have integrated our licensed processor IP, may prevent us from recognizing revenue in a particular
quarter and ultimately may not produce any sales. As a result, our operating results may vary significantly from quarter to quarter.
If we are unable to adequately control our cost of revenue, our gross margins could decrease, we may not sustain or
maintain profitability and our business, financial condition, operating results and cash flows could suffer.
The largest component of our cost of revenue is production costs of our processors. We have made, and expect to continue to
make, significant efforts to reduce the cost of our processors, including but not limited to wafer costs. Our processors are
fabricated by Taiwan Semiconductor Manufacturing Company Ltd. (TSMC), for which we are not a large customer. We rely on
third parties, such as Signetics Corporation (Signetics), for assembly, packaging and test. The low volume of our orders relative to
other customers at these suppliers makes it difficult for us to control the cost of the

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fabrication of our processors. As compared to our larger competitors, we typically do not purchase a sufficiently high volume of
wafers and services to obtain the discounts that our larger competitors may be able to obtain from their foundries and other
suppliers. We do not have long-term supply contracts with our suppliers, which further limits our ability to control costs. If we are
unable to reduce, or maintain controls over, our cost of manufacturing relative to our selling prices, our business, financial
condition, operating results and cash flows could be materially and adversely impacted.
We may experience difficulties demonstrating the value to OEMs and MNOs of newer, higher priced and higher margin
products if they believe our existing products are adequate to meet user expectations regarding sound quality, which
would cause our revenue to decline and negatively affect our business, financial condition, operating results and cash
flows.
As we develop and introduce new solutions, we face the risk that OEMs may not understand or be willing to bear the cost of
incorporating these newer solutions into their mobile devices. MNOs may also be unwilling to require OEMs to include newer
sound quality solutions if they believe users are satisfied with current solutions. Transitioning OEMs and MNOs to newer
generations of solutions involves a substantial amount of time educating them on the benefits provided by the newer solutions,
particularly since there are currently no common objective measures or testing standards for sound quality. Regardless of the
improved features or superior performance of the newer solutions, OEMs may be unwilling to adopt our new solutions as a result
of design or bill of material constraints associated with their new mobile device introductions. We must also successfully manage
product transition in order to minimize disruption in our OEMs’ ordering and purchasing patterns, provide timely availability of
sufficient supplies of new products to meet OEM demand and avoid reductions in the demand for our existing processors. If we
fail to manage the transition successfully, we may have to write down or write off excess inventory of the older generation of
processors. Due to the extensive time and resources that we invest in developing new solutions, if we are unable to sell OEMs
new generations of our solutions, our revenue could decline and our business, financial condition, operating results and cash
flows could be negatively impacted.
We are dependent on sales of mobile devices that incorporate our voice and audio processors and our processor IP, and
a decline in the demand for these mobile devices could harm our business.
Since inception, our revenue has been generated from the sale of processors for mobile devices. Continued market adoption of
mobile device sound quality solutions is critical to our future success. Our success is also dependent on our OEMs’ ability to
successfully commercialize their mobile devices in which our solutions are incorporated. The markets for our OEMs’ mobile
devices are intensely competitive and are characterized by rapid technological change. These changes result in frequent product
introductions, short product life cycles and increased device convergence and capabilities. Mobile devices incorporating our
solutions may not achieve market success or may become obsolete. We cannot assure you that our OEMs will dedicate the
resources necessary to promote and commercialize mobile devices incorporating our solutions, successfully execute their
business strategies for these mobile devices, be able to manufacture quantities sufficient to meet demand or cost effectively
manufacture mobile devices at high volume. Any of these factors, as well as more general mobile device industry issues, could
result in a decline in sales of mobile devices that incorporate our products. If demand for our products or our OEMs’ mobile
devices were to decline, fail to continue to grow at all or in a manner consistent with expectations, our revenue would decline and
our business would be harmed.

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If our voice and audio processors fail to integrate or interoperate with our OEMs’ product designs, including various
system control and audio interface protocols, we may be unable to maintain or increase market segment share and we
may experience reduced demand for our processors.
Our products must integrate and interoperate with our OEMs’ existing and future mobile devices, including components such as
baseband processors, audio codecs, microphones and software applications, each of which may have different specifications.
When new or updated versions of these components, interface protocols or software applications are introduced, or if we find
defects in other vendors’ or our OEMs’ software or hardware or an incompatibility or deficiency in our products, we may need to
develop updated versions of our products so that they interoperate properly. We may not complete these development efforts
quickly, cost effectively or at all. These development efforts may require substantial capital investment and the devotion of
substantial resources. If we fail to achieve and maintain compatibility with components, interface protocols or software
applications, our products may not be able to fulfill our OEMs’ requirements, or we may experience longer design win and
development cycles or our solutions may be designed out of mobile devices. As a result, demand for our products may decline
and we may fail to increase or maintain market segment share.
We are subject to business uncertainties that make it difficult to forecast demand and production levels accurately and
to have our products manufactured on a timely basis, which could interfere with our ability to deliver our processors and
generate sales.
Sales of our processors are generally based on purchase orders with our OEMs rather than long-term purchase commitments. As
a result, it is difficult to accurately forecast OEM demand for future periods. Our primary foundry, TSMC, produces integrated
circuits for other fabless semiconductor companies in volumes that are far greater than ours. We do not have supply or timing
commitments from TSMC and our production orders are typically filled on a delayed basis as production capacity becomes
available between larger orders. In order to secure foundry space for the production of our processors on a timely basis and to
ensure that we have sufficient inventory to meet our OEMs’ demands, we place orders with TSMC well in advance of receipt of
OEM orders. If we inaccurately forecast demand for our processors, we may have excess or inadequate inventory or incur
cancellation charges or penalties. Excess inventory levels could result in unexpected charges to operations that could adversely
impact our business, financial condition, operating results and cash flows. Conversely, inadequate inventory levels could cause us
to forego revenue opportunities, potentially lose market segment share and harm our OEM relationships. As we continue to
introduce new products, we may need to achieve volume production rapidly. We may need to increase our wafer purchases,
foundry capacity and assembly, packaging and test operations if we experience increased demand. The inability of TSMC to
provide us with adequate supplies of our processors on a timely basis, or an inability to obtain adequate quantities of wafers or
packages, could cause a delay in our order fulfillment and could interfere with our ability to generate revenue.
We rely on a limited number of manufacturing, assembly, packaging and test, as well as logistics, contractors, in some
cases single sources, and any disruption or termination of these arrangements could delay shipments of our voice and
audio processors and reduce our revenue.
We rely on a limited number of contractors for several key functions in producing our processors, including the processors
themselves, which are primarily manufactured by TSMC. We also rely on third

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parties, such as Signetics, for assembly, packaging and test, and other contractors for logistics. This reliance on a limited number
of contractors involves several risks, including:
•   capacity constraints;
•   price increases;
•   delivery delays; and
•   yield and other quality issues.
If any of these contractors were to cancel or materially change their commitments to us or fail to meet the quality or delivery
requirements needed to allow us to timely manufacture, assemble, package, test and deliver our processors, we could lose
time-sensitive OEM orders or be forced to pay damages for the cost of replacement components, be unable to develop or sell
certain processors cost effectively or on a timely basis, if at all, and experience significantly reduced revenue. In the event that it
became necessary to find other contractors, transition to a new vendor could take significant time due to the technology
development process and other qualification criteria for a different contractor. For example, developing a second source foundry
for one of our products could require us to redesign the product to meet the specialized requirements of that foundry. Inadequate
supplies of critical components, such as wafers or packages, may also impair our ability to fulfill orders in a given quarter and/or
result in a decrease in our gross margins.
We currently rely primarily on TSMC to manufacture our processors. Our reliance on TSMC reduces our control over the
fabrication process, exposing us to risks, including reduced control over quality assurance, production costs and product supply. If
we fail to manage our relationship with TSMC effectively, or if TSMC experiences delays, disruptions, capacity constraints or yield
problems in its operations, our ability to ship products to our OEMs could be impaired and our competitive position and reputation
could be harmed. We do not have a supply agreement with TSMC and TSMC is under no obligation to continue to supply us at all
or at the capacity we need. We are a relatively small customer of TSMC and, in times of capacity constraint, we may not receive
the capacity allocation we need. If TSMC is unwilling or unable to meet our production requirements, we would be required to
engage a new foundry. Qualifying a new foundry and commencing volume production would be expensive and time consuming.
While we have engaged GLOBALFOUNDRIES Inc. (Globalfoundries) to produce prototypes for some of our products, the transfer
of additional products to Globalfoundries may require significant redesign of such processors. Any redesign may take nine months
or more to complete and may involve further delays if such redesigned products do not meet our or our OEMs’ performance
specifications. If we are required to change foundries or move between production lines of a particular foundry or other supplier for
any reason, this could disrupt the supply of our processors and increase our costs.
Disruption or termination of supplies from TSMC or Globalfoundries and problems with yield of good die from the wafers we
purchase from them could delay shipments of our products and materially and adversely affect our operating results. Production
delays and quality defects are often outside of our control and are difficult to predict. Any delay of shipments or the existence of
defects in our products could damage our relationships with current and prospective OEMs, increase our costs due to the time
and money spent remedying the defects and reduce our revenue.
If flaws in the design, production or test of our processors were to occur, we could experience a failure rate in our products that
could result in substantial yield reductions, increased manufacturing costs and harm to our reputation. Even minor deviations in
the manufacturing process can cause substantial

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manufacturing yield losses or cause halts in production. We have in the past, and may in the future, experience quality problems
with the die provided by our foundries. Our foundries may not be able to detect these defects early in the fabrication process or
determine the cause of such defects in a timely manner, which may affect the quality or reliability of our products. Although we
have procedures in place to monitor the quality of our foundries’ processes, we cannot assure you that our efforts will be sufficient
to avoid a rate of failure in our processors that results in substantial delays in shipment or significant repair or replacement costs,
any of which could result in lost sales, harm to our reputation and an increase in our operating costs.
Any errors or defects discovered in our products after commercial release could result in a loss of OEM business, a termination of
design wins or increased warranty costs, any of which may adversely affect our business, financial condition, operating results
and cash flows. We may also face claims for product liability and breach of warranty, including claims relating to the manner in
which our products interact with other components of mobile devices produced by our OEMs. We may also be required to
indemnify our OEMs for losses allegedly caused by our voice and audio solutions that are incorporated into their mobile devices.
Any warranty or other rights we may have against our suppliers for yield or other quality issues caused by them may be more
limited than those our OEMs have against us, based on our relative size, bargaining power or otherwise. We cannot assure you
that our warranty reserves will be sufficient or either increase or decrease in future periods. Defending a lawsuit, regardless of its
merit, could be costly and might divert management’s attention and adversely affect the market’s perception of us and our
solutions. In addition, if the amount and scope of our business liability insurance coverage proves inadequate for a claim, or future
coverage is unavailable on acceptable terms or at all, our business, financial condition, operating results and cash flows could be
harmed.
Our voice and audio processors may fail to meet OEM or MNO specifications or may contain undetected software or
hardware defects, either of which could cause degradation in sound quality that might result in liability to us or our
OEMs or MNOs, harm to our reputation, a loss of OEMs and a reduction in our revenue.
Our processors are highly technical and complex. In many cases, our processors are assembled in customized packages or
feature high levels of integration. Our products may fail to meet exacting OEM specifications for sound quality, performance and
reliability or may contain undetected errors, defects or security vulnerabilities that could result in degradation in voice and audio
data quality. Some errors in our processors may only be discovered after they have been incorporated into our OEMs’ mobile
devices. Resolving these errors and defects may require a significant amount of time and resources. If our voice and audio
processors fail to meet OEM or MNO specifications or contain undetected software or hardware defects, we and our OEMs or
MNOs may incur liability, our reputation and relationships with our OEMs and MNOs may be harmed and our revenue and results
of operations may be adversely affected.
If we are unable to maintain or expand our relationships with MNOs or establish new MNO relationships, we may not be
able to affect MNO demand for mobile devices that meet high sound quality specifications, which may limit our growth
and adversely affect our business, financial condition, operating results and cash flows.
We have invested and continue to invest significant resources in working with MNOs to educate them about the impact of sound
quality on the user experience in order to increase awareness of and demand for our processors. We also intend to collaborate
with MNOs in new geographic markets in order to extend our geographic reach. MNOs may not value the improvements in sound
quality that our

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products can provide. The specifications that MNOs impose on their OEMs may not be sufficiently high to differentiate our
processors compared to the solutions of our competitors. MNOs may grant waivers to their sound quality specifications if
individual mobile devices do not meet the specifications but provide other benefits to users. We do not have and do not expect to
have any influence on whether a MNO waives compliance with its specifications. In addition, mobile device specifications and the
level of control of MNOs over the mobile devices operating on their networks vary by OEM and geography. We do not have any
long-term contracts with the MNOs we work with and these MNOs have no obligation to require the use of our products by their
OEMs or to impose or enforce a certain level of sound quality specifications. If we are unable to maintain or expand our
relationships with MNOs, we may not realize the potential benefits that we believe these relationships can provide. We cannot
assure you that MNOs will continue to work with us to assess and evaluate their voice and audio requirements. If we are unable to
maintain or expand our existing relationships with MNOs or enter into new MNO relationships, demand for our products may
decline and our business, financial condition, operating results and cash flows may be adversely affected.
Our ability to benefit from net operating loss carryforwards (NOLs) may be impaired as a result of future ownership
changes or changes in tax laws.
To date, we have not paid material income taxes due to our historical losses. We have significant NOLs in the United States.
These NOLs will expire at various times in the future or may be rescinded with changes in tax laws or regulations. Any changes
that may affect our NOLs would affect our ability to estimate our provision for income tax in the future.
In general, under Section 382 of the Internal Revenue Code of 1986, as amended (Internal Revenue Code), a corporation that
undergoes an ownership change is subject to limitations on its ability to utilize its NOLs generated prior to such ownership change
to offset future taxable income. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders
(generally, 5% stockholders, applying certain aggregation and look-through rules) increases by more than 50 percentage points
over such stockholders’ lowest percentage ownership during the testing period (generally, three years). We have in the past
experienced ownership changes that have resulted in limitations on the use of a portion of our NOLs under Section 382 of the
Internal Revenue Code. If we undergo further ownership changes in connection with or after this public offering, our ability to
utilize NOLs could be further limited by Section 382 of the Internal Revenue Code. Future changes in our stock ownership such as
certain stock issuances and transfers between stockholders, some of which changes are outside of our control, could result in an
ownership change under Section 382 of the Internal Revenue Code. Similar rules may apply in other jurisdictions. For these
reasons, it is possible that we may not be able to utilize a significant portion of our NOLs.
Our future effective income tax rates could be affected by changes in the relative mix of our operations and income
among different geographic regions and by proposed and enacted U.S. federal income tax legislation, which could affect
our future operating results, financial condition and cash flows.
We seek to structure our worldwide operations to take advantage of certain international tax planning opportunities and incentives.
Our future effective income tax rates could be adversely affected if tax authorities challenge our international tax structure or if the
relative mix of our U.S. and international income changes for any reason, or if U.S. or international tax laws were to change in the
future. In particular, recent changes to U.S. tax laws as well as proposed tax legislation that could become law in the future could
substantially impact the tax treatment of our foreign earnings. These proposed and enacted changes, including limitations on our
ability to claim and utilize foreign tax credits and deferral

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of interest expense deductions until non-U.S. earnings are repatriated to the United States, could negatively impact our overall
effective tax rate and adversely affect our operating results. We cannot assure you that our effective tax rate will not increase in
the future.
We may not be able to sustain or manage any future growth effectively. If we fail to manage our growth effectively, we
may be unable to execute our business plan, sell our voice and audio solutions successfully and adequately address
competitive challenges. As a result, our business, financial condition, operating results and cash flows may suffer.
In recent periods, we have significantly expanded the size and scope of our business. Our future growth prospects depend in
large part on our ability to secure design wins and orders from a broader OEM base, our ability to establish and expand our
relationships with key suppliers to expand our product manufacturing, assembly, packaging, test and delivery capacity and our
ability to manage our growing business effectively. Continued growth in our business will place significant demands on our
managerial, administrative, operational, financial and other resources. Successful management of any future growth will require
substantial management attention with respect to, among other things:
•   maintaining and expanding our relationships with OEMs and MNOs and educating and supporting their product design and
    quality personnel;
•   anticipating and meeting the technology needs of users;
•   continuing to expand and improve our intellectual property portfolio and making technological advances;
•   expanding our relationships with our foundries and assembly, packaging, test and logistics providers and entering into new
    relationships with additional foundries, assembly, packaging, test and logistics providers to ensure that we can produce, test
    and deliver sufficient processors to meet market demand;
•   recruiting, hiring, integrating and retaining highly skilled and motivated individuals, including research and development and
    sales personnel;
•   expanding and broadening our product development capabilities, including establishing and managing our own design center
    outside the United States;
•   accurately forecasting revenue and controlling costs;
•   enhancing and expanding our infrastructure;
•   managing inventory levels;
•   expanding our international operations and managing increasingly dispersed geographic locations and facilities; and
•   implementing and improving our company-wide processes and procedures to address human resource, financial reporting and
    financial management matters.
If we are unable to execute our growth strategy effectively or to manage any future growth we may experience, we may not be
able to take advantage of market opportunities, execute our business plan, sell our voice and audio solutions successfully, remain
competitive, maintain OEM relationships or attract new OEMs. Our failure to effectively sustain or manage any future growth we
do experience could result in a reduction in our revenue and materially and adversely affect our business, financial condition,
operating results and cash flows.

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If we are unable to attract and retain highly qualified personnel, our business, financial condition, operating results and
cash flows would be harmed.
Our future success depends on our continued ability to attract and retain highly qualified technical, sales, support and
management personnel. In particular, our ability to improve and maintain our technology requires talented software and hardware
development engineers with specialized skills in areas such as CASA algorithms, acoustic engineering, digital and analog
integrated circuit design and mobile systems design and integration. If we are unable to recruit and retain these engineers, the
quality and speed with which our solutions are developed would likely be seriously compromised and our reputation and business
would suffer as a result. Our sales positions require candidates with specific sales and engineering backgrounds in the integrated
circuit or mobile device manufacturing industries and we may be unable to locate and hire individuals with these credentials as
quickly as needed, if at all. Once new sales personnel are hired, we need a reasonable amount of time to train them before they
are able to effectively and efficiently perform their responsibilities. Failure to hire and retain qualified sales personnel could
adversely impact our sales. Competition for these and the other personnel we require, particularly in the Silicon Valley area, is
intense and we compete for these personnel with large, established publicly traded companies. We may fail to attract or retain
highly qualified technical, sales, support and management personnel necessary for our business. If we are unable to attract and
retain the necessary key personnel, our business, financial condition, operating results and cash flows could be harmed.
We may make acquisitions in the future that could disrupt our business, cause dilution to our stockholders, reduce our
financial resources and harm our business.
In the future, we may acquire other businesses, products or technologies. We have not made any acquisitions to date and do not
have any agreements or commitments for any specific acquisition at this time. Our ability to make and successfully integrate
acquisitions is unproven. If we complete acquisitions, we may not strengthen our competitive position or achieve our goals in a
timely manner, or at all, and these acquisitions may be viewed negatively by OEMs, financial markets or investors. In addition, any
acquisitions we make could lead to difficulties in integrating personnel, technologies and operations from the acquired businesses
and in retaining and motivating key personnel from these businesses. Acquisitions may disrupt our ongoing operations, divert
management from their primary responsibilities, subject us to additional liabilities, increase our expenses and adversely impact
our business, financial condition, operating results and cash flows. Acquisitions may also reduce our cash available for operations
and other uses and could result in an increase in amortization expense related to identifiable assets acquired, potentially dilutive
issuances of equity securities or the incurrence of debt, any of which could harm our business.
The political and economic conditions of the countries in which we conduct business and other factors related to our
international operations could adversely affect our business, financial condition, operating results and cash flows.
We have generated substantially all of our revenue from sales to contract manufacturers (CMs) and OEMs that manufacture in
Asia and we expect sales to such CMs and OEMs to contribute a majority of our revenue in the foreseeable future. We have sales
and technical support personnel in countries other than the United States and we outsource all manufacturing, assembly,
packaging and test of our processors to third parties in Asia, as well as a portion of product development to a third party in India.
We may open our own research and development operation outside of the United States during 2012,

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establish administrative offices offshore and continue to add sales personnel in additional countries. Our international operations
subject us to a variety of risks, including:
•   difficulties in managing and staffing international offices and increased travel, infrastructure and legal compliance costs
    associated with multiple international locations;
•   the challenge of managing a development team in geographically disparate locations;
•   differing employment practices and labor relations issues;
•   difficulties in enforcing contracts, judgments and arbitration awards and collecting accounts receivable and longer payment
    cycles;
•   impediments to the flow of foreign exchange capital payments and receipts due to exchange controls instituted by certain
    foreign governments;
•   tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our processors in various
    foreign markets;
•   difficulties in obtaining governmental and export approvals for communications, processors and other products;
•   restrictions imposed by the U.S. government on our ability to do business with certain companies or in certain countries as a
    result of international political conflicts;
•   increased exposure to foreign currency exchange rate risk;
•   burdens of complying with a wide variety of complex foreign laws and treaties and unanticipated changes in local laws and
    regulations, including tax laws;
•   potentially adverse tax consequences;
•   reduced protection for intellectual property rights in some countries; and
•   political and economic instability.
As we expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage
these risks. Our failure to manage any of these risks successfully could adversely affect our business, financial condition,
operating results and cash flows.
If we need additional capital in the future, it may not be available to us on favorable terms, or at all.
We cannot assure you that we will be successful in executing our business plan, maintaining and growing our existing OEM base
or achieving and sustaining profitability. Failure to generate sufficient revenue, achieve planned gross margins or control operating
costs may require us to raise additional capital through equity or debt financing. Such additional financing may not be available on
acceptable terms, or at all and could require us to modify, delay or abandon some of our planned future expansion or
expenditures or reduce some of our ongoing operating costs, which could have a material adverse effect on our business,
financial condition, operating results and cash flows and ability to achieve our intended business objectives. If we raise additional
funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing
stockholders could suffer significant dilution in their percentage ownership and any new securities we issue could have rights,
preferences and privileges senior to those of holders of our common stock. Our existing credit facilities preclude us from entering
into additional credit agreements, other than in limited

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circumstances and, as a result, we may be required to issue equity securities rather than obtain additional debt financing.
We are exposed to fluctuations in currency exchange rates that could negatively impact our business, financial
condition, operating results and cash flows.
Because a portion of our business is conducted outside of the United States, we face exposure to adverse movements in foreign
currency exchange rates. These exposures may change over time as business practices evolve and they could have a material
adverse impact on our financial results and cash flows. Historically, we have paid our suppliers and sold our products in U.S.
dollars. We have also historically paid our outsourced research and development services provider in U.S. dollars. As we start
performing those research and development activities ourselves and have more significant non-U.S. payroll and operating
expenses, we may begin to incur material expenses in currencies other than the U.S. dollar. Increases in the value of these
currencies relative to the U.S. dollar could increase our operating expenses. In addition, an increase in the value of the U.S. dollar
could increase the real cost of our products to our OEMs that produce and sell their mobile devices outside of the United States.
This may increase pressure on and result in erosion of our average sales prices without any offset in our production costs if we
continue to pay those expenses in U.S. dollars, which could compress our margins. Average selling price erosion, compressed
margins and increased operating expenses could have a negative effect on our business, financial condition, operating results and
cash flows.
Our business is vulnerable to interruption by events beyond our control, including earthquakes, fire, floods, disease
outbreaks and other catastrophic events.
Our corporate headquarters and the operations of our key OEMs, foundries and third-party contractors are located in areas
exposed to risks of natural disasters such as earthquakes and tsunamis, including the San Francisco Bay area, Singapore, China,
Japan and Taiwan. A significant natural disaster, such as an earthquake, tsunami, fire or flood, or other catastrophic event such
as disease outbreak, could have a material adverse impact on our business, financial condition, operating results and cash flows.
In the event that any of our OEMs’ or MNOs’ information technology systems, manufacturing facilities or logistics abilities are
impeded by any of these events, shipments could be delayed and we could miss key financial targets, including revenue and
earnings estimates, for a particular quarter.

Risks related to regulations to which we may be subject and our intellectual property
Concerns over possible health and safety risks posed by mobile devices may result in the adoption of new regulations
and may otherwise reduce the demand for our products and those of our OEMs.
Concerns over the effects of radio frequency emissions, even if unfounded, may have the effect of discouraging the use of mobile
devices, which may decrease demand for our products and those of our OEMs. In recent years, the Federal Communications
Commission (FCC) and foreign regulatory agencies have updated the guidelines and methods they use for evaluating radio
frequency emissions from radio equipment, including mobile phones and other mobile devices. In addition, interest groups have
requested that the FCC investigate claims that wireless communications technologies pose health concerns and cause
interference with airbags, hearing aids and medical devices. Concerns have also been expressed over the possibility of safety
risks due to a lack of attention associated with the use of mobile devices while driving. These concerns and any future legislation
that may be adopted in response to them, could reduce demand for our products and those of our OEMs in the United

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States as well as other countries, which could materially and adversely affect our business, financial condition, operating results
and cash flows.
Claims of infringement against us or our OEMs could increase our expenses, disrupt our ability to sell our voice and
audio solutions and reduce our revenue.
The mobile communications industry is characterized by the existence of a large number of patents, trademarks, trade secrets
and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights.
Third parties may claim that our processors or technologies infringe or misappropriate their intellectual property rights. We expect
that infringement claims and misappropriation claims may increase as the number of products and competitors in our market
increases and as we gain greater visibility and market exposure as a public company. We cannot assure you that we do not
currently infringe or misappropriate, or that we will not in the future infringe or misappropriate, any third-party patents or other
proprietary rights. For instance, because patent applications in the United States and foreign jurisdictions are typically maintained
in confidence for up to 18 months after their filing or, in some cases, for the entire time prior to issuance as a U.S. patent, third
parties may have earlier filed applications covering methods or other inventions that we consider our trade secrets. The limited
size of our patent portfolio may not provide meaningful deterrence against third parties alleging that we infringe their patents,
particularly against patent holding companies or other adverse patent owners who have no relevant product revenue. Any claims
of infringement or misappropriation by a third party, even those without merit, could cause us to incur substantial costs defending
against the claims and could distract our management from our business. A party making such a claim, if successful, could secure
a judgment that requires us to pay substantial damages. A judgment could also include an injunction or other court order that
could prevent us from offering our processors or licensing our processor IP. In addition, we might be required to seek a license for
the use of the infringed intellectual property, which might not be available on commercially reasonable terms or at all. Alternatively,
we might be required to develop noninfringing technology, which could require significant effort and expense and might ultimately
be unsuccessful. Any of these events could seriously harm our business, financial condition, operating results and cash flows.
Third parties may also assert infringement claims against our OEMs. Claims against our OEMs may require us to initiate or defend
potentially protracted and costly litigation on an OEM’s behalf, regardless of the merits of these claims, because we generally
agree to defend and indemnify our OEMs with which we have long-term agreements from claims of infringement and
misappropriation of proprietary rights of third parties based on the use or resale of our products. Other OEMs, with which we do
not have formal agreements requiring us to indemnify them, may ask us to indemnify them if a claim is made as a condition to
awarding future design wins to us. Because our OEMs are much larger than we are and have much greater resources than we do,
they may be more likely to be the target of an infringement claim by third parties than we would be, which could increase our
chances of becoming involved in a future lawsuit. If any of these claims succeeds, we might be forced to pay damages on behalf
of our OEMs that could increase our expenses, disrupt our ability to sell our voice and audio solutions and reduce our revenue. A
party making an infringement claim against our OEMs, if successful, could secure an injunction or other court order that could
prevent our OEMs from producing or selling their mobile devices incorporating our products. Any such claims or injunction against
our OEMs could seriously harm our business, financial condition, operating results and cash flows.
It is also not uncommon for foundries, packaging providers or suppliers of other components in our processors to be involved in
infringement lawsuits by or against third parties. Although some of our foundries, packaging providers or other suppliers are
obligated to indemnify us in connection with

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infringement claims related to their intellectual property rights, these parties may contest their obligations to indemnify us, or their
available assets or indemnity obligation may not be sufficient to cover our losses. Third-party intellectual property infringement
claims that involve us or our suppliers may require us to alter our technologies, obtain licenses or cease certain activities.
We may not be able to protect and enforce our intellectual property rights, which could harm our competitive position
and reduce the value of our proprietary technology.
Our success depends in part on obtaining, maintaining and enforcing our patent and other proprietary rights. We rely on trade
secret, patent, copyright and trademark laws and confidentiality agreements with employees and third parties, all of which offer
only limited protection. The steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation
of our proprietary information or infringement of our intellectual property rights and our ability to prevent such misappropriation or
infringement is uncertain, particularly in countries outside of the United States. We do not know whether any of our pending patent
applications will result in the issuance of a patent or whether the examination process will require us to narrow our claims. As of
March 31, 2012, we had seven issued U.S. patents, 87 pending U.S. patent applications and 37 pending foreign patent
applications. Each of the foreign patent applications is related to a U.S. patent or a pending U.S. patent application. Our patents
may be contested, circumvented, found unenforceable or invalidated and we may not be able to prevent third parties from
infringing them. Moreover, the rights granted under any issued patents may not provide us with proprietary protection or
competitive advantages and, as a result, our competitors may be able to copy or develop technologies similar or superior to ours.
In some countries where our processors are sold or may be sold, we do not have foreign patents or pending applications
corresponding to some of our U.S. patents and patent applications. Even if foreign patents are granted, effective enforcement in
foreign countries may not be available.
Protecting against the unauthorized use of our technology, trademarks and other proprietary rights is expensive and difficult.
Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to
determine the validity and scope of the proprietary rights of others. Any such litigation could result in substantial costs and
diversion of management resources, either of which could harm our business, financial condition, operating results and cash
flows. Litigation also puts our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not
issuing. Additionally, any enforcement of our patents or other intellectual property may provoke third parties to assert
counterclaims against us. Many of our current and potential competitors have the ability to dedicate substantially greater
resources to enforcing their intellectual property rights than we have. We may not be able to prevent third parties from infringing
upon or misappropriating our intellectual property.
Patent protection outside of the United States is generally not as comprehensive as in the United States and may not protect our
intellectual property in some countries where our processors are sold or may be sold in the future. Even if patents are granted
outside of the United States, effective enforcement in those countries may not be available. For example, the legal regime
protecting intellectual property rights in China is relatively weak and it is often difficult to create and enforce such rights. We may
not be able to effectively protect our intellectual property rights in China or elsewhere. Many companies have encountered
substantial intellectual property infringement in countries where we sell or intend to sell processors. If such an impermissible use
of our intellectual property or trade secrets were to occur, our ability to sell our processors at competitive prices and to be a
leading provider of processors may be adversely affected and our business, financial condition, operating results and cash flows
could be materially and adversely affected.

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We rely on the availability of third-party licenses.
Our products include intellectual property licensed from third parties, such as certain design technology, circuits and
manufacturing rights for processor cores. It may be necessary in the future to renew these licenses or obtain additional licenses.
We cannot assure you that the necessary licenses would be available on acceptable terms, or at all. Our failure to obtain, maintain
and renew certain licenses or other rights on favorable terms, or at all, and our involvement in litigation regarding third-party
intellectual property rights could have a material adverse effect on our business, financial condition, operating results and cash
flows.
Failure to comply with the U.S. Foreign Corrupt Practices Act (FCPA) and similar laws associated with our activities
outside of the United States could subject us to penalties and other adverse consequences.
We face significant risks if we fail to comply with the FCPA and other anticorruption laws that prohibit improper payments or offers
of payment to foreign governments and political parties by us for the purpose of obtaining or retaining business. In many foreign
countries, particularly in countries with developing economies, it may be a local custom that businesses operating in such
countries engage in business practices that are prohibited by the FCPA or other applicable laws and regulations. We are in the
early stages of implementing our FCPA compliance program and cannot assure you that all of our employees and agents, as well
as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies and
applicable law, for which we may be ultimately held responsible. Any violation of the FCPA or other applicable anticorruption laws
could result in severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S. government
contracting, which could have a material and adverse effect on our reputation, business, financial condition, operating results and
cash flows.
We are subject to governmental export and import controls and economic sanctions laws that could subject us to
liability and impair our ability to compete in international markets.
Because we incorporate U.S. origin technology into our processors, our processors are subject to U.S. export controls and may be
exported or licensed outside of the United States only with the required level of export license or through an export license
exception. If a transaction involves countries, individuals or entities that are the target of U.S. or other economic sanctions,
licenses or other approvals from the U.S. Department of the Treasury’s Office of Foreign Assets Control or other sanctions
authorities may be required and may not be granted. Various countries regulate the importation of certain encryption technology
and have enacted laws that could limit our ability to distribute our processors or license our processor IP in such countries or could
limit our OEMs’ ability to sell mobile devices incorporating our processors in those countries. Changes in our processors or
changes in export or import or economic sanctions regulations may create delays in the introduction of our processors in
international markets, prevent our OEMs with international operations from incorporating our processors in their products or, in
some cases, prevent the export or import of our processors to certain countries altogether. Any change in export, import or
economic sanctions regulations or related legislation, shift in approach to the enforcement or scope of existing regulations or
change in the countries, persons or technologies targeted by these regulations could result in decreased use of our processors by,
or in our decreased ability to export, license or sell our processors to, existing or potential OEMs with international operations.
Failure to obtain required import or export approval for our processors or failure to comply with these regulations could result in
penalties and restrictions on export privileges and could impair our ability to compete in international markets.

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We, our OEMs and third-party contractors are subject to increasingly complex environmental regulations and
compliance with these regulations may delay or interrupt our operations and adversely affect our business.
We face increasing complexity in our research and development and procurement operations as a result of requirements relating
to the materials composition of many of our processors, including the European Union’s (EU’s) Restriction on the Use of Certain
Hazardous Substances in Electrical and Electronic Equipment (RoHS) directive, which restricts the content of lead and certain
other substances in specified electronic products put on the market in the EU after July 1, 2006 and similar Chinese legislation
relating to marking of electronic products which became effective in March 2007. Failure to comply with these laws and
regulations could subject us to fines, penalties, civil or criminal sanctions and contract damage claims, which could harm our
business, reputation and operating results. The passage of similar requirements in additional jurisdictions or the tightening of
these standards in jurisdictions where our products are already subject to such requirements could cause us to incur significant
expenditures to make our products compliant with new requirements, or could limit the markets into which we may sell our
products. Other environmental regulations may require us to reengineer our processors to use components that are compatible
with these regulations and this reengineering and component substitution may result in additional costs to us.
Some of our operations, as well as the operations of our CMs and foundries and other suppliers, are also regulated under various
other federal, state, local, foreign and international environmental laws and requirements, including those governing, among other
matters, the discharge of pollutants into the air and water, the management, disposal, handling, use, labeling of and exposure to
hazardous substances and wastes and the cleanup of contaminated sites. Liability under environmental laws can be joint and
several and without regard to comparative fault. We cannot assure you that violations of these laws will not occur in the future, as
a result of human error, accident, equipment failure or other causes. Environmental laws and regulations have increasingly
become more stringent over time. We expect that our products and operations will be affected by new environmental requirements
on an ongoing basis, which will likely result in additional costs, which could adversely affect our business. Our failure to comply
with present and future environmental, health and safety laws could cause us to incur substantial costs, result in civil or criminal
fines and penalties and decreased revenue, which could adversely affect our operating results. Failure by our foundries or other
suppliers to comply with applicable environmental laws and requirements could cause disruptions and delays in our product
shipments, which could adversely affect our relations with our OEMs and adversely affect our business and results of operations.
As a result of efforts by us and our third-party contractors to comply with these or other future environmental laws and regulations,
we could incur substantial costs, including those relating to excess component inventory, and be subject to disruptions to our
operations and logistics. In addition, we will need to procure the manufacture of compliant processors and source compliant
components from suppliers. We cannot assure you that existing laws or future laws will not have a material adverse effect on our
business.

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Risks related to this offering and ownership of our common stock
If we experience material weaknesses or otherwise fail to maintain an effective system of internal control over financial
reporting in the future, we may not be able to accurately report our financial condition, results of operations or cash
flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.
As a result of becoming a public company, we will be required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report
by management on, among other things, the effectiveness of our internal control over financial reporting for each fiscal year
beginning with the first full fiscal year after the effective date of this offering. This assessment will need to include disclosure of any
material weaknesses identified by our management in our internal control over financial reporting and, once we are no longer an
“emerging growth company” as such term is defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act) an opinion
from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. A
material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting that
results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be
prevented or detected on a timely basis.
We are in the very early stages of the costly and challenging process of hiring personnel and compiling the system and process
documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our
evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one
or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control
over financial reporting is effective. We cannot assure you that there will not be material weaknesses or significant deficiencies in
our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could
severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to
conclude that our internal control over financial reporting is effective, we would lose investor confidence in the accuracy and
completeness of our financial reports, which would cause the price of our common stock to decline. Our independent auditors will
not be required to attest to their effectiveness while we are an emerging growth company under the JOBS Act. If our independent
auditors determine we have a material weakness or significant deficiency in our internal control over financial reporting once our
independent auditors begin their reviews, investors may lose confidence in us. Failure to remedy any material weakness in our
internal control over financial reporting, or to implement or maintain other effective control systems required of public companies,
could also restrict our future access to the capital markets.
We will incur increased costs and demands upon management as a result of complying with the laws and regulations
affecting public companies, which could harm our operating results.
As a public company, we will incur significant legal, accounting, investor relations and other expenses that we did not incur as a
private company, including costs associated with public company reporting requirements. We also have incurred and will incur
costs associated with current corporate governance requirements, including requirements under Section 404 and other provisions
of the Sarbanes-Oxley Act and the Dodd-Frank Act of 2010, as well as rules implemented by the Securities and Exchange
Commission (SEC) and the stock exchange on which we expect our common stock will be traded. Although we may benefit from
some of the disclosure and attestation deferrals for the period in which we remain an emerging growth company under the JOBS
Act, we do not expect those deferrals to materially alter the costs and burdens we will experience as a public company. We are
eligible to be treated as an emerging growth company and intend to elect to be treated as such and to benefit from the various

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phase ins and limited reporting requirements thereunder. Under the JOBS Act, emerging growth companies can delay adopting
new or revised accounting standards until such standards apply to private companies. However, we are still evaluating which, if
any, of these rights we will waive and do not irrevocably elect to waive the benefits of the exemption. The expenses incurred by
public companies for reporting and corporate governance purposes have increased dramatically over the past several years. We
expect these rules and regulations to increase our legal and financial compliance costs substantially and to make some activities
more time consuming and costly. We are currently unable to estimate these costs with any degree of certainty. Greater
expenditures may be necessary in the future with the advent of new laws and regulations pertaining to public companies. If we are
not able to comply with these requirements in a timely manner, the market price of our stock could decline and we could be
subject to sanctions or investigations by the SEC, the applicable stock exchange or other regulatory authorities, which would
require additional financial and management resources. Because the JOBS Act has only recently been enacted, it is not yet clear
whether investors will accept the more limited disclosure requirements that we may be entitled to follow while we are an emerging
growth company. To the extent investors are not comfortable with a more limited disclosure regime, they may not be comfortable
purchasing and holding our common stock if we elect to comply with the reduced disclosure requirements. We also expect that, as
a public company, it will be more expensive for us to obtain director and officer liability insurance.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our
business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on any research and reports that securities or industry analysts
publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry
analysts. If no securities or industry analysts start coverage of us, the trading price for our stock would be negatively impacted. If
securities or industry analysts cover us and one or more of these analysts downgrades our stock or publishes inaccurate or
unfavorable research about our business, our stock price would likely decline. If one or more of these analysts stops coverage of
us or fails to publish reports on us regularly, demand for our stock could decrease which could cause our stock price and trading
volume to decline.
Our common stock has no prior public trading market and trading prices could be volatile due to a number of factors.
Before this offering, there has been no public market for shares of our common stock and we cannot assure you that one will
develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your
shares of our common stock at an attractive price or at all. We cannot predict the prices at which our common stock will trade. The
initial public offering price will not necessarily reflect the price at which investors in the market will be willing to buy and sell our
shares following this offering. As a result of these and other factors, the price of our common stock may decline, possibly
materially.
Historically, the trading prices of the securities of technology companies have been highly volatile. Our common stock could trade
at prices below the initial public offering price. Factors that could affect the trading price of our common stock, some of which are
outside of our control, include the following:
•   price and volume fluctuations in the overall stock market from time to time;
•   significant volatility in the market price and trading volume of technology companies in general and of companies in our
    industry;

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•   variations in our operating results or those of our competitors or other companies perceived to be similar to us;

•   actual or anticipated announcements of technological innovations, new services or service improvements, strategic alliances or
    significant agreements by us or by our competitors;
•   the gain or loss of significant OEMs or other developments involving our OEMs;
•   recruitment or departure of key personnel;
•   level of sales in a particular quarter;
•   changes in the estimates of our operating results;
•   lawsuits threatened or filed against us;
•   sales of large blocks of our stock or other changes in the volume of trading in our stock;
•   actual or anticipated changes in recommendations by any securities analysts who elect to follow our common stock;
•   whether our operating results meet the expectations of investors or securities analysts;
•   our failure to receive ongoing analyst coverage;
•   adverse publicity and investors’ general perception of us;
•   major catastrophic events; and
•   adoption or modification of regulations, policies, procedures or programs applicable to our business or our OEMs.
If the market for technology stocks or the stock market in general experiences loss of investor confidence, the trading price of our
common stock could decline for reasons unrelated to our business, operating results or financial condition. The trading price of our
common stock might also decline in reaction to events that affect other companies in our industry, even if these events do not
directly affect us. Each of these factors, among others, could have a material adverse effect on your investment in our common
stock. Some companies that have had volatile market prices for their securities have had securities class actions filed against
them. If a suit were filed against us, regardless of its merits or outcome, it would likely result in substantial costs and divert
management’s attention and resources. This could have a material adverse effect on our business, financial condition, operating
results and cash flows.
Our actual operating results may differ significantly from our guidance and investor expectations, causing our stock
price to decline.
From time to time, we may release guidance in our earnings releases, earnings conference calls or otherwise, regarding our future
performance that represent our management’s estimates as of the date of release. If given, this guidance, which will include
forward-looking statements, will be based on projections prepared by our management. Projections are based upon a number of
assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are beyond our control. The principal reason that we
expect to release guidance is to provide a basis for our management to discuss our business outlook with analysts and investors.
With or without our guidance, analysts and other investors may publish expectations regarding our business, financial
performance and results of operations. We do not accept any responsibility for any projections or reports published by any such
third persons.

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Guidance is necessarily speculative in nature and it can be expected that some or all of the assumptions of the guidance
furnished by us will not materialize or will vary significantly from actual results. If our actual performance does not meet or exceed
our guidance or investor expectations, the trading price of our common stock is likely to decline.
Insiders will continue to have substantial control over us after this offering, which could limit your ability to influence
corporate matters.
Upon completion of this offering, our directors, executive officers, principal stockholders and their affiliates will beneficially own, in
the aggregate, approximately      % of our outstanding common stock, assuming no exercise of the underwriters’ option to
purchase additional shares from us. As a result, these stockholders, if acting together, will be able to determine all matters
requiring stockholder approval, including the election of directors and approval of significant corporate transactions such as a
merger or other sale of our company or our assets. In addition, these stockholders, if acting together, will have the ability to control
the management and affairs of our company. This concentration of ownership could limit your ability to influence corporate matters
and might harm the market price of our common stock by:
•   delaying, deferring or preventing a change in corporate control;
•   impeding a merger, consolidation, takeover or other business combination involving us; and
•   discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.
For information regarding the ownership of our outstanding stock by our executive officers, directors, principal stockholders and
their affiliates, see the section titled “Principal and selling stockholders.”
As a new investor, you will experience substantial dilution as a result of this offering.
The assumed initial public offering price per share is substantially higher than the pro forma net tangible book value per share of
our common stock outstanding before this offering. As a result, investors purchasing common stock in this offering will experience
immediate dilution of $          per share in the pro forma net tangible book value per share from the price paid, based on an
assumed initial public offering price of $         per share (the midpoint of the range set forth on the cover page of this
prospectus). Investors who purchase shares in this offering will contribute approximately        % of the total amount of equity capital
raised by us through the date of this offering, but will only own approximately     % of the outstanding capital stock. In addition, we
have issued options and warrants to acquire common stock at prices significantly below the assumed initial public offering price.
To the extent outstanding options and warrants are ultimately exercised, there will be further dilution to investors in this offering.
This dilution occurs because our earlier investors paid substantially less than the initial public offering price when they purchased
their shares of common stock. If the underwriters exercise their option to purchase additional shares from us or if we issue
additional equity securities, you will experience additional dilution.
Future sales of shares by existing stockholders could cause our stock price to decline.
If our existing stockholders sell, or show an intention to sell, substantial amounts of our common stock in the public market after
the contractual lock-up agreements and other restrictions on resale discussed in this prospectus lapse, the trading price of our
common stock could decline. Based on shares outstanding as of March 31, 2012, upon completion of this offering, we will have
outstanding           shares of common stock plus any shares sold upon exercise of the underwriters’ overallotment option

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and any shares issued upon exercise of outstanding options and warrants. Of these shares, only the                  shares of common
stock sold in this offering or         shares of common stock sold in this offering if the underwriters’ over-allotment option were
exercised in full, would be freely tradable, without restriction, in the public market. Our underwriters may, in their sole discretion,
permit our directors, officers, employees and current stockholders who are subject to the 180-day contractual lock-up to sell
shares before the lock-up agreements expire. The lock-up may be extended under some circumstances.
At various times after the lock-up agreements pertaining to this offering expire, up to an additional       shares will be eligible
for sale in the public market of which 12,847,908 shares were held by directors, executive officers and other affiliates as of March
31, 2012, subject to certain volume and other limitations under Rule 144 under the Securities Act of 1933, as amended (Securities
Act), and in certain cases, various vesting agreements.
The shares that are either subject to outstanding options under our Stock Plans or reserved for future issuance under any other
stock plans and the 111,602 shares subject to outstanding warrants as of March 31, 2012 will become eligible for sale in the
public market to the extent permitted by the provisions of various vesting arrangements, the lock-up agreements and Rules 144
and 701 under the Securities Act.
Some of our existing securityholders have demand and piggyback rights to require us to register with the SEC up to 13,471,846
shares of our common stock as of March 31, 2012. If we register these shares of common stock, the stockholders would be able
to sell those shares freely in the public market. Most of these shares are subject to lock-up agreements restricting their sale for
180 days after the date of this prospectus, subject to extension or reduction. Registration rights are discussed further in the
section titled “Description of capital stock—Registration rights.”
After this offering, we intend to register approximately     shares of our common stock that we have issued or may issue
under our Stock Plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to the
applicable lock-up agreements described above.
The market price of our common stock could decline as a result of sales of a large number of shares of our common stock or the
perception that these sales could occur. This may also make it more difficult for us to raise funds through the issuance of
securities. We may issue and/or register additional shares, options, or warrants in the future in connection with acquisitions,
employee compensation or otherwise.
Our management will have broad discretion as to the use of the net proceeds that we receive from this offering and
might invest or spend the proceeds in ways with which you might not agree or in ways that may not yield a return.
Our management will have broad discretion to use the net proceeds that we receive from this offering and you will be relying on
the judgment of our management regarding the application of these proceeds. Our management might not apply the net proceeds
of this offering in ways with which you agree or that increase the value of your investment. We expect to use the net proceeds
from this offering for working capital and general corporate purposes, which may include acquisitions of complementary
businesses, products or technologies. We have not allocated these net proceeds for any specific purposes. Our management
might not be able to yield a significant return, if any, on any investment of these net proceeds. You may not have the opportunity
to influence our decisions on how to use the net proceeds from this offering. Until the net proceeds are used, they may be placed
in investments that do not produce significant income or that may lose value.

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Provisions in our certificate of incorporation and bylaws and Delaware law might discourage, delay or prevent a change
of control of us or changes in our management and therefore depress the trading price of our common stock.
Our certificate of incorporation and bylaws contain provisions that could depress the trading price of our common stock by acting
to discourage, delay or prevent a change in control of our company or changes in our management that our stockholders may
consider advantageous. These provisions:
•   provide that directors may only be removed for cause;
•   authorize the issuance of blank check preferred stock that our board of directors could issue to increase the number of
    outstanding shares and to discourage a takeover attempt;
•   eliminate the ability of our stockholders to call special meetings of stockholders;
•   prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting
    of stockholders;
•   provide that the board of directors is expressly authorized to make, alter or repeal our bylaws; and
•   establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can
    be acted upon by stockholders at stockholder meetings.
Section 203 of the Delaware General Corporation Law may discourage, delay or prevent a change in control of us by prohibiting
stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us.
Any provision of our certificate of incorporation, our bylaws or Delaware law that has the effect of discouraging, delaying or
preventing a change in control of us could limit the opportunity for our stockholders to receive a premium for their shares of our
common stock and could also affect the price that some investors are willing to pay for our common stock.
We do not expect to pay dividends for the foreseeable future.
We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends for the
foreseeable future. We expect to retain all of our future earnings for use in the development of our business and for general
corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors. In addition,
our existing credit agreement precludes us from paying cash dividends. Consequently, investors may need to rely on sales of their
common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Investors seeking cash dividends should not purchase our common stock.

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                                 Special note regarding
                      forward-looking statements and industry data
This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on
information currently available to us. These forward-looking statements are contained principally in the sections titled “Prospectus
summary,” “Risk factors,” “Management’s discussion and analysis of financial condition and results of operations,” “Business” and
“Executive compensation.” Forward-looking statements include information concerning our possible or assumed future results of
operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities and the
effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms
such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,”
“should,” “will,” “would” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from any future results, performance or achievements expressed or
implied by the forward-looking statements. We discuss these risks in greater detail in “Risk factors” and elsewhere in this
prospectus. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also,
forward-looking statements represent our management’s beliefs and assumptions only as of the date of this prospectus. You
should read this prospectus and the documents that we have filed as exhibits to the registration statement, of which this
prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we
expect.
Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual
results could differ materially from those anticipated in these forward-looking statements, even if new information becomes
available in the future.
This prospectus also contains estimates and other information concerning our industry, including market size and growth rates,
which we obtained from industry publications, surveys and forecasts, including those generated by IDC. This information involves
a number of assumptions and limitations and you are cautioned not to give undue weight to these estimates. Although we believe
the information in these industry publications, surveys and forecasts is reliable, we have not independently verified the accuracy or
completeness of the information. The industry in which we operate is subject to a high degree of uncertainty and risk due to
variety of factors, including those described in the section titled “Risk factors.”

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                                                    Use of proceeds
We estimate that our net proceeds from the sale of the common stock that we are offering will be approximately $              million,
assuming an initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page
of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses that
we must pay. If the underwriters’ option to purchase additional shares from us in this offering is exercised in full, we estimate that
our net proceeds will be approximately $         million after deducting estimated underwriting discounts and commissions and
estimated offering expenses that we must pay. A $1.00 increase (decrease) in the assumed initial public offering price of
$          per share would increase (decrease) our expected net proceeds by approximately $              million, assuming the
number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting
estimated underwriting discounts and commissions and estimated offering expenses that we must pay. We will not receive any
proceeds from the sale of shares of our common stock by the selling stockholders.
We intend to use the net proceeds to us from this offering for working capital and other general corporate purposes including
research and development and the expansion of our product lines to penetrate new market segments where voice and audio
quality impacts the user experience. We may also use part of the net proceeds to develop technology partnerships and to acquire
other businesses, products or technologies. However, we do not have any agreements or commitments for any specific
acquisition at this time. Our management will have broad discretion to use the net proceeds from this offering.
Pending use of net proceeds to us from this offering, we intend to invest the net proceeds in investment grade, interest-bearing
securities.


                                                     Dividend policy
We have never declared or paid cash dividends on our common or preferred stock. We currently intend to retain all available
funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends in the
foreseeable future. In addition, our existing credit agreement precludes us from paying cash dividends. Any future determination to
declare cash dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of
operations, capital requirements, general business conditions and other factors that our board of directors may consider relevant.

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                                                                       Capitalization
The following table sets forth our capitalization as of March 31, 2012 as follows:
•     on an actual basis;
•     on a pro forma basis after giving effect to the automatic conversion of all outstanding shares of preferred stock and the
      reclassification of the convertible preferred stock warrant liability to additional paid-in capital as if such conversion and
      reclassification had occurred on March 31, 2012; and
•     on a pro forma as adjusted basis reflecting (i) the conversion of all outstanding shares of preferred stock into common stock
      upon the closing of this offering; (ii) the reclassification of the convertible preferred stock warrant liability to additional paid-in
      capital; (iii) the receipt of the estimated net proceeds from the sale of            million shares of common stock offered by us in
      this offering at an assumed initial public offering price of $         , which is the midpoint of the price range set forth on the
      cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering
      expenses that we must pay; and (iv) the filing of our restated certificate of incorporation immediately prior to the closing of this
      offering.
You should read this table in conjunction with the sections of this prospectus titled “Selected consolidated financial data” and
“Management’s discussion and analysis of financial condition and results of operations” and with our financial statements and
related notes.

                                                                                                                    As of March 31, 2012
                                                                                                                                                         Pro forma as
                                                                                                   Actual                 Pro forma                       adjusted(1)
                                                                                                      (unaudited, in thousands, except share
                                                                                                               and per share data)
Total debt and capital lease obligations                                                                69                 69
Preferred stock warrant liability                                                                    1,304                 —                                           —
Convertible preferred stock, $0.001 par value: 400,424,913
  authorized and 13,205,180 shares issued and outstanding
  actual; no shares authorized, issued or outstanding, pro
  forma and pro forma as adjusted                                                                  74,348                             —                                —
Stockholders’ equity (deficit):
  Preferred stock, $0.001 par value: no shares authorized,
     issued or outstanding, actual; 50,000,000 shares
     authorized, no shares issued or outstanding, pro forma and
     pro forma as adjusted                                                                                —                           —                                —
  Common stock, $0.001 par value: 600,000,000 shares
     authorized, 1,139,880 shares issued and outstanding
     actual; 600,000,000 shares authorized, 14,345,060 shares
     issued and outstanding pro forma; 500,000,000 shares
     authorized,          shares issued and outstanding pro
     forma as adjusted                                                                                  1                           14
  Additional paid-in capital                                                                        4,582                       80,221
  Accumulated other comprehensive loss                                                                (83 )                        (83 )
  Accumulated deficit                                                                             (37,978 )                    (37,978 )
       Total stockholders’ equity (deficit)                                                       (33,478 )                     42,174

         Total capitalization                                                                 $    42,243                $      42,243               $

(1)    A $1.00 increase (decrease) in the assumed initial public offering price of $          per share of our common stock in this offering would increase (decrease) each of
       cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by $    , assuming the number of shares offered by
       us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering
       expenses that we must pay.

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If the underwriters’ option to purchase additional shares from us in the offering were exercised in full, pro forma as adjusted cash
and cash equivalents, common stock and additional paid-in capital, total stockholders’ equity (deficit) and total capitalization as of
March 31, 2012 would be $            ,$        ,$       ,$          and $         , respectively.
This table excludes the following shares:
•   4,584,897 shares of common stock issuable upon exercise of options outstanding as of March 31, 2012 at a weighted average
    exercise price of $4.96 per share;
•   1,043,985 shares of common stock reserved for future issuance under our 2011 Plan as of March 31, 2012;
•   451,764 shares of common stock reserved for future issuance under our 2011 ESPP which will become effective on the
    effective date of the registration statement of which this prospectus is a part; and
•   111,602 shares of common stock issuable upon the exercise of outstanding warrants as of March 31, 2012, at a weighted
    average exercise price of $3.63 per share.
See the section titled “Executive compensation—Employee benefit plans” for a description of our Stock Plans.

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                                                             Dilution
If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial
public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our
common stock immediately after this offering. Our pro forma net tangible book value as of March 31, 2012 was $39.5 million, or
$2.75 per share. Our pro forma net tangible book value per share represents the amount of our total tangible assets reduced by
the amount of our total liabilities and divided by 14,345,060 shares of common stock outstanding as of March 31, 2012 after giving
effect to the automatic conversion of all outstanding shares of preferred stock into shares of common stock upon the closing of
this offering.
Net tangible book value dilution per share to new investors represents the difference between the amount per share paid by
purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of common stock
immediately after completion of this offering. After giving effect to our sale of         shares of common stock in this offering at
an assumed initial public offering price of $          per share, which is the midpoint of the price range set forth on the cover page
of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses that
we must pay, our pro forma as adjusted net tangible book value as of March 31, 2012 would have been $                  million, or
$          per share. This represents an immediate increase in pro forma net tangible book value of $             per share attributable
to existing stockholders and an immediate dilution in pro forma net tangible book value of $             per share to new investors
purchasing shares in this offering, as illustrated in the following table:


Assumed initial public offering price per share                                          $                         $
Pro forma net tangible book value per share as of March 31, 2012                                       2.75
Increase in pro forma net tangible book value per share attributable to new
  investors
Pro forma as adjusted net tangible book value per share after the offering
Dilution of pro forma net tangible book value per share to new investors                                           $


If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value per share after the
offering would be $         per share, the increase in pro forma as adjusted net tangible book value per share to existing
stockholders would be $            per share and the dilution of pro forma as adjusted net tangible book value per share to new
investors purchasing shares in this offering would be $             per share.
Each $1.00 increase (decrease) in the assumed initial public offering price of $         per share would increase (decrease) our
pro forma as adjusted net tangible book value by $           million, or $       per share, the increase in pro forma as adjusted
net tangible book value attributable to existing stockholders by $         per share and the dilution in pro forma as adjusted net
tangible book value per share to new investors purchasing shares in this offering by $           per share, assuming that the
number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting
estimated underwriting discounts, commissions and estimated offering expenses that we must pay.

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The following table presents on a pro forma as adjusted basis as of March 31, 2012, the differences between the existing
stockholders and the new investors purchasing shares in this offering with respect to the number of shares purchased from us, the
total consideration paid and the average price paid per share:

                                                                                                                           Average
                                                                                                                           price per
                            Shares purchased                             Total consideration                                   share
                          Numbe
                              r          Percent                         Amount                   Percent
                                               (in thousands, except per share data and percentages)
Existing investors                                     % $                                        %             $
New investors
    Total                                               %    $                                              %

If the underwriters exercise their over-allotment option in full, the number of shares held by new investors will increase
to          shares, or    % of the total number of shares of our common stock outstanding after this offering.
These tables exclude the following shares:
•   4,584,897 shares of common stock issuable upon exercise of options outstanding as of March 31, 2012 at a weighted average
    exercise price of $4.96 per share;
•   1,043,985 shares of common stock reserved for future issuance under our 2011 Plan as of March 31, 2012;
•   451,764 shares of common stock reserved for future issuance under our 2011 ESPP which will become effective on the
    effective date of the registration statement of which this prospectus is a part; and
•   111,602 shares of common stock issuable upon the exercise of outstanding warrants as of March 31, 2012, at a weighted
    average exercise price of $3.63 per share.
See the section titled “Executive compensation—Employee benefit plans” for a description of our Stock Plans.
To the extent any of our outstanding options or warrants are exercised, there will be further dilution to investors participating in this
offering. If all of our outstanding options and warrants had been exercised, the pro forma net tangible book value as of March 31,
2012 would have been $62.7 million, or $3.29 per share, and the pro forma as adjusted net tangible book value after this offering
would have been $              million, or $      per share, causing dilution to new investors of $          per share.
Sales by the selling stockholders in this offering will cause the number of shares held by existing investors to be reduced
to         shares or      % of the total number of shares of our common stock outstanding after this offering. If the underwriters
exercise their option to purchase additional shares from us in full, the number of shares held by the existing investors after this
offering would be reduced to      % of the total number of shares of our common stock outstanding after this offering.

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                                Selected consolidated financial data
We derived our selected consolidated statements of operations data for 2009, 2010 and 2011 and our consolidated balance sheet
data as of December 31, 2010 and 2011 from our audited consolidated financial statements and related notes included elsewhere
in this prospectus. We derived our selected consolidated statements of operations data for 2007 and 2008 and our balance sheet
data as of December 31, 2007, 2008 and 2009 from our audited consolidated financial statements and related notes that are not
included in this prospectus. We derived our selected consolidated statements of operations data for the three months ended
March 31, 2011 and 2012 and our selected consolidated balance sheet data as of March 31, 2012 from our unaudited
consolidated financial statements and related notes included elsewhere in this prospectus. Our unaudited consolidated financial
statements were prepared on the same basis as our audited consolidated financial statements and include, in our opinion, all
adjustments, which include only nonrecurring adjustments, that we consider necessary for the fair statement of the financial
information set forth in those statements. Historical results are not necessarily indicative of future results.

                                                                                                                   Three months
                                                      Year ended December 31,                                     ended March 31,
                                      2007            2008         2009       2010                  2011           2011        2012

                                                                                                                    (unaudited)
                                                        (in thousands, except share and per share data)
Consolidated statements of
 operations data:
Revenue:
 Hardware                       $        —      $     2,454     $     5,749     $ 47,920       $   97,668     $ 28,540       $ 19,409
 Licensing                               —               —               —            —                —            —          11,699

 Total revenue                           —            2,454           5,749         47,920         97,668         28,540         31,108
Cost of revenue(1)                       —            1,729           5,355         19,314         45,707         10,414         13,419

 Gross profit                            —              725             394         28,606         51,961         18,126         17,689
Operating expenses:
 Research and                         6,842           9,147           8,969         11,445         21,578          5,034
   development(1)                                                                                                                 5,668
 Selling, general and                 4,205           6,651           8,058         12,217         21,237          3,969
   administrative(1)                                                                                                              7,524

  Total operating expenses          11,047          15,798          17,027          23,662         42,815          9,003         13,192

Income (loss) from operations       (11,047 )       (15,073 )       (16,633 )        4,944          9,146          9,123          4,497
Interest income (expense),
   net                                  404             218              11            (17 )           (8 )           (3 )            3
Other income (expense), net             (34 )           367            (136 )         (139 )         (843 )         (337 )         (331 )

Net income (loss)               $ (10,677 )     $ (14,488 )     $ (16,758 )     $    4,788     $    8,295     $    8,783     $    4,169

Net income (loss) per share
 attributable to common
 stockholders(2):
 Basic                          $    (24.04 )   $    (31.19 )   $    (32.46 )   $       —      $     0.16     $     0.52     $     0.19
 Diluted                        $    (24.04 )   $    (31.19 )   $    (32.46 )   $       —      $     0.14     $     0.46     $     0.16

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                                                                                                                                                         Three months
                                                                Year ended December 31,                                                                 ended March 31,
                                        2007                   2008              2009                           2010                   2011              2011                2012

                                                                                                                                                          (unaudited)
                                                                         (in thousands, except share and per share data)
Weighted average shares
  used in computing net
  income (loss) per share
  attributable to common
  stockholders(2):
  Basic                               444,145             464,532                     516,299                 619,640               947,921          871,379             1,079,810
  Diluted                             444,145             464,532                     516,299                 619,640             3,384,375        2,466,105             3,831,811
Pro forma net income per
  share attributable to
  common stockholders
  (unaudited)(2):
  Basic                                                                                                                   $            0.64                                 $0.30
  Diluted                                                                                                                 $            0.55                                 $0.25
Weighted average shares
  used in computing pro
  forma net income per
  share attributable to
  common stockholders
  (unaudited)(2):
  Basic                                                                                                                       14,153,101                             14,284,990
  Diluted                                                                                                                     16,658,283                             17,119,233

                                                                                                                                                                 March 31,
                                                                           December 31,                                                                              2012
                                 2007                     2008                    2009                             2010                         2011
                                                                                                                                                               (unaudited)
                                                                                        (in thousands)
Consolidated
  balance sheet
  data:
Cash and cash
  equivalents        $   3,393                  $         4,383            $             6,446         $         12,095            $          15,983        $            18,706
Working capital          6,161                            5,363                          4,468                   25,073                       34,696                     39,124
Total assets             7,352                            8,292                          9,934                   36,741                       49,865                     55,326
Total debt and
  capital lease
  obligations               —                                   —                            377                        240                       103                         69
Convertible
  preferred stock
  warrant liability        551                              169                            227                      315                        1,137                      1,304
Total liabilities        1,277                            1,698                          4,736                   10,758                       13,962                     14,456
Convertible
  preferred stock       29,578                          44,280                         59,241                    74,348                       74,348                     74,348
Common stock and
  additional paid-in
  capital                  478                                 786                       1,128                    2,049                         3,733                     4,583
Total stockholders’
  equity (deficit)   $ (23,503 )                $       (37,686 )          $          (54,043 )        $        (48,365 )          $          (38,445 )     $         (33,478 )

(1)   Includes stock-based compensation expense as follows:

                                                                                                                                                           Three months
                                                                                    Year ended December 31,                                               ended March 31,
                                                        2007                   2008              2009             2010                   2011              2011              2012

                                                                                                                                                           (unaudited)
                                                                                                       (in thousands)
Cost of revenue                                     $    —           $           8       $          18      $     62          $           90       $        24       $         25
Research and development                                 33                     97                 132           227                     416                81                142
Selling, general and administrative                      44                     93                 133           258                     884                90                370
  Total stock-based compensation expense            $      77       $      198       $       283       $      547       $       1,390       $       195       $      537


(2)   See Note 6 to our consolidated financial statements for an explanation of how we arrived at our basic and diluted net income (loss) per share attributable to common
      stockholders and pro forma net income per share.

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                        Management’s discussion and analysis of
                      financial condition and results of operations
The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with
the consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed
below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those
discussed in the sections titled “Risk factors” and “Special note regarding forward-looking statements and industry data” included
elsewhere in this prospectus.

Overview
We are the leading provider of intelligent voice and audio solutions that improve voice quality and the user experience in mobile
devices. We collaborate with leading auditory neuroscientists to understand the human auditory system and have developed
purpose-built processors that combine science and technology to function like human hearing. Our low power,
hardware-accelerated DSPs and associated algorithms substantially improve sound quality and suppress noise in mobile devices.
As the primary driver of the mobile device market, the mobile phone continues to play an increasingly prominent role in peoples’
lives. Voice communication is a primary function of mobile phones, and we expect voice to increasingly complement touch as a
core user interface, heightening the importance of voice and audio quality in mobile devices.
Our total revenue was $5.7 million, $47.9 million, $97.7 million and $31.1 million for 2009, 2010, 2011 and the three months ended
March 31, 2012, respectively. Our net income (loss) was $(16.8) million, $4.8 million, $8.3 million and $4.2 million for 2009, 2010,
2011 and the three months ended March 31, 2012, respectively.
We work with OEMs to have our voice and audio processors designed into their products, which we refer to as design wins. Once
our voice and audio processor is designed into a mobile device, we generally sell our processors to CMs retained by OEMs on a
purchase order basis, and the CMs incorporate them into the mobile devices that they build for the OEMs. We sell a limited
portion of our products indirectly to OEMs through distributors. For a single OEM, we also license processor IP, which that OEM
has integrated into certain of its mobile phones. In the three months ended March 31, 2012, we began to recognize royalty
revenue for the use of our processor IP in mobile phones of a single OEM. Our OEMs’ products are complex and require
significant time to design, launch and ramp to volume production. As a result, our sales cycle is lengthy. We typically commence
commercial shipments of our products nine months to one year following a design win. Because the sales cycle for our products is
long, we incur expenses to develop and sell our products, regardless of whether we achieve a design win and well in advance of
generating revenue, if any. In addition, achieving a design win from an OEM does not ensure that the OEM will begin producing
the related product in a timely manner, if at all, or that the design win will ultimately generate additional revenue for us.
Historically, our revenue has been significantly concentrated in a small number of OEMs, CMs and distributors and we expect that
concentration to continue for the foreseeable future. Foxconn, one of Apple’s CMs, accounted for 81%, 65% and 18% of our total
revenue in 2010 and 2011 and the three months ended March 31, 2012, respectively. In the three months ended March 31, 2012,
our largest OEM accounted for 38% of our total revenue. In 2010, 2011 and the three months ended March 31, 2012, our largest
OEM and its CMs, Foxconn and Protek, collectively accounted for 82%, 75% and 62% of our total revenue, respectively.
Samsung accounted for 7%, 20% and 36% of our total revenue in 2010, 2011 and the three months ended March 31, 2012,
respectively. HTC accounted for 36% of our total revenue in 2009 and LG accounted for 18% and 45% of our total revenue in
2008 and 2009, respectively. Sales through Uniquest Corporation (Uniquest), a

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distributor for Samsung, accounted for 15% of our total revenue in 2009. Pantech accounted for 20% of our total revenue in 2008.
Sales through Midoriya Electric Co., Ltd. (Midoriya), a distributor for Sharp, accounted for 60% of our total revenue in 2008. No
other OEM, CM or distributor accounted for 10% or more of our total revenue in 2009, 2010, 2011 or the three months ended
March 31, 2012.
Headquartered in Mountain View, California, we were incorporated in California in July 2000 and reincorporated in Delaware in
June 2011. As of March 31, 2012, we had 206 employees. We began shipping our first generation of voice processors in 2008,
our second generation of earSmart voice and audio processors in 2011 and as of March 31, 2012, had sold over 160 million
processors worldwide. Since our inception, we have invested significantly in our product development. We have also invested in
protecting our intellectual property and, as of March 31, 2012, had seven patents issued and 87 pending patent applications in the
United States and 37 pending foreign patent applications. Each of the foreign patent applications is related to a U.S. patent or a
pending U.S. patent application. We have expanded our sales and marketing organizations to support the growth of our business
with our OEMs, which include Apple, HTC, LG, Pantech, Samsung, Sharp and Sony. We use a contract foundry, TSMC, to
manufacture our voice and audio processors, as well as third parties, such as Signetics, for assembly, packaging and test, and
other contractors for logistics.

Our arrangement with one of our OEMs
On August 6, 2008, we entered into an agreement with Apple. Pursuant to the terms of the agreement with this OEM, we develop,
supply and support our custom voice and audio processors for use in certain mobile devices which this OEM purchases from
Foxconn and Protek; however, we cannot assure you that Foxconn and Protek will continue to purchase our processors in similar
volumes, or at all. To date, Foxconn and Protek have purchased a custom version of our voice processor that Foxconn and Protek
have incorporated into multiple mobile phone models for this OEM and this OEM has licensed our processor IP that it has
integrated into certain of its mobile phones. Pursuant to our agreement, this OEM will pay us a royalty, on a quarterly basis, for the
use of our processor IP in mobile phones in which it is integrated. In the three months ended March 31, 2012, we began to
recognize royalty revenue for the use of our processor IP in certain of its mobile phones. We have granted a similar license to this
OEM for a new generation of our processor IP; however, this OEM is not obligated to incorporate our processor IP into any of its
current or future mobile devices. For the new generation of our processor IP that we have agreed to license to this OEM, the
royalty is subject to a lifetime maximum, after which we would not receive royalties for shipments of devices into which that
processor IP is integrated. We expect that we will continue to provide our processors on a stand-alone basis to Foxconn and
Protek to incorporate into the mobile phones in which they are currently designed; however, Foxconn, Protek and this OEM are
not obligated to continue to do so and, even if they do, we cannot predict when these mobile phones may reach the end of their
product lifecycles. In comparison to a business model with OEMs that purchase our processors on a stand-alone basis to
incorporate into their mobile devices, the licensing of our processor IP represents a multiyear process, and we may not receive
royalties for several years, if at all, after we agree to license our processor IP.
Under our current license agreement, royalties from our processor IP that we license are based upon the number of mobile
phones shipped that integrate our technology. We recognize royalty revenue based on mobile phone sales when and as reported
to us. The amount of revenue we recognize is determined by the agreed upon royalty rate, multiplied by the number of mobile
phones sold in which our processor IP is integrated. Our royalty revenue lags the sales of the products that integrate our
processor IP by one quarter.

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The licensing of our processor IP does not require the manufacture, assembly, packaging, test or shipment of integrated circuits
by us. Our royalty rate per licensed unit will be lower than our average selling price for our processors. Although we expect our
royalty revenue to increase as we transition to a partial licensing model with a single OEM, we expect our revenue from the sale of
processors to this OEM and its CMs to decrease substantially in the long term, as the mix of revenue shifts from stand-alone
processor sales to royalties. We also expect that our total revenue from this OEM and its CMs may also decrease as a result of
lower royalty revenue per mobile device under the licensing model. Our total revenue may decline if sales to other OEMs do not
increase sufficiently to offset the decline. As the cost of revenue associated with the licensing of our processor IP is substantially
lower than our cost of revenue for processors, we expect our gross margin on our royalty revenue to be higher than our gross
margin on our processor revenue.
Business factors affecting our performance
Creation of voice and audio improvement as a new category for users. Our success will depend, in part, on increasing market
awareness among OEMs, MNOs, operating system companies and applications vendors of the importance of voice and audio
quality on the user experience. User demand for new levels of voice and audio quality will depend on our ability to provide
solutions that continue to improve the user experience and our ability to convey the impact of our solutions on the mobile device
ecosystem.
Design wins . We closely monitor design wins by OEM and product type because we consider design wins to be critical to our
future success. The revenue that we generate from each design win can vary significantly and in some cases, our OEMs may
cancel projects for which we have been awarded a design win. Our long-term sales expectations are based on forecasts from
OEMs and internal estimations of demand factoring in the expected time to market for final mobile devices incorporating our
solutions and associated revenue potential. Our ability to implement our product roadmap and introduce new products will
facilitate the adoption of our solutions into future generations of mobile devices.
We estimate the life cycle of our OEMs’ mobile devices on the basis of our history with the OEM, the type of mobile device and
discussions with our OEMs. A given design win for our processors or processor IP can generate a wide range of sales volumes for
our voice and audio processors, depending on the market demand for our OEMs’ mobile devices. The market demand for our
OEMs’ mobile devices, in turn, can depend a number of factors, including the reputation of the OEM, the geographic markets in
which the OEM intends to introduce the mobile devices and whether the MNOs on whose networks the mobile devices are
designed to operate provide marketing and subsidies for the mobile devices.
Revenue driven by significant customers . Historically, our revenue has been significantly concentrated in a small number of
OEMs, CMs and distributors. During 2011, sales to Foxconn, Protek and Samsung accounted for 65%, 10% and 20% of our total
revenue, respectively. No other OEM, CM or distributor accounted for 10% or more of our total revenue in 2011. During the three
months ended March 31, 2012, sales to our largest OEM, Foxconn, Protek and Samsung accounted for 38%, 18%, 6% and 36%
of our total revenue, respectively. No other OEM, CM or distributor accounted for 10% or more of our total revenue in the three
months ended March 31, 2012.
While we strive to expand and diversify our OEM base and we expect our customer concentration to decline over time, we
anticipate that sales to a limited number of OEMs will continue to account for a significant percentage of our total revenue for the
foreseeable future. Our customer concentration may

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cause our financial performance to fluctuate significantly from period to period based on the device release cycles and seasonal
sales patterns of these OEMs and the success of their products. The loss of or any significant decline in total revenue from any of
these OEMs may have an adverse effect on our financial condition and results of operations.
Pricing and gross margins of our products . Our gross margin has been and will continue to be affected by a variety of factors,
including the timing of changes in pricing, shipment volumes, new product introductions, changes in OEM concentration and
product mixes, changes in our purchase price of fabricated wafers and assembly and test service costs and inventory write
downs, if any. In general, products with higher performance and a higher number of features tend to be priced higher and have
higher gross margins. As we transition to a partial licensing model with Apple, we expect our gross margin to increase but we also
expect it to fluctuate over time, in part from the impact of competitive pricing pressure. Erosion of average selling prices as
products mature is typical in the semiconductor industry. Consistent with this historical trend, we expect that the average selling
prices of our products will decline as they mature. As a normal course of business, we will seek to offset the effect of declining
average selling prices on existing products by reducing manufacturing costs and introducing new and higher value-added
products. If we are unable to maintain overall average selling prices, our gross margin will decline.
Relationships with MNOs. MNOs determine product specifications for OEM products, thereby influencing the design and
components selected by OEMs, which specifications have generated demand for our products. We have invested and continue to
invest significant resources in working with MNOs to increase awareness of the potential and benefits of our processors. We
intend to continue our work with MNOs to educate them about the impact of sound quality on the user experience. MNOs may not
continue to value the improvements in sound quality that our products can provide and may not require their OEMs to meet certain
sound quality specifications.
General economic conditions and geographic concentration . A global economic slowdown or financial crisis, similar to the one
that occurred beginning in late 2008, would likely have a significant impact on the mobile device industry and our financial results.
As the economy slows, consumer confidence may decline and, because our products serve the mobile device market, any decline
in purchases by consumers of new mobile devices would adversely affect our revenue. Moreover, because our sales have been
concentrated in a few selected markets, including China, Taiwan and Korea, our financial results will be impacted by general
economic and political conditions in these markets.

Components of our results of operations
Revenue
To date, we have generated hardware revenue from sales of our voice and audio processors and we expect the sale of our
processors to continue to represent the substantial majority of our revenue. We sell processors through three separate channels.
First, we ship a significant portion of our products to the inventory hubs of CMs and recognize the related revenue as the CMs
notify us in writing that they have drawn our products from the hub, at which point delivery and transfer of title and risk of
ownership has occurred. Our sales to Foxconn are an example of this type of arrangement. Second, for certain OEMs, we ship
our voice and audio processors directly and recognize revenue at the time of delivery and title transfer. Our shipping terms are
typically FOB (INCOTERMS 2000) shipping point. Third, we ship a small portion of our products to our distributors under our
shipping terms, which are typically FOB shipping point. These distributors tend to buy from us at the request of specific OEMs,
and we

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recognize revenue on sales to distributors when the distributor notifies us in writing of the final resale of our products.
We anticipate that in the future as significant OEMs prepare worldwide launches of their products, we may see substantial
increases in revenue shortly before the launch. We also anticipate that for some period before the OEM begins building new
inventory for the new mobile device or following the launch, we may see reductions in revenue related to our products
incorporated in prior generations of devices, as the OEMs reduce their inventories of those products.
We may enter into license agreements two years or more before we begin to receive royalty revenue on shipments of the mobile
devices incorporating our processor IP. Under a license agreement we entered into in 2008, we began to recognize royalty
revenue in the three months ended March 31, 2012. As part of our 2008 license, we are entitled to receive a royalty for each
mobile device that is sold incorporating and, for mobile devices other than mobile phones, enabling our processor IP. We entered
into an additional license agreement in 2010 relating to a new generation of our processor IP. We do not expect to offer this
arrangement to other OEMs and expect a single OEM to be the sole source of our royalty revenue for the foreseeable future.
We recognize royalty revenue on the basis of the number of mobile phones sold that incorporate our processor IP. We are reliant
on the accuracy of shipment reports, which we receive not later than 45 days after the OEM’s fiscal quarter end, in order to
calculate our royalty revenue. Our royalty revenue will lag the sales of mobile phones that integrate our processor IP by one
quarter. We have limited rights to audit the shipment data we receive, which limits our ability to verify calculated royalty revenue or
seek redress for reports we believe are not accurate and we have no experience in testing and evaluating the accuracy of the data
we will receive. Although mobile phones integrating our processor IP commenced shipping in the three months ended
December 31, 2011, we did not recognize royalty revenue related to those mobile devices until the three months ended March 31,
2012. While we expect our royalty revenue to increase as we transition from selling our stand-alone processors to its CMs to
licensing our processor IP to a single OEM, we also expect our hardware revenue from its CMs to decrease substantially in the
long term. We expect that our total revenue from this OEM and its CMs will also decrease as a result of lower royalty revenue per
mobile phone under the licensing model.
We maintain sales operations, which include our direct sales force, third-party sales representatives and distributors, in Asia,
North America, Japan and Europe. Substantially all of our revenue has been generated by sales to CMs and OEMs that
manufacture their products in Asia and we expect sales to such CMs and OEMs in Asia to contribute a majority of our revenue in
the foreseeable future. Because our OEMs market and sell their products worldwide, our revenue by geographic location is not
necessarily indicative of where mobile device sales occur, but rather of where their manufacturing operations occur. Since our
inception, our sales in Asia have represented substantially all of our total revenue. As we continue to recognize royalty revenue,
we anticipate that the geographic distribution of our revenue will change as our royalty revenue will be attributed to the location of
the licensor’s headquarters rather than the location of its CMs’ manufacturing operations.
Cost of revenue and gross margin
The largest components of our cost of revenue are costs of materials and outsourced manufacturing costs for the fabrication,
assembly, packaging and test of our voice and audio processors. To a lesser extent, cost of revenue also includes expenses
relating to cost of personnel, stock-based compensation, logistics and quality assurance, royalty expense, shipping, provisions for
excess and

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obsolete inventories, if any, and an allocation of overhead. We intend to continue to manage our cost of revenue through both cost
improvements and economies of scale.
We expect our gross margins to fluctuate over time depending on the mix of newer, higher margin products and older products,
whose margins have declined over time, as well as the mix between sales of processors and license of processor IP. In general,
new products with higher performance and more features tend to be priced higher and have higher gross margins. Consistent with
trends in the semiconductor industry, we have reduced the price of certain of our products over time and may continue to do so in
the future. As a normal course of business, we seek to offset the effect of declining average selling prices by reducing
manufacturing costs of existing products and introducing new and higher value-added products. The license of our processor IP
does not require the manufacture, assembly, packaging, test or shipment of integrated circuits, resulting in higher gross margins
than for the sale of stand-alone processors.
Operating expenses
We classify our operating expenses as either research and development or selling, general and administrative. Personnel-related
costs, including salaries, benefits, bonuses and stock-based compensation, are the most significant component of each of our
operating expense categories. In the near term, we expect to hire a significant number of additional employees in order to support
our anticipated growth. In any particular period, the timing of additional hires could materially affect our operating expenses.
Research and development . Our research and development expenses consist primarily of personnel-related costs for the
design and development of our products and technologies. Additional research and development expenses include nonrecurring
engineering expenses, product prototypes, external test and characterization expenses, depreciation, amortization of design tool
software licenses and allocated overhead expenses. We also outsource portions of our research and development activities. We
record all research and development expenses as incurred, except for capital equipment, which we depreciate over its estimated
useful life. We have engineering development teams in the United States and outsourced engineering teams in the United States
and India. In 2012, we may open our own design center outside of the United States and reduce the extent to which we rely on
outsourced research and development teams. We expect research and development expenses to increase in absolute dollars for
the foreseeable future as we continue to improve our product features and increase our portfolio of solutions. From time to time,
one of our OEMs retains us to provide nonrecurring engineering services, which enhances our proprietary technology. This OEM
reimburses us at contractually predetermined rates for the costs we incur to provide these services. We apply these cost
reimbursements against research and development expense when acceptance occurs, which is generally upon cash receipt.
Selling, general and administrative . Selling, general and administrative expenses consist primarily of personnel-related costs for
our sales, business development, marketing, applications engineering, executive, finance and human resources activities.
Additionally, selling, general and administrative expenses include promotional and other marketing expenses, third-party sales
representative commissions, travel, professional fees, depreciation and allocated overhead expenses. Professional fees
principally consist of legal, audit, tax and accounting consultation services. We expect selling, general and administrative
expenses to increase in absolute dollars for the foreseeable future as we hire additional personnel, make improvements to our
infrastructure and incur significant additional costs for the compliance requirements of operating as a public company, including
the costs associated with public reporting, Sarbanes-Oxley Act requirements and insurance.

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Other income (expense), net
We classify our outstanding convertible preferred stock warrants as a liability on our balance sheet and record changes in their fair
value from period to period in other income (expense), net. This remeasurement may terminate if our convertible preferred stock
converts to common stock in connection with the closing of the offering contemplated by this prospectus.
Although a majority of our sales are outside of the United States, we incur a substantial majority of our expenses and receive all of
our revenue in U.S. dollars. As a result, our foreign currency related expense and income has not been material to date.
Income taxes
To date, we have not paid or incurred material income taxes due to our NOLs and tax credits in the United States, for which we
have a full valuation allowance. However, our effective tax rate may fluctuate significantly on a quarterly basis if our ability to
utilize our NOLs and tax credits to offset taxable income in any year are significantly limited due to a change of ownership, or if the
full valuation allowance against our U.S. deferred tax assets is released, or if there are significant changes in tax laws or
regulations. Our effective tax rate may also fluctuate as we continue to expand our business outside of the United States and align
our legal structure and supply chain to facilitate our expansion and support our commercial needs.
From time to time, we may be subject to income tax audits by the Internal Revenue Service (IRS) and other tax authorities. We
regularly assess the likelihood of adverse outcomes that could result from tax audits to determine the adequacy of our provision
for income taxes. While we believe that we have complied with applicable income tax laws, we cannot assure you that the
governing tax authorities will not have a different interpretation of the tax laws and subsequently assess us with incremental
income taxes.
Backlog
We do not believe that our backlog as of any particular date is meaningful, as our sales are made primarily pursuant to purchase
orders. Only a small portion of our orders is noncancelable, and the dollar amount associated with the noncancelable portion is
not significant.

Critical accounting policies and estimates
Our consolidated financial statements and the related notes included elsewhere in this prospectus are prepared in accordance
with accounting principles generally accepted in the United States (GAAP). In many cases, the accounting treatment of a
particular transaction is specifically dictated by GAAP and does not require our judgment in its application. In other cases, our
judgment is required in selecting among available alternative accounting policies that allow different accounting treatment for
similar transactions. The preparation of our consolidated financial statements also requires us to make estimates and assumptions
that affect the reported amounts of our assets, liabilities, revenue, costs and expenses and related disclosures. We base our
estimates on our historical experience and various other assumptions that we believe are reasonable under the circumstances.
Our actual results could differ significantly from the estimates we make. To the extent that there are differences between our
estimates and our actual results, our future financial statement presentation, financial condition, results of operations and cash
flows would be affected. We believe that the accounting policies discussed below are critical to understanding our historical and
future performance, as these policies relate to the more significant areas involving our judgments and estimates.

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Revenue recognition
We derive hardware revenue from the direct sale of voice and audio processors to CMs and OEMs and indirect sales of
processors to OEMs through distributors. We recognize revenue from sales to CMs and OEMs when persuasive evidence of an
arrangement exists, the selling price is fixed or determinable, product delivery has occurred, which is when the risk and reward of
ownership pass to the customer, and collectability of the resulting receivable is reasonably assured. These criteria are usually met
when our processors are shipped to an OEM under our shipping terms, which are typically FOB shipping point. We also ship a
significant portion of our products to the inventory hubs of CMs and recognize the related revenue as the CMs notify us in writing
that they have drawn our products from the hub, at which point delivery and transfer of title and risk of ownership has occurred.
Although we do not recognize hardware revenue from sales to our distributors upon shipment, the title and the risk of ownership
for the products transfer to the distributor upon shipment as the shipping terms are typically FOB shipping point and the distributor
is obligated to pay for the products at that time. We do not offer distributors, CMs or OEMs return rights, rebates, price protection
or other similar rights. However, in the past, we have occasionally accepted returns from distributors. As a result, we defer
revenue recognition, adjustments to revenue and the related costs of revenue until the distributor notifies us in writing of their
resale of the products. The amounts billed to distributors, adjustments to revenue and the cost of inventory shipped to, but not yet
sold by the distributors, are included on our consolidated balance sheets under “Deferred credits and income.” We take into
account the inventories held by our distributors in determining the appropriate level of provision for excess and obsolete inventory.
We record a provision for estimated sales returns on product sales in the same period we record the related revenue. To date,
returns have not been significant. Our estimates are based on historical returns, analysis of credit memo data and other known
factors. Actual sales returns could differ from these estimates.
We earn royalties on mobile phones integrating our licensed processor IP. We recognize royalty revenue based on mobile phone
shipments reported during the quarter in which we receive the report, assuming that all other revenue recognition criteria are met
at that time because we do not have other evidence to reasonably estimate the amount of royalties due. The amount of revenue
recognized is determined by multiplying the number of mobile phones sold during a particular quarter in which our processor IP is
integrated at the agreed-upon royalty rate.
With respect to a single OEM, we provide rights to integrate certain of our processor IP into its mobile devices. This OEM has
agreed to pay royalties based on its sales of mobile devices integrating and enabling our processor IP. Sales of mobile phones
integrating our licensed processor IP began in the three months ended December 31, 2011 and we began to recognize royalty
revenue in the three months ended March 31, 2012. We earn royalties on mobile phones integrating our licensed processor IP at
the time of sale. We recognize royalty revenue based on mobile phone shipments reported during the quarter in which we receive
the report, assuming that all other revenue recognition criteria are met at that time because we do not have other evidence to
reasonably estimate the amount of royalties due. The amount of revenue recognized is determined by multiplying the number of
mobile phones sold during a particular quarter in which our processor IP is integrated at the agreed-upon royalty rate. We are
reliant on the accuracy of shipment reports from this OEM in order to calculate our royalty revenue.

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Inventory
Our inventory consists primarily of completed wafers, processors being assembled or tested by third parties and finished
processors. We state our inventories at the lower of standard cost, which approximates actual cost determined on the weighted
average basis, or market value. We routinely evaluate quantities and values of inventory in light of current market conditions and
market trends and record provisions for inventories in excess of demand and subject to obsolescence. This evaluation may take
into consideration expected demand, new product development schedules, the effect new products might have on the sale of
existing voice and audio processors, product obsolescence, product merchantability and other factors.
We also regularly review the cost of inventories against their estimated market value and record a provision for inventories that
have a cost in excess of estimated market value in order to carry those inventories at the lower of cost or market value.
The recording of these provisions establishes a new and lower cost basis for each specifically identified inventory item and we do
not restore the cost basis to its original level regardless of any subsequent changes in facts or circumstances. Recoveries are only
recognized upon the sale of previously written-down inventories.
Accounting for income taxes
In accordance with the authoritative guidance for income taxes, we make certain estimates and judgments in determining the
income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits,
benefits and deductions, as well as the interest and penalties relating to these uncertain tax positions. Estimates and judgments
also occur in the recording of deferred tax assets and liabilities, which arise from differences in the timing of recognition of revenue
and expense between tax and financial statement reporting. Significant changes to these estimates may increase or decrease our
provision for income taxes in a subsequent period. Similarly, for tax liabilities denominated in a currency other than the U.S. dollar,
changes in the value of the denominated currency may increase or decrease our tax provision in a subsequent period.
The calculation of our tax liabilities involves the assessment of uncertainties in the application of complex tax regulations. We
recognize liabilities for uncertain tax positions based on a two-step process. In the first step, recognition, we determine whether it
is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the position. The second step addresses measurement of a tax position that
meets the more-likely-than-not criterion. The tax position is measured at the largest amount of benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement. Because we are required to determine the likelihood of various possible
outcomes, these estimates are inherently difficult and subjective. We reevaluate these uncertain tax positions on a quarterly basis.
This reevaluation is based on factors including, but not limited to, changes in facts or circumstances and tax law. A change in
recognition or measurement would result either in the recognition of a tax benefit or in an increase in the tax provision for the
period.
We also assess the likelihood that we will be able to realize our deferred tax assets. If realization is not likely, we increase our
provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate we may not ultimately
realize. We establish valuation allowances when necessary to reduce deferred tax assets where management concludes that it is
more likely than not that the deferred tax assets will not be realized based upon the available evidence. We determined that

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it was more likely than not that our deferred tax assets would not be realized and recorded a full valuation allowance at that time.
Should there be a change in our assessment of our ability to realize our deferred tax assets, our tax provision would decrease in
the period in which we determined that it is more likely than not that the benefit of our deferred tax assets will be realized and the
valuation allowance is released. With our recent earnings and projected future income, we believe it is reasonably possible that
we may release a significant portion of the valuation allowance against our U.S. deferred income tax assets in the next 12 months.
The valuation allowance as of December 31, 2011 was approximately $16.6 million.
Stock-based compensation
We measure stock-based compensation at the grant date based on the fair value of the award using the Black-Scholes option
pricing model. The fair value is recognized as an expense on a straight-line basis over the requisite service period, which is
generally the vesting period. The fair value of our stock-based awards to nonemployees is estimated based on the fair market
value on each vesting date, accounted for under the variable accounting method and is recognized as expense on a straight-line
basis over the requisite service period. In future periods, we expect that our stock-based compensation expense will increase as a
result of our existing unrecognized stock-based compensation still to be recognized and expense related to the issuance of
additional stock-based awards in order to attract and retain employees and consultants.
The following table summarizes the options we granted from October 1, 2010 to March 31, 2012:
                                                                    Fair market value/         Fair value per share             Aggregate grant
                          Number of shares                              exercise price                   of options                    date fair
Date of grant             subject to options                                per share                    granted(1)                    value(1)

                                                                                                                          (in thousands)
11/04/2010                          117,061        $                              3.30     $                   1.41   $                      165
12/07/2010                          189,495                                       3.30                         1.45                          275
03/03/2011                          296,483                                       5.10                         2.14                          634
05/24/2011                           58,220                                       9.30                         3.99                          232
06/29/2011                           11,635                                       9.30                         3.99                           46
10/31/2011                          553,296                                      11.70                         4.71                        2,608
11/02/2011                           53,323                                      11.70                         4.69                          250
12/09/2011                          237,668                                      11.70                         4.69                        1,115
01/25/2012                          276,647                                      13.80                         5.26                        1,456
03/07/2012                           37,190                                      13.80                         5.26                          196


(1)   Grant date fair value was determined using the Black-Scholes option pricing model.

Determining the fair value of stock-based awards at the grant date requires the input of various assumptions, including the fair
value of the underlying common stock, expected future share price volatility, expected term, risk-free interest rate and dividend
rate. The assumptions used in calculating the fair value of stock-based awards represent our best estimates, but these estimates
involve inherent uncertainties and the application of management’s judgment. If factors change and we use different assumptions,
our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the
expected forfeiture rate for options we grant and only recognize expense for those shares that we expect to vest. We estimate the
forfeiture rate based upon the historical experience of our stock-based awards that are cancelled. If the actual forfeiture rate is
materially different from our estimate, our stock-based compensation expense could be significantly different from what was
recorded in prior periods.

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The Black-Scholes model requires the use of highly subjective and complex assumptions which determine the fair value of
stock-based awards. We estimate the fair value of each option award on the date of grant and estimate expected volatility based
on the historical volatility of a guideline group of publicly traded companies. The expected term of options is based upon the
simplified method for estimating expected term and the risk-free rate for the expected term of the option is based on the U.S.
Treasury Constant Maturity rate. The assumptions used to value options granted in 2010, 2011 and the three months ended
March 31, 2011 and 2012 were as follows:
                                                                                                               Three months
                                                          Year ended December 31,                            ended March 31,
                                                             2010                 2011                      2011            2012
Expected term (years)                                          6.25                     6.25                6.25                6.25
Volatility                                                       42 %                     39 %                39 %                37 %
Risk-free rate                                            1.39-2.96 %               1.17-2.3 %              2.30 %              1.11 %
Dividend yield                                                    0%                       0%                  0%                  0%
Expected term . Expected term represents the period over which we anticipate stock-based awards to be outstanding. As we
have and expect to undergo significant operational and structural changes in our business such that the historical exercise data no
longer provides a reasonable basis upon which to estimate expected term, the expected term of the stock-based awards we
granted was calculated based on the simplified method. Under the simplified method, the expected term is equal to the average of
the stock-based award’s weighted average vesting period and its contractual term. We expect to continue using the simplified
method until we have sufficient information.
Expected volatility . The expected volatility is based on the historical stock volatilities of a group of publicly listed comparable
companies over a period equal to the expected terms of the stock-based awards, as we do not have prior trading history to use to
determine the volatility of our common stock. If, in the future, we determine that other methods are more reasonable or other
methods for calculating these assumptions are prescribed by authoritative guidance, the fair value calculated for our stock based
awards could change significantly. Higher volatility would result in an increase to stock-based compensation expense determined
at the date of grant.
Expected dividend yield . We have not paid, nor do we currently intend to pay dividends on our common stock. In addition, our
existing credit facilities preclude us from paying cash dividends.
Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero
coupon U.S. Treasury notes with maturities approximately equal to the stock-based award’s expected term.
Forfeiture rate . We estimate the forfeiture rate of our stock-based awards based on an analysis of our actual forfeitures,
analysis of employee turnover and other factors. The impact from a forfeiture rate adjustment would be recognized in full in the
period in which the forfeiture rate changes and, if the actual number of future forfeitures differs from our prior estimates, we may
be required to record adjustments to stock-based compensation expense in future periods.
Fair value of common stock . The fair value of the shares of common stock underlying the stock-based awards we grant has
historically been the responsibility of and determined by our board of directors in the absence of a public trading market for our
common stock. Our board of directors estimates the fair value of our common stock for purposes of granting options and for
determining stock-based compensation expense at each grant date after consideration of all available information including:
•   contemporaneous valuations by an unrelated third-party valuation firm;

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•   the price of the most recent preferred stock sales to investors in arms-length transactions;
•   our capital resources and financial condition;
•   the preferences of our preferred stock that are payable prior to any distributions to shares of our common stock;
•   the likelihood and timing of achieving a liquidity event, such as an initial public offering (IPO) or sale of our company given
    prevailing market conditions;
•   our historical operating and financial performance as well as management’s estimates of future financial performance;
•   recent acquisitions and valuations of comparable companies;
•   the hiring of key personnel;
•   the status of our development, product introduction and sales efforts;
•   revenue growth;
•   industry information such as market growth and volume and macroeconomic events; and
•   additional objective and subjective factors relating to our business.
Determining the fair value of our common stock requires complex and subjective judgment. To assist our board of directors in
setting the exercise price of our stock options at the fair market value of our common stock on the applicable grant date, we
obtained quarterly independent valuations performed by unrelated third-party specialists in a manner consistent with the American
Institute of Certified Public Accountants Practice Aid , Valuation of Privately-Held-Company Equity Securities Issued as
Compensation . Management and our board of directors have assumed full responsibility for the determination of the values by
our independent appraisers. Our determination of the exercise price and the fair market value of the underlying common stock for
our option grants on or between the respective valuation dates are discussed further below.
In valuing our common stock, we first estimated the enterprise value of our business using the income approach. The income
approach estimates the present value of future estimated cash flows based upon forecasted revenue and costs. These future
cash flows are discounted to their present values using highly subjective assumptions, such as a discount rate derived from an
analysis of the cost of capital of comparable publicly traded companies in our industry or similar lines of business as of each
valuation date and are adjusted to reflect the risks inherent in our cash flows. To validate our estimated enterprise value under the
income approach, we also considered the market approach using both the public company market multiple method and the similar
transaction method. The market approach estimates the fair value of a company by applying market multiples of guideline publicly
traded companies in our industry or similar lines of business which are based on key metrics implied by the enterprise values or
acquisition values of these companies.
The enterprise value was then allocated to each of class of stock using either the option pricing method (OPM) or the probability
weighted expected return method (PWERM) as additional information and certainty developed regarding possible discrete events,
including an IPO.
The OPM treats common stock and convertible preferred stock as call options on an enterprise value, with exercise prices based
on the liquidation preference of the preferred stock. Assuming the enterprise has funds available to make a liquidation preference
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stockholders, the common stock has value only if the funds available for distribution to the stockholders exceed the value of the
liquidation preference at the time of a liquidity event, such as a merger, sale or IPO. The common stock is modeled as 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 OPM uses the Black-Scholes option pricing model to price the call option. The OPM is appropriate to use when the
range of possible future outcomes is difficult to predict and thus creates highly speculative forecasts.
PWERM involves a forward-looking analysis of the possible future outcomes of the enterprise. This method is particularly useful
when discrete future outcomes can be predicted at a high confidence level with a probability distribution. Discrete future outcomes
considered under the PWERM include non-IPO market based outcomes, as well as an IPO. Determining the fair value of the
enterprise using the PWERM requires us to estimate assumptions for both the probability of IPO and non-IPO outcomes, as well
as the values we expect those outcomes could yield. We apply significant judgment in estimating these assumptions, primarily
based upon the enterprise value we determine using the income method, our knowledge of the business and our reasonable
expectations of discrete outcomes occurring. In the non-IPO outcomes, a large portion of the enterprise value is allocated to the
preferred stock to give effect to their higher aggregate liquidation preferences. In the IPO scenario, due to the automatic
conversion of all shares of common stock immediately prior to the closing of an IPO, the enterprise value is allocated pro rata
among the shares of convertible preferred and each series of preferred stock, which causes the common stock to have a higher
relative value per share.
Over time, as certainty developed regarding possible discrete events, including an IPO, we transitioned the methodology we used
to allocate our enterprise value from OPM to PWERM. We used the OPM through September 30, 2010, the OPM as validated by
the PWERM on December 31, 2010 and the PWERM alone since January 1, 2011.
The following table provides some key assumptions utilized in our board of directors’ valuations at each respective grant date:

                                                                                                                   Remain private
                                 Derived common                       Expected                                    discount rate for
Grant date                            stock value               liquidity timing      Discount rate           lack of marketability

11/04/2010          $                         3.30                        1 year                  25 %                        12.5 %
12/07/2010                                    3.30                        1 year                  25                          12.5
03/03/2011                                    5.10                        1 year                  19                          12.5
05/24/2011                                    9.30            1.25 to 2.25 years                  19                            15
06/29/2011                                    9.30            1.25 to 2.25 years                  19                            15
10/31/2011                                   11.70            0.50 to 1.75 years                  17                            11
11/02/2011                                   11.70            0.50 to 1.75 years                  17                            11
12/09/2011                                   11.70            0.50 to 1.75 years                  17                            11
01/25/2012                                   13.80            0.50 to 1.50 years                  16                            10
03/07/2012                                   13.80            0.50 to 1.50 years                  16                            10
A brief narrative of the specific factors considered by our board of directors in determining the grant date fair value of our common
stock, of the date of each grant since November 1, 2010, is set forth below.
November and December 2010 . For stock option grants in November and December 2010, our board of directors determined
the fair market value of our common stock to be $3.30 per share. This fair market value was based on a number of factors,
including our achievement of profitability in the three

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months ended September 30, 2010, our election of a new member to our board of directors in September 2010 and our
introduction of a new product in October 2010. Our board of directors also considered the September 30, 2010 contemporaneous
third-party valuation and determined that the fair market value of our common stock on each grant date was $3.30 per share.
We determined our enterprise value using an income approach. In applying the OPM to the enterprise value during this period, the
expected time to a liquidity event of one year was based on a reasonable time frame for us to achieve significant milestones in our
business strategy and experience a liquidity event based on market and business conditions prevailing at that time. The volatility
of 40% was based on the median volatility over the expected time to a liquidity event for a select group of guideline publicly traded
companies. The risk-free interest rate of 0.26% was based on the yield on a U.S. Treasury bond corresponding to the expected
time to a liquidity event. Due to a lack of a public market for our common stock, a discount of 12.5% was applied based upon a
protective put analysis using the same assumptions for the term, volatility and risk-free rate.
March 2011 . For stock option grants in March 2011, our board of directors determined the fair market value of our common
stock to be $5.10 per share. This fair market value was based on a number of factors, including the new product announcement of
our earSmart eS310, the first phase handset roll-out with AT&T of mobile devices incorporating these processors, our hiring of our
vice president of business development and our consideration of a proposed schedule for an IPO for late 2011 or early 2012. Our
board of directors also considered the December 31, 2010 contemporaneous third-party valuation and determined that the fair
market value of our common stock on each date was $5.10 per share.
We determined the enterprise value using an income approach. In applying the OPM to the enterprise value during this period, the
expected time to a liquidity event of one year was based on a reasonable time frame for us to achieve significant milestones in our
business strategy and experience a liquidity event based on market and business conditions prevailing at that time. The volatility
of 40% was based on the median volatility over the expected time to a liquidity event for the group of guideline publicly traded
companies. The risk-free interest rate of 0.27% was based on the yield on a U.S. Treasury bond corresponding to the expected
time to a liquidity event. Due to a lack of a public market for our common stock, a discount of 12.5% was based upon a protective
put analysis using the same assumptions for the term, volatility and risk-free rate.
To confirm the valuation of our common stock determined using the OPM, we also performed a contemporaneous valuation based
upon the PWERM as of December 31, 2010. Using the PWERM, we estimated the value of our common stock to be $5.10 per
share. The PWERM allocation used a risk adjusted discount rate of 19% based upon an adjusted capital asset pricing model and
a lack of marketability discount of 12.5% in the remaining a private company scenario. The expected outcomes were weighted as
follows: 35% probability of an IPO in 0.75 years likely resulting in a market value of $140 million; 10% probability of an IPO in
1.25 years likely resulting in a market value of $200 million; and 5% probability of an IPO in 2.0 years likely resulting in a market
value of $400 million. Similarly, we believed that a sale or acquisition of our company would be the second most probable
scenario. We believed that there was a 30% chance that we would be sold or acquired in 1.0 year likely generating proceeds of
$100 million and a 20% chance that we would be sold or acquired in 2.0 years generating proceeds of $50 million. In the
$50 million acquisition scenario, the equity proceeds would be allocated among the preferred stockholders based on liquidation
preference seniority and no value would be allocated to the common stockholders.

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May and June 2011 . For stock option grants in May and June 2011, our board of directors determined the fair market value of
our common stock to be $9.30 per share. This fair market value was based on a number of factors, including our release of a new
advanced voice and audio processor, the hiring of additional key employees and the addition of a new member to our board of
directors. The valuation also took into account our continued progress towards becoming a public company and the expected date
for an IPO organizational meeting late in the summer of 2011. Our board of directors also considered the March 31, 2011
contemporaneous third-party valuation and determined that the fair market value of our common stock on each grant date was
$9.30 per share.
As a result, the PWERM approach valuation as of March 31, 2011 increased to $9.30 per share. Our board of directors believed
that the acceleration in the revenue growth rate in the second half of 2010 and our improved outlook was consistent with the
growth trend in the fair market value per share during this period.
The March 31, 2011 contemporaneous valuation was based on the PWERM. The PWERM allocation used a risk adjusted
discount rate of 19% based upon an adjusted capital asset pricing model and a lack of marketability discount of 15% in the
remaining a private company scenario. The expected outcomes were weighted as follows: 40% probability of an IPO in 1.25 years
likely resulting in a market value of $250 million, a 15% probability of an IPO in 1.583 years likely resulting in a market value of
$500 million and a 5% probability of an IPO in 2.25 years, likely resulting in a market value of $800 million. Similarly, we believed
that a sale or acquisition of our company would be the second most probable scenario. We believed that there was a 30% chance
that our company would be sold or acquired in 1.75 years likely generating proceeds of $150 million and a 10% chance that our
company would be sold or acquired in 2.25 years generating proceeds of $50 million. In the $50 million acquisition scenario, the
equity proceeds would be allocated among the preferred stockholders based on liquidation preference seniority and no value
would be allocated to the common stockholders.
October, November and December 2011.          For stock options granted in October, November and December 2011, our board of
directors determined the fair market value of our common stock to be $11.70 per share. This fair market value was based on a
number of factors, including the release of a mobile phone containing our processor IP and the hiring of our chief financial officer
and our vice president of marketing. The valuation also took into account our continued progress toward becoming a public
company and the launch of our IPO process in the three months ended September 30, 2011. Our board of directors also
considered the September 30, 2011 contemporaneous third-party valuation and determined that the fair market value of our
common stock on each grant date was $11.70 per share.
Our board of directors believed that the impact of a transition to a royalty model for the recognition of revenue for one OEM, the
continued diversification of the sources our revenue stream and design wins in the first three quarters of 2011, our outlook,
including the revenue transition in the three months ended December 31, 2011, and increased volatility in the public stock markets
were consistent with the moderate growth in fair market value per share during this period.
The September 30, 2011 contemporaneous valuation was based on PWERM. The PWERM allocation used a risk adjusted
discount rate of 17% based upon an adjusted capital asset pricing model and a lack of marketability discount of 11% in the
remaining private company scenario. The marketability discount was reduced from 15% to 11% from the March 31, 2011 valuation
to the September 30, 2011 valuation. The reduction in the rate was due primarily to a decrease in the weighted average estimated
time for a liquidity event to approximately 0.90 years. The expected outcomes were weighted as

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follows: 50% probability of an IPO in 0.5 years likely resulting in a market value of $300 million, a 15% probability of an IPO in
1 year likely resulting in a market value of $350 million and a 10% probability of an IPO in 1.75 years, resulting in a market value
of $400 million. Similarly, we believed an acquisition of our company would be the second most probable scenario. We believed
that there was a 20% chance that our company would be sold or acquired in 1 year likely generating proceeds of $100 million and
a 5% chance that our company would be sold or acquired in 1.5 years generating proceeds of $50 million. In the $50 million
acquisition scenario, the equity proceeds would be allocated among the preferred stockholders based on liquidation preference
seniority and no value would be allocated to the common stockholders.
January and March 2012. For stock options granted in January and March 2012, our board of directors determined the fair market
value of our common stock to be $13.80 per share. This fair market value was based on a number of factors, including the
recognition of our first royalty revenue related to the licensing of our processor IP and the announcement of our single microphone
products in February 2012. The valuation also took into account our continued progress toward becoming a public company and
the filing of the registration statement of which this prospectus forms a part in the three months ended March 31, 2012. Our board
of directors also considered the December 31, 2011 contemporaneous third-party valuation and determined that the fair market
value of our common stock on each grant date was $13.80 per share.
Our board of directors believed that the impact of a transition to a royalty model for the recognition of revenue for one OEM, the
continued diversification of the sources of our revenue stream and design wins in 2011 and our outlook, including the revenue
transition in the three months ended December 31, 2011 and March 31, 2012, were consistent with the moderate growth in fair
market value per share during this period.
The December 31, 2011 contemporaneous valuation was based on PWERM. The PWERM allocation used a risk adjusted
discount rate of 16% based upon an adjusted capital asset pricing model and a lack of marketability discount of 10% in the
remaining private company scenario. The marketability discount was reduced from 11% to 10% from the September 30, 2011
valuation to the December 31, 2011 valuation. The reduction in the rate was due primarily to a decrease in the weighted average
estimated time for a liquidity event to approximately 0.75 years. The expected outcomes were weighted as follows: 55%
probability of an IPO in 0.5 years likely resulting in a market value of $350 million, a 15% probability of an IPO in 1 year likely
resulting in a market value of $400 million and a 10% probability of an IPO in 1.5 years, resulting in a market value of $450 million.
Similarly, we believed an acquisition of our company would be the second most probable scenario. We believed that there was a
15% chance that our company would be sold or acquired in 0.75 years likely generating proceeds of $100 million and a 5%
chance that our company would be sold or acquired in 1.25 years generating proceeds of $50 million. In the $50 million acquisition
scenario, the equity proceeds would be allocated among the preferred stockholders based on liquidation preference seniority and
no value would be allocated to the common stockholders.
On March 15, 2012, our board of directors determined the fair market value of our common stock to be $15.30 per share. Our
board of directors considered the continued diversification of the sources of our revenue stream and design wins as well as the
March 15, 2012 contemporaneous third-party valuation. The March 15, 2012 valuation was used to assist in the accounting for our
convertible preferred stock warrants on March 31, 2012 and no stock options were granted subsequent to the date of the valuation
through March 31, 2012.

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The March 15, 2012 contemporaneous valuation was based on PWERM. The PWERM allocation used a risk adjusted discount
rate of 16% based upon an adjusted capital asset pricing model and a lack of marketability discount of 8% in the remaining private
company scenario. The expected outcomes were weighted as follows: 65% probability of an IPO in 0.29 years likely resulting in a
market value of $350 million, a 15% probability of an IPO in 0.80 years likely resulting in a market value of $400 million and a 5%
probability of an IPO in 1.29 years, resulting in a market value of $450 million. Similarly, we believed an acquisition of our
company would be the second most probable scenario. We believed that there was a 10% chance that our company would be
sold or acquired in 0.55 years likely generating proceeds of $100 million and a 5% chance that our company would be sold or
acquired in 1.04 years generating proceeds of $50 million. In the $50 million acquisition scenario, the equity proceeds would be
allocated among the preferred stockholders based on liquidation preference seniority and no value would be allocated to the
common stockholders.
Upon completion of this offering, our common stock will be publicly traded and will therefore be subject to potential significant
fluctuations in the market price. Such fluctuations, if they occur, could impact the volatility used in the fair value calculations which
could also impact our future stock-based compensation, as increased volatility would increase the fair value of the related awards
granted in future periods. In addition, increases and decreases in market price of our common stock will also increase and
decrease the fair value of our stock-based awards granted in future periods.
Convertible preferred stock warrants
We classify freestanding warrants to purchase shares of our convertible preferred stock as liabilities on our balance sheets and
carry them at fair value because the warrants obligate us to transfer assets to the holders under certain circumstances (e.g., upon
a change in control) at some point in the future. The warrants are subject to remeasurement at each balance sheet date and we
recognize any change in fair value as a component of other income (expense), net in our statements of comprehensive income
(loss). We estimated the fair value of these warrants at issuance and at the respective balance sheet dates using the
Black-Scholes option pricing model. We recorded amounts of $(58,000), $(88,000), $(822,000) and $(167,000) to other income
(expense), net for 2009, 2010, 2011 and the three months ended March 31, 2012, respectively, to reflect an increase in the fair
value of these warrants.
We will continue to record adjustments to the fair value of the warrants until they are exercised, converted into warrants to
purchase common stock, or expire. Upon the closing of the offering to which this prospectus relates, all outstanding warrants to
purchase shares of our convertible preferred stock will become warrants to purchase shares of our common stock and, as a
result, will no longer be remeasured at each balance sheet date. The then current aggregate fair value of these warrants at the
time of the offering will be reclassified from liabilities to additional paid in capital, a component of stockholders’ equity (deficit).

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Results of operations
The following table sets forth our historical operating results for 2009, 2010, 2011 and the three months ended March 31, 2011
and 2012, respectively. The period to period comparison of our financial results is not necessarily indicative of the financial results
we may achieve in future periods.

                                                                                                                  Three months
                                                        Year ended December 31,                                  ended March 31,
                                                      2009              2010                     2011             2011         2012
                                                                                                                   (unaudited)
                                                                             (in thousands)
Revenue:
 Hardware                                  $          5,749        $       47,920           $   97,668       $ 28,540       $ 19,409
 Licensing                                               —                     —                    —              —          11,699
 Total revenue                                        5,749                47,920               97,668           28,540         31,108
Cost of revenue                                       5,355                19,314               45,707           10,414         13,419
Gross profit                                           394                 28,606               51,961           18,126         17,689
Operating expenses:
  Research and development                            8,969                11,445               21,578            5,034          5,668
  Selling, general and administrative                 8,058                12,217               21,237            3,969          7,524
Total operating expenses                            17,027                 23,662               42,815            9,003         13,192
Income (loss) from operations                      (16,633 )                4,944                9,146            9,123          4,497
Interest income (expense), net                          11                    (17 )                 (8 )             (3 )            3
Other income (expense), net                           (136 )                 (139 )               (843 )           (337 )         (331 )
Net income (loss)                          $       (16,758 )       $        4,788           $    8,295       $    8,783     $    4,169


The following table sets forth our historical operating results for 2009, 2010 and 2011 and the three months ended March 31, 2011
and 2012, respectively, as a percentage of revenue:

                                                                                                                   Three months
                                                         Year ended December 31,                                  ended March 31,
                                                        2009               2010                   2011            2011         2012
                                                                                                                     (unaudited)
Revenue:
 Hardware                                                 100 %                       100 %         100 %          100 %            62 %
 Licensing                                                 —                           —             —              —               38
 Total revenue                                            100                         100           100            100             100
Cost of revenue                                            93                          40            47             36              43
Gross margin                                                   7                       60            53              64             57
Operating expenses:
  Research and development                                156                          24            22              18             18
  Selling, general and administrative                     140                          26            22              14             24
Total operating expenses                                  296                          50            44              32             42
Income (loss) from operations                            (289 )                        10              9             32             14
Other income (expense), net                                (2 )                        —              (1 )           (1 )           (1 )
Net income (loss)                                        (291 %)                       10 %             8%           31 %           13 %


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Comparison of the three months ended March 31, 2011 and 2012
Revenue
Revenue increased $2.6 million, or 9%, from $28.5 million for the three months ended March 31, 2011 to $31.1 million for the
three months ended March 31, 2012. The increase was due primarily to our largest OEM’s license of our processor IP, as well as
continued sales growth to Samsung. The three months ended March 31, 2012 represented the first period in which we recognized
royalty revenue from the licensing of our processor IP, which offset a decline in the purchase of our processors from CMs
associated with our largest OEM, as that OEM is transitioning to licensing of our processor IP.
Other than the licensing of our processor IP, substantially all of our revenue during these periods was generated from the sale of
our products to CMs and OEMs whose primary manufacturing operations and distributors are in Asia. In the three months ended
March 31, 2011 and 2012, revenue generated in Asia represented 100% and 62% of our revenue, respectively. In the three
months ended March 31, 2011 and 2012, revenue generated in the United States represented 0% and 38% of our revenue,
respectively, all of which was royalty revenue from the licensing of our processor IP.
In the three months ended March 31, 2011 and 2012, Foxconn represented 77% and 18%, Protek represented 18% and 6%,
Samsung represented 5% and 36% and our largest OEM represented 0% and 38% of our revenue, respectively. No other OEM,
CM or distributor represented more than 10% of our revenue in either period. Aggregate sales to distributors accounted for less
than 10% of our total revenue in each of the three months ended March 31, 2011 and 2012.
Cost of revenue and gross margin
Cost of revenue increased $3.0 million, or 29%, from $10.4 million in the three months ended March 31, 2011 to $13.4 million in
the three months ended March 31, 2012. The increase was primarily due to the increased sales volume of our lower margin
processors and a $948,000 write down of excess and obsolete inventory of certain of our processors that exceeded the amount of
inventory we needed to retain to satisfy our then-current forecasts of the future demand for our processors. Cost of revenue
associated with the license of our processor IP is not significant. Gross margin was 64% and 57% in the three months ended
March 31, 2011 and 2012, respectively. The decrease in gross margin was due to a higher proportion of sales of lower margin
voice and audio processors and the write down of excess and obsolete inventory, partially offset by recognizing higher margin
royalty revenue from the licensing of our processor IP.
Operating expenses
Research and development.        Research and development expenses increased $634,000, or 13%, from $5.0 million in the three
months ended March 31, 2011 to $5.7 million in the three months ended March 31, 2012. The increase was primarily due to
additions in headcount, resulting in a $1.4 million increase in salaries, employee benefits and stock-based compensation expense.
Costs of consulting and outside services, including offshore providers of product development services, increased $603,000 as a
result of development projects related to our second generation of voice and audio processors and other new products. This was
offset by a $173,000 decrease in mask expenses for the manufacture of our voice and audio processors. Costs were also offset
by $1.4 million in the three months ended March 31, 2012 for cash received for the performance of nonrecurring engineering work.
We did not receive any amounts for performing non-recurring engineering work in the three months ended March 31, 2011.

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Selling, general and administrative.   Selling, general and administrative expenses increased $3.5 million, or 88%, from $4.0
million in the three months ended March 31, 2011 to $7.5 million in the three months ended March 31, 2012. The increase was
primarily due to additions in headcount, resulting in a $2.1 million increase in salaries, employee benefits and stock-based
compensation expense and a $468,000 increase in audit and legal fees, which was primarily related to our ongoing preparations
to become a public company.
Other income (expense), net
Our other income (expense), net decreased $6,000 from expense of $337,000 in the three months ended March 31, 2011 to an
expense of $331,000 in the three months ended March 31, 2012. The expense for mark-to-market adjustments in the fair value of
our outstanding preferred stock warrants decreased by $170,000 from $337,000 in the three months ended March 31, 2011 to
$167,000 in the three months ended March 31, 2012. This was partially offset by an increase of tax provisions of $128,000 from a
credit of $5,000 in the three months ended March 31, 2011 to an expense of $123,000 in the three months ended March 31, 2012.

Comparison of years ended December 31, 2010 and 2011
Revenue
Revenue increased $49.8 million, or 104%, from $47.9 million for 2010 to $97.7 million for 2011. The increase was due primarily
to Foxconn’s purchase of our voice and audio processors, as well as continued sales growth to other OEMs. Substantially all of
our revenue during these periods was generated from the sale of our products to CMs and OEMs with their primary manufacturing
operations and distributors in Asia.
In 2010 and 2011, Foxconn represented 81% and 65% and Samsung represented 7% and 20% of our revenue, respectively. In
2011, Protek represented 10% of our revenue. No other OEM, CM or distributor represented more than 10% of our revenue in
either period. Aggregate sales to distributors accounted for less than 10% of our total revenue in each of 2010 and 2011.
Cost of revenue and gross margin
Cost of revenue increased $26.4 million, or 137%, from $19.3 million in 2010 to $45.7 million in 2011. The increase was primarily
due to the increased volume of our first generation of processors, the A1026, the A1028 and a custom processor for Apple, which
achieved volume production in the first half of 2010. Gross margin was 60% and 53% in 2010 and 2011, respectively. The
decrease in gross margin was due to a higher proportion of sales of lower margin voice and audio processors in 2011 as we
endeavored to diversify our revenue streams.
Operating expenses
Research and development . Research and development expenses increased $10.2 million, or 89%, from $11.4 million in 2010
to $21.6 million in 2011. The increase was primarily due to additions in headcount, resulting in a $4.7 million increase in salaries,
employee benefits and stock-based compensation expense. Costs of consulting and outside services, including offshore providers
of product development services, increased $1.7 million as a result of development projects related to our second generation of
voice and audio processors and other new products. Other product development and testing costs increased by $1.4 million.
These increases were offset by a decrease in mask expenses for the manufacture of our voice and audio processors, which
decreased to $967,000 from $1.5 million. Costs were also offset by $1.8 million and $563,000 in 2010 and 2011, respectively, for
cash received for the performance of nonrecurring engineering work.

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Selling, general and administrative . Selling, general and administrative expenses increased $9.0 million, or 74%, from
$12.2 million in 2010 to $21.2 million in 2011. The increase was primarily due to additions in headcount, resulting in a $6.2 million
increase in salaries, employee benefits and stock-based compensation expense and a $1.1 million increase in audit and legal
fees, which was primarily related to our ongoing preparations to become a public company.
Other income (expense), net
Other income (expense), net decreased $704,000 from expense of $139,000 in 2010 to expense of $843,000 in 2011. The
decrease was primarily due to mark-to-market adjustments in the fair value of our outstanding preferred stock warrants. The
increase in the fair value of the warrants due to an improved business outlook was recognized as an expense in other income
(expense), net.

Comparison of the years ended December 31, 2009 and 2010
Revenue
Revenue increased $42.2 million, or 740%, from $5.7 million in 2009 to $47.9 million in 2010. The increase was due primarily to
Foxconn’s purchase of our processors for a single OEM’s mobile phone that launched in 2010, as well as continued launches of
mobile devices by other customers, including Samsung. Substantially all of our revenue in 2009 and 2010 was generated by sales
to CMs and OEMs that have their primary manufacturing operations and distributors in Asia.
Foxconn accounted for 0% and 81% of our total revenue in 2009 and 2010, respectively. Sales of our voice and audio processors
to Foxconn commenced in production volumes in the second quarter of 2010 and rose throughout the remainder of 2010. In 2009,
HTC, LG and Uniquest, a distributor for Samsung, accounted for 36%, 45% and 15% of our total revenue, respectively. No other
OEM, CM or distributor represented more than 10% of our total revenue in either period. Aggregate sales to distributors
accounted for less than 10% of our total revenue in each of 2009 and 2010.
Cost of revenue and gross margin
Total cost of revenue increased $13.9 million, or 257%, from $5.4 million in 2009 to $19.3 million in 2010. The increase was due to
a higher volume of sales. Gross margin rose from 7% in 2009 to 60% in 2010, due to a favorable sales mix of our first generation
processors, which achieved volume production in the first half of 2010. In 2009, we wrote down $1.3 million of inventory that
exceeded the amount of inventory that we needed to retain to satisfy our then-current forecasts of the future demand for our
processors.
Operating expenses
Research and development . Research and development expenses increased $2.4 million, or 28%, from $9.0 million in 2009 to
$11.4 million in 2010. The increase was primarily due to additions in headcount, resulting in a $2.5 million increase in salaries,
employee benefits and stock-based compensation expense. Consulting and outside services, including offshore providers of
product development services, increased $800,000 in 2010. Increases in research and development expenses were partially
offset by a reduction in the cost of mask sets and related costs from $3.7 million in 2009 to $2.5 million in 2010 due to the timing
and number of new processor introductions. Costs were also offset by $1.5 million and $1.8 million in 2009 and 2010,
respectively, for cash received for the performance of nonrecurring engineering work.

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Selling, general and administrative . Selling, general and administrative expenses increased $4.1 million, or 51%, from
$8.1 million in 2009 to $12.2 million in 2010. The increase was primarily due to additions in headcount, resulting in a $2.0 million
increase in salaries, employee benefits, stock-based compensation and recruiting expenses. Legal costs associated with our
intellectual property protection program increased by $500,000. We also incurred an additional $260,000 associated with
increased marketing activities.

Quarterly results of operations
The following table sets forth our unaudited statements of operations data for each of the last nine quarters. The unaudited
quarterly data was prepared on the same basis as the audited financial statements included elsewhere in this prospectus. You
should read this information together with our financial statements and related notes included elsewhere in this prospectus. The
results of the quarterly historical periods presented below are not necessarily indicative of the results of operations for a full year
or any future periods.
                                                                                      Three months ended
                               Mar. 31,         June 30,         Sept. 30,         Dec. 31,      Mar. 31,          June 30,         Sept. 30,       Dec. 31,         Mar. 31,
                                 2010              2010             2010               2010         2011              2011             2011           2011             2012
                                                                                   (in thousands, unaudited)
Revenue:
  Hardware                 $     1,674      $      7,314     $     19,177      $    19,755     $   28,540      $     24,870     $     26,306    $    17,952      $    19,409
  Licensing                         —                 —                —                —              —                 —                —              —            11,699

  Total revenue                  1,674             7,314           19,177           19,755         28,540            24,870           26,306         17,952           31,108
Cost of revenue                  1,259             3,585            7,217            7,253         10,414            11,533           13,798          9,962           13,419

Gross profit                       415             3,729           11,960           12,502         18,126            13,337           12,508           7,990          17,689
Operating expenses:
  Research and
    development                  1,915             2,271            4,080            3,179          5,034             5,183            4,388           6,973           5,668
  Selling, general and
    administrative               2,268             2,769            3,158            4,022          3,969             5,081            5,820           6,367           7,524

Total operating expenses         4,183             5,040            7,238            7,201          9,003            10,264           10,208         13,340           13,192

Income (loss) from
   operations                    (3,768 )         (1,311 )          4,722            5,301          9,123             3,073            2,300          (5,350 )         4,497
Interest income
   (expense), net                   (12 )             (3 )              (2 )            —              (3 )              (2 )              —              (3 )              3
Other income (expense),
   net                               20               28               (36 )          (151 )         (337 )            (321 )            101            (286 )          (331 )

Net income (loss)          $     (3,760 )   $     (1,286 )   $      4,684      $     5,150     $    8,783      $      2,750     $      2,401    $     (5,639 )   $     4,169


The following sets forth notable fluctuations in our quarterly results of operations:
Our revenue increased to $7.3 million in the three months ended June 30, 2010 and was mostly attributed to our sale of
processors to Foxconn. Revenue attributable to Foxconn during this quarter was $5.4 million. For the three months ended
September 30, 2010, December 31, 2010 and March 31, 2011, sales to Foxconn increased to $16.3 million, $17.2 million and
$22.0 million, respectively, as a result of user acceptance of mobile phones launched commercially in mid-2010. For the three
months ended June 30, 2011, total revenue decreased $3.7 million, or 13%, from the previous quarter primarily due to a

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decrease in sales to Foxconn partially offset by an increase in sales to Samsung. For the three months ended December 31,
2011, total revenue decreased $8.4 million, or 32%, from the previous quarter primarily due to a decrease in sales to Foxconn and
Protek as we transitioned to a processor IP licensing model with a single OEM, for which there is a one quarter lag in recognizing
royalty revenue, and a seasonal decrease in sales to Samsung. In the three months ended March 31, 2012, total revenue
increased $13.2 million from the prior quarter to $31.1 million. This increase was primarily due to our first time recording of royalty
revenue in the amount of $11.7 million. In addition, while overall hardware revenue increased, hardware sales to our largest OEM
decreased which was more than offset by higher hardware sales to Samsung.
Our gross profit improved in 2010 primarily due to a favorable sales mix of higher margin voice and audio processors and cost
efficiencies as a result of higher unit volumes. As we endeavored to diversify our revenue in 2011, gross profit decreased due to
sales of lower margin voice and audio processors. Gross profit increased in the three months ended March 31, 2012 as a result of
our recognition of royalty revenue and was partially offset by product mix differences from the prior quarter and an excess and
obsolete inventory write down of $948,000.
In each of the quarters of 2010, we added to our levels of staffing company-wide, and, in doing so, increased expenses
associated with salaries and bonuses, employee benefits and stock-based compensation. We also received cost reimbursements,
periodically, for performing nonrecurring engineering services for a single OEM, which reduced our total research and
development expenses. Selling, general and administrative costs for corporate legal, intellectual property legal, audit and tax
services also increased due to the growth of our business.
During 2011, we continued to add to our levels of staffing through all departments, thereby increasing salaries and bonuses,
employee benefits and stock-based compensation expenses. Research and development expenses during the three months
ended March 31, 2011 increased $1.9 million over the previous quarter and included a reduction in research and development
expense during the previous quarter from the effect of a nonrecurring engineering service fee. Our selling, general and
administrative expenses increased $1.1 million during the three months ended June 30, 2011 and were mostly a result of an
increase in audit and legal fees, which were primarily related to our ongoing preparations to become a public company. Research
and development expenses during the three months ended September 30, 2011 decreased $795,000 over the previous quarter
due in part to receiving a nonrecurring engineering service fee. Our research and development expenses increased $2.6 million
during the three months ended December 31, 2011 over the previous quarter due to both an increase in mask expenses for the
manufacture of our voice and audio processors and to additions to headcount resulting in increases in salaries, employee benefits
and stock-based compensation. In the three months ended March 31, 2012, research and development expenses associated with
increases in salaries, employee benefits, stock-based compensation and consulting were partially offset by a payment of
$1.4 million received for the performance of nonrecurring engineering work. During the same period, our selling, general and
administrative expenses increased $1.2 million primarily due to increases in headcount and related costs, as well as audit and
legal services.
Liquidity and capital resources
Since our inception, we have incurred significant losses, and, as of March 31, 2012, we had an accumulated deficit of
$38.0 million. We have funded our operations primarily with proceeds from the sale of an aggregate of $74.3 million of convertible
preferred stock issued to date, cash flows from operations and borrowings under our credit facilities. As of March 31, 2012, we
had cash and cash equivalents of $18.7 million, $69,000 of capital lease obligations and $4.3 million of operating lease
obligations.
As of March 31, 2012, we also had access to a $10.0 million revolving line of credit, with available funds based on eligible
accounts receivable and customer purchase orders. As of March 31, 2012, we

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had no outstanding borrowings under this line of credit. Our master loan agreement for our revolving line of credit and equipment
loan contains covenants.
We believe that our existing sources of liquidity will satisfy our working capital and capital requirements for at least the next
12 months. We cannot assure you that we will be successful in executing our business plan, maintaining and growing our existing
customer base or achieving profitability. Failure to generate sufficient revenue or control costs may require us to raise additional
capital through equity or debt financing. Such additional financing may not be available on terms acceptable to us, or at all, and
could require us to modify, delay or abandon some of our planned future expansion or expenditures or reduce some of our
ongoing operating costs. If we are unable to obtain additional financing, it could have a material adverse effect on our business,
financial condition, operating results and cash flows and ability to achieve our intended business objectives. If we raise additional
funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing
stockholders could suffer significant dilution in their percentage ownership of our company and any new securities we issue could
have rights, preferences and privileges senior to those of holders of our common stock.
Our cash flows for 2009, 2010, 2011 and the three months ended March 31, 2011 and 2012 were as follows:

                                                                                                              Three months
                                                        Year ended December 31,                              ended March 31,
                                                      2009             2010                   2011            2011         2012
                                                                                                               (unaudited)
                                                                             (in thousands)
Net cash provided by (used in) operating
  activities                                $       (14,919 )    $        (8,304 )    $       6,292      $     963       $    3,795
Net cash provided by (used in) investing
  activities                                            726                 (560 )           (1,744 )          (504 )          (700 )
Net cash provided by (used in) financing
  activities                                        16,197               14,544                (601 )            48            (320 )
Effect of exchange rate change on cash
  and cash equivalents                                   59                  (31 )              (59 )            (3 )           (52 )
Net increase in cash and cash
 equivalents                                          2,063                5,649              3,888            504            2,723
Cash and cash equivalents:
 Beginning of period                                  4,383                6,446             12,095          12,095          15,983
  End of period                             $         6,446      $       12,095       $      15,983      $ 12,599        $ 18,706


Cash flows from operating activities
Our operating cash flows primarily consist of and depend on the timing and amount of cash receipts from sales of our products
and royalty payments, inventory purchases and our payment of operating expenses. Net cash used in operating activities for the
periods presented consisted of net income or losses adjusted for certain noncash items and changes in working capital. Within
changes in working capital, changes in accounts receivable, inventory and accounts payable generally account for the largest
adjustments, as we typically use more cash to fund accounts receivable and build inventory as our business grows. Increases in
accounts payable typically provides more cash as we do more business with our contract foundries and other third parties,
depending on the timing of payments.
Cash flows from investing activities
Our investing activities consist primarily of purchases and sales of short-term investments, purchases of property and equipment
and costs incurred to register and maintain our intellectual property, such as patents and trademarks. We expect to continue to
make significant capital expenditures to support our expanding operations and incur costs to protect our investment in our
developed technology and intellectual property.

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Cash flows from financing activities
To date, we have financed our operations primarily with proceeds from the sale of our convertible preferred stock and borrowings
under our credit facilities.

Comparison of three months ended March 31, 2011 and 2012
Cash flows from operating activities.   For the three months ended March 31, 2012, net cash provided by operating activities was
$3.8 million, as compared to net cash provided by operating activities of $1.0 million for the three months ended March 31, 2011.
The most significant component of the increase was the receipt of royalty revenue from a single OEM in the three months ended
March 31, 2012 without any use of cash to purchase inventory to support the revenue. Net income was $4.2 million for the three
months ended March 31, 2012 and $8.8 million for the three months ended March 31, 2011. In addition, a decrease in accounts
receivable due to the timing of cash receipts contributed to the increase in cash from operating activities. In the three months
ended March 31, 2012, a $948,000 charge for excess and obsolete inventory also had an impact on cash flows from operating
activities relative to net income.
Cash flows from investing activities.  For the three months ended March 31, 2012, net cash used in investing activities was
$700,000, as compared to $504,000 for the three months ended March 31, 2011, due primarily to purchases of property and
equipment to support the growth in our business.
Cash flows from financing activities. For the three months ended March 31, 2012, net cash used in financing activities was
$320,000, as compared to net cash generated by financing activities of $48,000 for the three months ended March 31, 2011. The
decrease was due primarily to our payment of costs associated with the offering to which this prospectus relates.

Comparison of years ended December 31, 2010 and 2011
Cash flows from operating activities . For 2011, net cash provided by operating activities was $6.3 million, as compared to net
cash used in operating activities of $8.3 million for 2010. The most significant component of this change was Foxconn’s
commercial scale production of mobile phones with our processor, as well as continued revenue growth from other OEMs, yielding
net income of $8.3 million for 2011 compared to a net income of $4.8 million for 2010. In addition, a decrease in accounts
receivable due to the timing of payments contributed to the increase in cash from operating activities. To a much lesser extent,
other changes in working capital, mostly due to the timing of when liabilities were incurred and payments were received, partially
offset the benefit of the growth in net income for 2011, from the lower net income for 2010, as 2010 was the first year in which we
achieved profitability.
Cash flows from investing activities . For 2011, net cash used in investing activities was $1.7 million, as compared to $560,000
for 2010, due primarily to purchases of property and equipment to support the growth in our business.
Cash flows from financing activities . For 2011, net cash used in financing activities was $601,000 as compared to $14.5 million
for 2010. The decrease was due primarily to our receipt of proceeds from the sale of our Series E preferred stock in February and
March 2010 and payment of $758,000 in expenses associated with the offering.

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Comparison of years ended December 31, 2009 and 2010
Cash flows from operating activities . For 2010, net cash used in operating activities fell to $8.3 million from $14.9 million for
2009. The most significant component of this change was Foxconn’s commercial scale production of mobile phones with our
processor in mid-2010. This resulted in net income of $4.8 million in 2010 compared to a net loss of $16.8 million in 2009. This net
income benefit was partially offset by an increase in accounts receivable and an increase in inventories to support our increased
sales volumes.
Cash flows from investing activities . For 2010, net cash used in investing activities was $560,000, as compared to net cash
provided by investing activities of $726,000 for 2009. The change was due primarily to higher purchases of property and
equipment in 2010 to support our growth, partially offset by proceeds received upon maturity of our money market and certificate
of deposit investments.
Cash flows from financing activities . For 2010, net cash provided by financing activities fell to $14.5 million from $16.2 million for
2009. In 2010, we completed the sale of our Series E preferred stock and repaid the $800,000 balance under our revolving line of
credit. In 2009, we completed the sale of our Series D preferred stock and received $411,000 in proceeds from our equipment
term loan and $800,000 under our revolving line of credit.

Off balance sheet arrangements
During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of
facilitating off balance sheet arrangements or other contractually narrow or limited purpose.
Contractual obligations and commitments
The following table summarizes our contractual obligations and commitments for principal and interest payments due on our
capital lease facility and operating lease payments as of December 31, 2011:

                                                                                    Payments due by period
                                                                              Less than           1 to 3                          3 to 5                   More than
                                                          Total                  1 year           years                           years                      5 years
                                                                                               (in thousands)
Capital lease obligations                     $             103          $             103          $        —                $       —          $                     —
Operating lease obligations                               2,153                      1,133                1,020                       —                                —
Components purchase
 obligations(1)                                         11,788                      11,788                          —                 —                                —
                                              $         14,044           $          13,024          $          1,020          $       —          $                     —


(1)   Purchase obligations represent outstanding purchase orders that we have placed with our suppliers as of December 31, 2011. The lead time for delivery is long,
      typically 12 to 14 weeks, and suppliers must prepare unique materials for us at the beginning of the fabrication process. Accordingly, we are precluded from cancelling
      our orders once placed and the production process has begun.

As of December 31, 2011 and March 31, 2012, we had no liability for uncertain tax positions.
As of March 31, 2012, we had purchase obligations with our third-party foundries and other suppliers of $10.3 million due within
one year, and no purchase obligations due after one year. As of the same date we had $69,000 of capital lease obligations due
within one year and no capital lease obligations due after one year, as well as operating lease obligations of $4.3 million, of which
$2.4 million was due within one year and $1.9 million was due after one year.

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Our operating lease commitments as of December 31, 2011 and as of March 31, 2012 primarily relate to the lease of our
corporate headquarters in Mountain View, California and, to a lesser extent, our offices in Scotts Valley, California, Lafayette,
Colorado, South Korea, Taiwan, China, Singapore and India. Other than our Mountain View, California, Taiwan and China leases,
these leases are for a remaining period of less than 12 months.
Our capital lease consists of equipment financing arrangements with Silicon Valley Bank.

Quantitative and qualitative disclosures about market risk
We are exposed to market risks in the ordinary course of our business. These risks primarily include foreign exchange rate and
interest rate sensitivities as follows:
Foreign currency risk
We sell our products to CMs and OEMs with their primary manufacturing operations and distributors in Asia. All sales of our
processors and the license of our processor IP are denominated in U.S. dollars. We incur a small portion of our expenses in
currencies other than the U.S. dollar. The expenses we incur in currencies other than U.S. dollars affect gross profit, selling,
general and administrative expenses and income taxes.
As of December 31, 2011 and March 31, 2012, the functional currency of our non-U.S. entities was the U.S. dollar. Transaction
gains and losses resulting from transactions denominated in currencies other than the respective functional currencies are
included in “other income (expense), net” for the periods presented. The amounts of transaction gains and losses were not
material in any of the periods presented.
Given that the operating expenses that we incur in currencies other than U.S. dollars have not been a significant percentage of
our revenue, we do not believe that our foreign currency exchange rate fluctuation risk is significant. Consequently, we do not
believe that a hypothetical 10% change in foreign currency exchange rates would have a significant effect on our future net
income or cash flows as of March 31, 2012.
We have not hedged exposures denominated in foreign currencies or used any other derivative financial instruments. Although we
transact the overwhelming majority of our business in U.S. dollars, future fluctuations in the value of the U.S. dollar may affect the
competitiveness of our products and thus may impact our results of operations and cash flows.
Interest rate sensitivity
We had cash and cash equivalents of $18.7 million as of March 31, 2012. Our cash and cash equivalents are held primarily in
cash deposits and money market funds. We hold our cash and cash equivalents for working capital purposes. Due to the
short-term nature of these instruments, we believe that we do not have material exposure to changes in the fair value of our
investment portfolio as a result of changes in interest rates. Declines in interest rates will reduce future interest income. During the
three months ended March 31, 2012, a 10% appreciation or depreciation in overall interest rates would not have had a material
impact on our interest income.

Recent accounting pronouncements
In May 2011, the FASB amended its guidance related to fair value measurements to provide a consistent definition of fair value
and ensure that the fair value measurement and disclosure requirements are similar between GAAP and International Financial
Reporting Standards. The

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amendments change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing
information about fair value measurements. For many of the requirements, the updated guidance should not result in a change in
the application of previous fair value measurement guidance. The guidance was effective for us prospectively beginning in the
three months ended March 31, 2012. The adoption of this guidance did not have a material impact on our financial position,
results of operations or cash flows.
In June 2011, the FASB issued guidance related to the presentation of comprehensive income. This update gives an entity the
option to present the total of comprehensive income, the components of net income, and the components of other comprehensive
income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The
guidance was effective for us beginning in the three months ended March 31, 2012 and we applied it retrospectively. Adoption of
this guidance did not have a material impact on our financial position, results of operations or cash flows.

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                                                          Business
Business overview
We are the leading provider of intelligent voice and audio solutions that improve voice quality and the user experience in mobile
devices. We collaborate with leading auditory neuroscientists to understand the human auditory system and have developed
purpose-built processors that combine science and technology to function like human hearing. Our low power,
hardware-accelerated DSPs and associated algorithms substantially improve sound quality and suppress noise in mobile devices.
As the primary driver of the mobile device market, the mobile phone continues to play an increasingly prominent role in peoples’
lives. Voice communication is a primary function of mobile phones, and we expect voice to increasingly complement touch as a
core user interface, heightening the importance of voice and audio quality in mobile devices.
The human auditory system is remarkable for its ability to isolate individual sources within a complex sound mixture, which we
refer to as auditory intelligence. We have incorporated this auditory intelligence into an intelligent platform by employing CASA, a
scientific discipline dedicated to mapping the sound separation functions in human hearing, into a computational framework. This
approach enables our products to intelligently characterize, group and isolate sounds to improve sound quality while suppressing
noise. We believe that our approach addresses the challenge of providing clear and consistent voice and audio quality more
effectively than other available solutions. We also believe that our highly scalable platform will enable us to create and drive
differentiated user experiences, such as robust speech recognition and high-quality audio for mobile video communication.
Our platform consists of our proprietary, purpose-built DSPs, analog and mixed signal circuits and algorithms for voice isolation
and noise suppression. We also provide our proprietary AuViD graphical design tools to help OEMs design in and tune our
products in their efforts to bring mobile devices with the best voice and audio quality to market rapidly. Our technologies and tools
are underpinned by our significant intellectual property, resulting in a strong foundation from which to extend the value of our
platform through continued innovation and integration of adjacent voice and audio functionality.
We were founded in 2000 and initially targeted the rapidly growing mobile device market, including mobile phones, media tablets
and mobile PCs. We began production shipments in 2008 and had sold over 160 million processors to our OEM customers as of
March 31, 2012. In addition to the mobile device market, we believe that our voice and audio technology is also applicable to a
broad range of other market segments, including automobile infotainment systems, digital cameras, digital televisions, headsets
and set top boxes, for which we have not yet released products.
We are headquartered in Mountain View, California, reincorporated in Delaware in June 2011 and had 206 employees as of
March 31, 2012. We outsource the manufacture of our voice and audio processors to independent foundries and use third parties
for assembly, packaging, test and logistics. We had total revenue of $5.7 million, $47.9 million, $97.7 million and $31.1 million for
2009, 2010, 2011 and the three months ended March 31, 2012, respectively. We had net income (loss) of $(16.8) million,
$4.8 million, $8.3 million and $4.2 million for 2009, 2010, 2011 and the three months ended March 31, 2012, respectively.
Historically, our revenue has been significantly concentrated in a small number of OEMs, CMs and distributors and we expect that
concentration to continue for the foreseeable future. In 2010, 2011 and the three months ended March 31, 2012, our largest OEM
and Foxconn and Protek, its CMs, represented 82%, 75% and 62% of our revenue, respectively, and Samsung represented 7%,
20% and 36% of our revenue, respectively. We are undergoing a transition in our sales model with our largest OEM and have
licensed processor IP to the OEM for its latest

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generation of mobile phones, and are continuing to sell processors to its CMs for older generations of mobile phones. We began
recognizing royalty revenue from this OEM in the three months ended March 31, 2012, and we expect that our total revenue from
this OEM and its CMs will continue to decline as we receive a lower royalty per mobile device than the selling price of a
stand-alone processor.

Industry overview
Mobile devices are ubiquitous today and play an increasingly prominent role in peoples’ lives. However, due to network and
device limitations, voice quality has not changed significantly since the introduction of mobile phones. For example, the frequency
range of sound has historically been constrained by narrowband, circuit switched networks, resulting in lower voice quality than in
a face-to-face conversation. In addition, mobile devices have been unable to adequately separate the user’s voice from
background noise. As a result, users have had to tolerate noisy, poor quality voice communication. After years of mobile network
infrastructure investments in bandwidth and connectivity, MNOs are turning their attention to voice and audio quality as a way to
improve user experience, satisfaction and loyalty.
The transition from narrowband to wideband communications has produced networks capable of carrying higher quality signals,
and the sound quality delivered by these networks is poised for significant improvement. Advanced voice and audio solutions will
also enable mobile devices to improve sound quality and enhance the user experience. As users increasingly become aware of
these network and device improvements, they are demanding improved voice quality in the devices they depend upon, including
smartphones, feature phones, media tablets and mobile PCs. In addition, new applications and functionality, such as voice as a
user interface, will require improved voice and audio quality. We expect that OEMs and MNOs will increasingly adopt advanced
voice and audio solutions as they seek to differentiate future products and services.
IDC estimates that the market for mobile devices, including smartphones, feature phones, media tablets and mobile PCs, will grow
to 2.6 billion units by 2015. This market is undergoing rapid change, and IDC expects fast growing segments such as
smartphones and media tablets to have 2010 to 2015 unit CAGRs of 28% and 50%, respectively, driving growth and changing
user expectations for mobile devices. Dedicated voice and audio processors are expected to expand rapidly as a new category
not only in mobile devices, but also in additional market segments into which we have not yet released our products such as
automobile infotainment systems, desktop PCs, digital cameras, digital televisions, headsets and set top boxes. IDC estimates
that voice and audio processor unit sales will grow from 63 million units in 2010 to over 1.6 billion units in 2015, representing a
CAGR of 92%.

Trends driving demand for high-quality voice and audio solutions in mobile devices
Sound quality is fundamental to the user experience in mobile communications. A variety of trends are driving demand for
high-quality voice and audio solutions in mobile devices, including:
Users expect more freedom in how and where they communicate . Users increasingly want to make or take calls with their
mobile devices in noisy environments, but they also want to hear and be heard clearly. Users want a consistent, high-quality voice
and audio experience whether conducting a conference call from an airport, video chatting in a cafe, calling a friend hands-free
while driving or capturing and posting multimedia content to a social network page.

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Emerging adoption of wideband communications networks . MNOs are migrating the delivery of voice content from narrowband,
circuit-switched public networks to more advanced, wideband, packet-switched Internet Protocol networks. Internet
Protocol-based coding and transmission enables a much richer voice experience by widening the prior frequency limits on voice
transmission.
Users expect high-quality voice and audio in their mobile devices . As MNOs and OEMs promote new wideband networks and
more advanced mobile devices in their marketing campaigns, users are learning to expect and seek improved voice and audio
quality from those networks and devices.
Increased functionality in mobile devices . OEMs are adding new features to mobile devices that were historically found only in
stand-alone devices such as music players, video cameras, navigation devices, gaming devices and others. Substantial
improvements in voice and audio quality improve the user experience for many of these functions. OEMs are making greater
investments in voice and audio quality for multifunction mobile devices.
Increased far-field interaction with mobile devices . An increasing number of applications require far-field use cases, in which the
microphone is held farther from the sound source than traditional handset use modes. A common far-field use case is
speakerphone mode, which is typically used with applications such as Skype, Facetime, hands-free calling and Google Voice
Search. These and other applications require a combination of speech, touch and visual interaction where the mobile device is
held away from the speaker. Far-field uses are more vulnerable to background noise interference and poor voice quality given the
speaker’s distance from the device.
Voice is becoming a preferred interface for mobile devices . Voice communication is a fundamental form of human interaction
and represents a natural interface for mobile devices. A common use of voice as a mobile device interface is in automobiles,
where users are required to comply with hands-free legislation. Similar to the evolution of touch as an interface, speech
recognition is expected to be increasingly important, particularly as voice-enabled applications become more prevalent and viable.
Poor-quality audio impacts the HD video experience.      As HD video content continues to become increasingly prevalent within
broadband and broadcast networks, we believe that a high-quality audio user experience will provide a point of substantial
differentiation in the experience of consuming media content, and that robust real-time voice and audio processing will play an
important role in user satisfaction as HD video capture and playback on mobile devices becomes more common.

Voice and audio subsystem in mobile devices
The voice and audio subsystem in a typical smartphone includes a baseband processor for modulation and transmission of voice
and audio signals, an application processor for multimedia-based applications, audio codecs to digitally encode and decode audio
signals, as well as acoustic elements such as microphones and speakers. Some mobile devices only incorporate a single
microphone as part of the audio subsystem, while more advanced mobile devices use two microphone solutions to increase the
amount of information available to improve the voice and audio performance of the device. The voice and audio subsystem also
includes other analog circuits, such as data converters, amplifiers and mixers, each of which has a specific function along the
signal chain.

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                           Figure 1: Illustrative voice and audio subsystem for a typical smartphone

Innovation in the voice and audio subsystem
A greater number of mobile devices are incorporating a new category of voice and audio processors with dedicated processing
resources and specialized algorithms to improve user experience. The pace of innovation in voice and audio processing has
recently accelerated, with the adoption of two microphone nonstationary noise suppression solutions. We believe that new
technology development and introduction will continue at a rapid pace for the foreseeable future, driven by demand for improved
voice and audio quality, with voice becoming a core user interface in mobile devices.

Challenges in delivering high-quality voice and audio solutions in mobile devices
The mobile environment is noisy . The availability of mobile networks has provided users the ability to communicate anywhere,
including in noisy environments where unwanted sound makes it difficult for users to hear and be heard. New and existing far-field
uses, such as video calling and speakerphone mode, make mobile communications even more susceptible to degradation by
ambient noise. In addition, new voice communication technologies such as Skype that use Internet Protocol-based communication
offer a wider audio frequency range, but are inherently noisier than typical narrowband communications.
Isolating voice from background noise is very difficult . Removing background noise while preserving speech quality is
challenging. Nonstationary noise, such as voice or music, which constantly changes in both frequency and loudness, is
particularly problematic. Nonstationary noise is highly distracting to a listener and is especially difficult to remove without affecting
speech quality, due in part to the

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similarity of such noise to speech itself. An effective solution should be able to remove all noise types, in almost all conditions,
without harming speech quality.
A complete voice and audio solution cannot be provided without consistent voice isolation.        For an improved mobile device user
experience, it is necessary to provide high-quality echo cancellation, equalization, receive channel enhancement and improved
speaker output. In order to accomplish this, it is essential to have a detailed analysis of the sound sources and consistently isolate
the voice or audio signal of interest for focused and effective improvement across use cases and noise environments. For
example, receive channel enhancement requires isolation of voice from noise in the far-end signal, as well as analysis of local
noise sources.
Implementing high-quality voice and audio solutions on mobile devices creates additional challenges . Mobile devices are small,
thereby limiting any opportunity to spread out or use a large number of microphones to locate the desired voice. The small form
factor of mobile devices also makes it difficult to physically separate speakers from microphones to prevent echo. There is
typically little or no flexibility to adapt the mobile device form factor to the acoustic needs of a voice processing solution. Cost
constraints often compel OEMs to use low cost, commoditized microphones and speakers, which have significant manufacturing
variances that impair most multimicrophone solutions. Low power consumption requirements preclude the use of high-power
integrated circuits or software. Finally, short design cycles further exacerbate these issues by limiting the window of time to tune
device performance for a device’s individual acoustic and electronic characteristics.
All of these challenges impair basic voice call quality and are magnified for emerging uses of voice and audio such as video
communication, speech recognition and multimedia capture and playback, which depend on far-field use cases and/or wideband
frequencies.
Traditional signal processing techniques are not scalable or adaptable to dynamic sound environments . Conventional
approaches deployed in baseband and other processors lack the sophistication to benefit from greater compute capabilities and
are unable to mitigate nonstationary noise effectively. These techniques exhibit the following shortfalls:
•   Stationary noise suppression— removes only small amounts of slowly changing noise, such as noise from a fan.
•   Beam-forming —uses multiple microphones, relies on directional noise suppression and is susceptible to variations in noise
    direction and device position. These variations degrade the user experience because the distracting noise randomly appears
    and disappears. Overall performance is highly sensitive to manufacturing variations in microphones.
•   Voice activity detection —prevents noise when a user is not talking and passes through noise when the user is talking.
While these techniques are often combined, they do not mitigate one another’s shortcomings, and the result can be inconsistent
performance, poor voice quality and a poor user experience.

Our solution
We provide intelligent voice and audio solutions that substantially improve sound quality and suppress noise in mobile devices.
We believe that our auditory intelligence approach addresses the challenge of providing clear and consistent voice and audio
quality more effectively than other available solutions. Our platform consists of our proprietary, purpose-built DSPs, analog and
mixed signal circuits and algorithms for voice isolation and noise suppression. In addition, we provide our proprietary AuViD

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graphical design tools to help OEMs design in and tune our products in their efforts to bring the best voice and audio quality
mobile devices rapidly to market.

Benefits to mobile device users
Our solutions improve user experiences by delivering the following benefits:
•   Differentiated voice and audio quality .   Our products substantially improve voice quality and reduce background noise in
    mobile devices wherever they are used. Users can more comfortably hear and be heard in noisy environments, such as the
    sidewalk of a busy street, a sporting event or an airport terminal, without needing to elevate their voices, strain to hear or mute
    their lines. Users can speak quietly and in a normal tone of voice while in a noisy environment, thereby gaining privacy. Users
    can also experience the benefits of wideband networks more fully without the background noise interference to which
    wideband communication is particularly susceptible.
•   Consistent voice and audio experience . Our products enable a more consistent voice and audio experience, regardless of
    the use case or the surrounding noise environment. Our voice isolation and noise suppression techniques enable users to
    communicate clearly irrespective of noise type or location, such as background noise, acoustic echo or unwanted voices or
    sounds. The quality of our solution is robust on either narrowband or wideband networks and is not significantly impacted by
    the angle or position of the mobile device relative to the user. Our solutions effectively support video calling on mobile devices,
    a far-field use case.
•   Robust speech recognition . By combining our high-quality voice isolation capability with next generation third-party speech
    recognition software, our intelligent voice and audio solutions improve the user experience with speech recognition
    applications. For example, users are better able to use their devices’ speech-to-text applications to find driving directions
    without needing to manually type the address. Users can also use voice commands to search while holding their devices at a
    distance to simultaneously see search results.
•   Clarity of audio capture and playback . We believe that demand for creating and viewing user-generated content will lead
    users to select devices that feature differentiated HD audio and video capture. Our solutions enable functions relying on voice
    and audio to work in a more robust and consistent manner. Users can take part in HD video conference calls or record HD
    video, where our solutions can isolate or improve the accompanying audio. Users also experience improved voice and audio
    quality on streaming or downloadable video, music and television content, even on small, inexpensive mobile device speakers.

Benefits to the mobile device ecosystem
Our technology and collaboration efforts also benefit other members of the mobile device ecosystem, including OEMs, MNOs,
mobile operating system providers and application vendors.
•   Original equipment manufacturers . OEMs can more effectively differentiate their mobile devices by providing a better user
    experience when our intelligent voice and audio solutions are incorporated into their products. Our processors also provide
    more consistent performance over variations in device manufacturing tolerances. OEMs benefit from our processors’ small die
    size, power-efficient design and our support capabilities, including our development and integration tools which ensure
    seamless compatibility and rapid time to market. Our solutions also help OEMs’ mobile devices to meet specifications set by
    MNOs regarding voice and audio quality.

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•   Mobile network operators . By improving the user experience, we believe that our processors can increase user demand for
    mobile communication services, enhance user satisfaction and promote user loyalty. Our processors’ noise suppression
    capabilities also have the potential to increase network capacity for MNOs by reducing the transmission of noise.
•   Mobile operating system providers . Mobile operating system providers benefit from our processors’ ability to intelligently
    analyze and understand the sound environment in support of speech recognition, multimedia and other applications.




                                      Figure 2: Audience and the mobile device ecosystem

Our competitive strengths
Since our founding, we have focused on understanding sound to improve the user experience. We have combined auditory
neuroscience and technology to improve voice and audio quality in mobile devices. In so doing, we have created a new category
of advanced voice and audio solutions for mobile devices. Our leadership position in this category results from the following core
strengths:
•   Deep domain expertise in voice and audio communications . Our team includes leading innovators in CASA, speech analysis
    and coding, spatial audio and acoustics, among other disciplines. More than two-thirds of our research and development team
    have advanced engineering degrees. At Audience, this team has leveraged that experience to develop and deploy two
    generations of CASA-based voice and audio products, creating a new category of voice and audio processors.
•   Differentiated, scalable technology platform . Our proprietary platform offers high-quality voice and audio performance at low
    power by leveraging our purpose-built DSPs and algorithms. Our CASA-based architecture scales with compute power and
    across new applications and use cases. We believe this ability to scale our technology differentiates us from alternative
    approaches to voice and audio quality. Additionally, the flexibility of our platform’s design interface makes it easy for customers
    to integrate our products into a wide range of mobile devices.

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•   Strong relationships with industry leading MNOs and operating system developers . Our collaboration with leading MNOs
    provides us visibility into critical design specifications and development timelines, which helps to keep us at the forefront of
    technological innovation in voice and audio solutions. We also influence the design specifications for OEMs’ devices set by
    certain of these MNOs to increase demand for our products. We are actively engaged in various ways with leading MNOs,
    including AT&T, China Mobile, Orange, Sprint Nextel, Telecom Italia, T-Mobile, Verizon and Vodafone. In addition, we are
    building relationships with operating system providers, such as Google, Inc., whose operating system enables speech
    recognition and other applications that can leverage the capabilities of our platform.
•   Collaboration and repeat design wins with leading OEMs . Through close, long-term relationships with OEMs, we gain both a
    unique understanding of their product roadmaps and an ability to influence design decisions. These insights help us to
    anticipate our key OEMs’ future voice and audio challenges and drive our product and technology roadmap. As of March 31,
    2012, our processors had been incorporated in over 70 mobile device models that have reached commercial production,
    including those sold by leading OEMs, such as Apple through its CMs Foxconn and Protek, HTC, LG, Pantech, Samsung,
    Sharp and Sony. We believe that these OEMs have repeatedly selected us based on the high quality, performance and
    reliability of our solutions.
•   Significant OEM design support capabilities . We work closely with OEMs throughout their design processes using our
    proprietary AuViD graphical design tools to integrate our solutions into their mobile devices, which enables us to improve
    design efficiency, increase productivity and establish differentiated design relationships with OEMs. We also have a
    considerable field application engineering team to provide design support capabilities, enabling OEMs to efficiently deploy our
    solutions across their portfolio.
•   Significant intellectual property portfolio in voice and audio technologies . Our intellectual property consists of core
    technology related to mapping the human auditory system within a computational framework, as well as the technology, tools
    and methods related to the implementation of these technologies in mobile devices. As of March 31, 2012, this intellectual
    property included seven issued U.S. patents, 87 pending U.S. patent applications and 37 pending foreign patent applications,
    as well as proprietary analog and digital signal processing building blocks, optimizations for programmable DSP architectures,
    multimedia processing, audio algorithms, audio codecs and amplifiers, embedded firmware and operating systems, tools and
    audio tuning capabilities.

Our strategy
Our mission is to be the leading provider of intelligent voice and audio solutions for the mobile device and consumer electronics
markets. Key elements of our strategy include:
•   Innovate to further improve the user experience . We believe that there is significant opportunity for substantial improvement
    in voice and audio quality relative to capabilities available in the market today. We expect users to continue to demand
    improved voice quality during mobile phone calls, as well as an expanding range of mobile device uses and applications. We
    intend to continue to develop innovative voice and audio solutions to satisfy that demand.
•   Improve and extend our proprietary platform . Our technology is built upon a unique approach to voice and audio processing
    that begins by modeling the human auditory system. We intend to advance our modeling of this system to access its untapped
    potential within our scalable architecture. Modeling advancements will allow us to improve our platform’s performance and to
    incorporate added capabilities and features into future product generations that support new applications in real-time
    communications, speech recognition and multimedia.

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•   Develop and expand relationships with OEMs . Our solutions enable OEMs to differentiate their products in their highly
    competitive markets. We intend to continue to develop relationships with new OEMs and to expand our existing engagements
    to increase our solutions’ penetration across OEMs’ product platforms. In addition, we intend to continue to develop our
    application engineering capabilities to more rapidly integrate our voice and audio solutions into new device platforms.
•   Extend collaboration with leading MNOs and operating system developers . We intend to continue our work with MNOs to
    improve the user experience with mobile devices on their networks. We also intend to continue to partner with MNOs to extend
    our reach into additional international markets. We expect to work with mobile operating system and applications developers to
    further align our solutions and to refine our roadmap to support future generations of software applications.
•   Leverage our technology leadership to penetrate new market segments . Our proprietary technology can be applied to
    numerous adjacent market segments where users will benefit from improved voice and audio capabilities. These new market
    segments may include automobile infotainment systems, desktop PCs, digital cameras, digital televisions, headsets and set
    top boxes.

Our technology
We collaborate with leading experts in auditory neuroscience to understand the detailed function of the human auditory pathway,
uniquely combining science and technology to model the functions of human hearing. Our architecture combines scientific
breakthroughs with DSP hardware acceleration to deliver a solution with the intelligence of human hearing in the size and power
constraints of mobile devices.
The human auditory system is remarkable for its ability to identify and isolate individual sources within a complex sound mixture to
enable people to hear the desired sound source clearly, which we refer to as auditory intelligence. To effectively manage the
separation and identification of individual sounds, the human hearing system evaluates the entire auditory scene based on a
variety of characteristics. Employing the science of CASA, our proprietary technology has been designed to intelligently
characterize, group, classify the auditory scene and isolate a speaker’s voice from noise.
Our proprietary CASA-based algorithms provide a rich, highly integrated capability we use to deliver leading-edge voice and audio
quality solutions. Our platform allows us to create custom, hardware-accelerated DSPs, purpose-built for our algorithms, to
provide top performance with low power characteristics. Our core technology has already scaled from basic calls to more difficult
voice use cases, such as wideband speakerphone mode. We believe our dedicated approach to voice and audio processing will
continue to enable our solutions to scale along with the demands in mobile devices for increased performance and more robust
feature sets. Our architecture will allow us to incorporate additional intelligence into our solutions in each of the processing stages,
such as adding new characterization cues to enable more refined decision making. We believe that this will enable our solutions to
better address new and more challenging use cases and noise conditions as compared to traditional approaches.

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The following descriptions and diagram of corresponding stages depict our CASA-based architecture.
•   Fast Cochlea Transform (FCT) . Our proprietary FCT architecture, based on the human cochlea, transforms incoming sound
    waves into frequency components in order to map the digital audio stream into a three-dimensional representation of the sound
    mixture. This approach has significant benefits over the typical method, the Fast Fourier Transform (FFT). In particular, it offers
    much higher spectro-temporal resolution than is possible using FFT, enabling precise characterization and analysis of the
    auditory scene, similar to the analysis that occurs in the human auditory pathway. Our solutions attain this resolution with very
    low latency, which is necessary for use in real-time communications. This combination of high resolution and low latency is
    unique to the FCT.
•   Characterization . During characterization, our solutions identify and compute the acoustic properties of incoming sounds
    according to fundamental attributes such as pitch, harmonics, spatial location, temporal and other information in the frequency
    domain. The diversity and precision of our characterization is essential to making intelligent decisions in the grouping stage
    which follows.
•   Grouping . Following characterization, our solutions group the FCT domain components of the sound mixture into individual
    sources according to a variety of CASA principles, such as common location, onset time and fundamental frequency, as well
    as timbral consistency. Information from the characterization stage is simultaneously evaluated in real time, including time
    alignment, in order to decide which FCT domain energy belongs to which sound source. In this way, individual sound
    components are grouped to create separate audio streams, which are then tracked independently.
•   Voice isolation . Once all of the individual sound components have been properly characterized and grouped into discrete
    streams, the sound source of interest is selected. Importantly, the isolation stage enables the intelligent separation of voice
    from other components of the sound mixture, eliminating noise and other audio to deliver clear voice and audio to users.
•   Inverse FCT . As a final stage, the inverse FCT is responsible for reconstructing the FCT data back into high-quality digitized
    audio for further transmission.




                                        Figure 3: Stages of our CASA-based architecture

Our products
Our solutions include our proprietary, purpose-built DSPs, algorithms for voice isolation and noise suppression and our design
tools and support capabilities. These processors enable noise suppression and improved sound quality for real-time
communications, speech-based applications and multimedia.

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Our processors provide dedicated computational power for the implementation of our proprietary, CASA-based algorithms. These
processors have been optimized for both performance and power and utilize advanced hardware acceleration techniques. Our
product portfolio supports both analog and digital interfaces to provide added design flexibility for our customers.
We design our solutions to deliver consistent performance. Incorporating over 10 years of field testing and device data, our
solutions deliver improved voice and audio quality and noise suppression in near and far-field modes and at different handset
orientations. Our processors deliver noise suppression in real world environments by removing both stationary and nonstationary
noise for narrowband and wideband communications.
Key features of our products include:
Real time communication voice quality
•   Nonstationary noise suppression :       Suppression of dynamic distracters, such as background voices or music, characterized
    by rapid or random changes.
•   Transmit and receive : Simultaneous signal processing along both the transmit and receive paths. In the transmit path, the
    user’s auditory scene is processed before transmission to the listener on the other end. In the receive path, the audio stream
    from the other end is improved by our solution and then presented to the near end listener.
•   Near-field and far-field capability :   More consistent voice and audio quality wherever the device is held and used.
•   Narrowband and wideband :        Capable of signal processing for both narrowband and wideband signals.
•   Audience HiFi voice : Improves narrowband signals by estimating and adding energy at higher sound frequencies to create
    wideband voice quality and deliver rich, full sound quality.
•   Acoustic echo cancellation : Cancellation of echo caused by acoustic conditions that redirect sound, such as the acoustic
    coupling between a mobile device’s speakers and microphones.
•   One microphone compensation : Compensation for one microphone mobile devices, which provide fewer environmental cues
    than two microphone mobile devices, delivering improved voice and audio quality in near-field and far-field uses for one
    microphone mobile devices.
Automatic speech recognition (ASR) assist
•   ASR assist :    Improves accuracy and performance of speech enabled applications in the presence of noise.
Multimedia improvement
•   Parametric equalization : Post-processing of music streams during playback to emulate audio profiles such as rock, classical,
    jazz and other custom profiles by enhancing specific frequencies in the audio stream.
•   Stereo widening : Improvement of music playback over headphones or stereo loudspeakers by expanding the perceived
    spatial separation of different sounds.

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Our voice and audio solutions
Our processors range in performance and functionality to meet the multiple needs of various mobile devices. We currently offer
the earSmart eS305, eS310, A1026, A1028 and custom voice and audio processors for device platforms including smartphones,
feature phones and media tablets. These processors are accompanied by our integration tools and support. We offer the following
processors:
•   eS305 : Second generation voice and audio processor utilizing new hardware acceleration architecture and algorithms for
    far-field, wideband communications and capable of advanced speech recognition assist; uses an all digital interface.
•   eS310 : Provides similar capabilities to the eS305. It also provides flexible connectivity to adjacent components, including
    both analog and digital interfaces.
•   A1026 :     First generation narrowband voice processor designed for real-time communications and typical near-field use.
•   A1028 : First generation narrowband voice processor designed for real-time communications and far-field as well as
    near-field use.
In the second quarter of 2012, we also expect to offer the earSmart eS110 voice and audio processor, which incorporates a
version of our audio processing technology for near-field and far-field use in devices that have a single microphone. During the
three months ending June 30, 2012, we also expect to sample our first product with analog codec functions that extends the
feature set of the eS310 from an analog interface to a stereo audio codec.

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The following table summarizes the feature set of our processors:
                                                                                   A1026             A1028                    eS110                eS305/eS310
                                                                            January 2010      October 2010    Samples January 2012    February 2011/June 2011
Feature                                                                          1                 1
                                                                            st Generation     st Generation      1 st Generation          2 nd Generation
One microphone processing                                                                                               

Two microphone processing                                                                                                                     

Acoustic echo cancelation                                                                                                                    

User interface tone mixing                                                                                                                   

Voice equalization                                                                                                                           

Multiband companding transmit                                                                                                                  

Multiband companding receive                                                                                                                  

Automatic gain control                                                                                                                       

Audience HiFi voice                                                                                                                            

ADC and DAC interfaces(1)                                                                                                                     

Stationary noise narrowband                                                                                                                  

Stationary noise wideband                                                                                                                       

Non-stationary noise over narrowband           Near-field Far-field
                                               Over receive path
                                               ASR assist                                                                                    
                                                                                                                                              
                                                                                                                                               
                                                                                                                                               

Non-stationary noise over wideband             Near-field
                                               Far-field
                                               Over receive path
                                               ASR assist                                                                                       
                                                                                                                                                
                                                                                                                                                
                                                                                                                                                

Multimedia                                     Parametric equalization                                                                          
                                               Stereo widening
                                                                                                                                                

End market                                     Smartphones
served                                         Feature phones
                                               Media tablets                                                                                 
                                                                                                                     
                                                                                                                                                

(1)       ADC is analog to digital converter and DAC is digital to analog converter.

                                                          Figure 4: Product differentiation by feature
Custom solutions : We sell a customized version of one of our processors to Foxconn and Protek. We have also licensed our
semiconductor intellectual property, which we refer to as processor IP, for custom designs to a single OEM for integration into its
mobile devices.
Integration tools and support : We provide OEMs with our AuViD graphical design tools enabling them to efficiently integrate and
customize the features of our voice and audio processors across a multitude of device designs. These tools feature an
easy-to-use visual design interface and facilitate rapid and cost-effective design integration. Our applications and technical sales
engineers work closely with OEMs to provide design support from device concept through field testing.

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Customers
We derive our revenue primarily from the sale of our voice and audio processors to OEMs which incorporate them into mobile
devices. We currently have design wins for our voice and audio processors to OEMs in the United States and Asia. As of March
31, 2012, OEMs, CMs and distributors worldwide had purchased more than 160 million of our processors and incorporated them
in over 70 mobile device models that have reached commercial production. In 2009, 2010 and 2011, sales to CMs and OEMs with
manufacturing operations and distributors in Asia represented substantially all of our revenue. Commencing in the three months
ended March 31, 2012, we began recording royalty revenue that is attributed to our OEM’s headquarters location, which is in the
United States. As a result, in the three months ended March 31, 2012, sales to CMs and OEMs in the United States and Asia
accounted for 38% and 62% of our revenue, respectively. See Note 12 of our consolidated financial statements for a discussion of
our revenue by geographic region.
OEMs design in our products and either procure them directly from us or indirectly through CMs or distributors. OEMs and their
CMs and distributors generally purchase our voice and audio processors on a purchase order basis and do not enter into
long-term contracts or have minimum purchase commitments with us that would obligate them to purchase additional products
from us in the future.
Since we began generating revenue in 2008, Apple, through its CMs, Foxconn and Protek, HTC, LG, Pantech, Samsung, Sharp
and Sony have incorporated our products into certain smartphones and feature phones, and, in the case of HTC, media tablets.
Apple accounted for 38% of our total revenue in the three months ended March 31, 2012. Foxconn accounted for 81%, 65% and
18% of our total revenue in 2010, 2011 and the three months ended March 31, 2012, respectively. Protek accounted for 10% and
6% and Samsung accounted for 20% and 36% of our total revenue in 2011 and the three months ended March 31, 2012,
respectively. In 2009, HTC, LG and Uniquest, a distributor for Samsung, accounted for 36%, 45% and 15% of our total revenue,
respectively. In 2008, LG, Pantech and Midoriya, a distributor for Sharp, contributed 18%, 20% and 60% of our total revenue,
respectively. We expect that our relationships with Foxconn and Protek, their OEM and Samsung will continue to account for a
substantial portion of our total revenue for 2012. No other OEM, CM or distributor accounted for 10% or more of our total revenue
in 2009, 2010, 2011 or the three months ended March 31, 2012.
On August 6, 2008, we entered into an agreement with Apple. Pursuant to the terms of the agreement, we develop, supply and
support a custom version of one of our processors and related software to Foxconn and Protek for use in certain mobile phones.
Pursuant to the terms of the agreement, we also license processor IP for certain mobile devices. We have entered into statements
of work under the agreement that set forth terms and conditions specific to licensing processor IP. While we expect to continue to
sell our processors to Foxconn and Protek for certain mobile phones in 2012, we began to receive royalties for the use of our
processor IP in other mobile phones sold by the same OEM in the three months ended March 31, 2012.
We may enter into license agreements with this OEM two years or more before we begin to receive royalty revenue on shipments
of mobile devices incorporating our processor IP. Under a license agreement we entered into in 2008, we began receiving royalty
payments in the three months ended March 31, 2012. As part of our 2008 license, we are entitled to receive a royalty for each
mobile device that is sold incorporating and, with respect to mobile devices other than mobile phones, enabling our processor IP.

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We entered into an additional license agreement with this OEM in 2010 relating to a new generation of our processor IP; however,
the OEM is not obligated to use this new processor IP, or previous processor IP we have licensed, in its mobile devices. For the
new generation of processor IP, the royalty is subject to a lifetime maximum, after which we would not receive royalties for
shipments of mobile devices into which that processor IP is integrated.
Under our agreement with this OEM, we provide custom processors to Foxconn and Protek, which we cannot develop,
manufacture or distribute to third parties unless the OEM ceases development of its mobile devices incorporating our product for
reasons other than our default. We are required to afford Foxconn and Protek priority allocation of processors in the event of a
supply constraint. Foxconn and Protek are not obligated to purchase any of our processors and their OEM is not obligated to
integrate or enable our processor IP in any of its current or future products. This OEM and its affiliates are not precluded from
developing competing products or technologies internally and designing those internally developed products and technologies into
its mobile devices. The term of the agreement is perpetual until terminated for cause by either party. This OEM may terminate a
written statement of work under the agreement for any reason by providing notice at least 30 days prior to termination. Under the
agreement, we have obligations to indemnify this OEM against, among other things, losses arising out of or in connection with any
claim that our technology or services infringe third-party proprietary or intellectual property rights.

Sales and marketing
We sell our voice and audio processors to OEMs and their CMs through a direct sales force aided in certain regions by third-party
sales representatives. For some OEMs, distributors purchase processors from us to fulfill the OEMs’ orders. We maintain sales
operations, which include our direct sales force, third-party sales representatives and distributors, in Asia, North America, Japan
and Europe. Substantially all of our revenue has been generated by sales to CMs and OEMs that manufacture their products in
Asia and distributors in Asia. We expect sales to CMs and OEMs in Asia to contribute a majority of our revenue for the
foreseeable future. As of March 31, 2012, we had 77 employees in sales and marketing, including our application engineers and
technical sales people, located in North America, Asia and Europe.
Our direct sales force focuses on securing design wins to incorporate our voice and audio processors in OEMs’ mobile devices.
We work directly with OEMs to create awareness of our product offerings and provide design and integration support.
We have also worked with MNOs to educate them about factors contributing to voice and audio quality in order to enable them to
further improve customer satisfaction. We work with MNOs to encourage OEMs to incorporate intelligent voice and audio solutions
in their products.
We also comarket our earSmart technology with AT&T, Sharp and Wal-Mart Stores, Inc., with information regarding our
technology featured on product packaging, advertising and promotional materials.

Manufacturing and operations
We operate a fabless business model and outsource the manufacturing of our voice and audio processors. Manufacturing
includes the fabrication of integrated circuits, assembly, packaging and test. We currently rely on TSMC to produce most of our
voice and audio processors at three of its fabrication facilities in Taiwan. We have also engaged Globalfoundries to produce some
of our voice and audio processors at two of its fabrication facilities in Singapore and have begun commercial production at these
locations. In addition, we rely on third parties, such as Signetics, for assembly,

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packaging and test, and other contractors for logistics. We do not have any long-term supply agreements with our foundries or our
assembly, packaging, test and logistics vendors. This outsourced manufacturing approach allows us to focus our resources on the
design, sale and marketing of our products. In addition, we believe that outsourcing our manufacturing provides us the flexibility
needed to respond to variations in customer demand, simplifies our operations and significantly reduces our capital
requirements.

Competition
The market for mobile device components is highly competitive and we expect competition to intensify in the future. There are a
number of components in the voice and audio subsystem of a mobile device including baseband processors, audio codecs and
voice and audio processors. Currently, we provide only voice and audio processors and do not compete in other aspects of the
mobile device component market. In the future, we may elect to expand our offerings to include other subsystem components and
we would need to compete against companies offering those subsystem components. Companies that currently compete for sales
of other mobile device components may enter the voice and audio processor market with stand-alone components or components
with other functionalities and compete with us.
We currently face competition from a number of established companies that produce components for the mobile device audio
subsystem, including companies that produce dedicated voice and audio solutions, such as Maxim, ON Semiconductor,
Qualcomm, Texas Instruments, Wolfson and Yamaha. We also face competition from smaller, privately held companies and could
face competition from new market entrants, whether from new ventures or from established companies moving into the areas of
voice and audio subsystems that our products address. We also compete against solutions internally developed by OEMs, as well
as combined third-party software and hardware systems.
Our ability to compete effectively depends on a number of factors, including:
•   our processors’ scalability, performance, quality, ease of use and cost effectiveness relative to those of our competitors’
    products;
•   our success in developing and creating demand for new and proprietary technologies to offer products and features previously
    not available in the marketplace;
•   our success in identifying new markets, applications and technologies;
•   our ability to attract, retain and support other OEMs and to establish and maintain relationships with MNOs;
•   our ability to recruit and retain engineering, sales and marketing personnel;
•   our products’ interoperability with various data access protocols and other voice and audio subsystem components of mobile
    devices;
•   our ability to continue to establish greater name recognition and build upon our reputation in the industry;
•   our ability to respond effectively to aggressive business tactics by our competitors, including selling at lower prices or asserting
    intellectual property rights irrespective of the validity of the claims; and
•   our ability to protect our intellectual property.
With respect to these factors, based on publicly available data, we believe that we compete favorably on performance, scalability
and cost.

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Research and development
Since our inception we have made substantial investments in research and development. We have research and development
facilities in Mountain View, California, Scotts Valley, California and Lafayette, Colorado. We also contract for certain research and
development services that are performed by a third party in Bangalore, India. As of March 31, 2012, we had 90 employees in
research and development. Our focus is to further develop our current voice and audio processors, develop new products that
achieve market acceptance, maintain technological competitiveness and meet an expanding range of mobile device requirements.
A majority of our research and development employees focus on software development. Our team includes leading innovators in
CASA, speech analysis and coding, spatial audio and acoustics, among other disciplines. More than two thirds of our research
and development team has an advanced engineering degree.
Our total expenses for research and development for 2009, 2010, 2011 and the three months ended March 31, 2012 were
$9.0 million, $11.4 million, $21.6 million and $5.7 million, respectively.

Intellectual property
Our success depends in part upon our ability to develop and protect our core technology and intellectual property. We rely
primarily on a combination of trade secret, patent, copyright and trademark laws, as well as contractual provisions with employees
and third parties, to establish and protect our intellectual property rights. Our products are provided to OEM customers pursuant to
agreements that impose restrictions on use and disclosure. Our agreements with employees and contractors who participate in
the development of our core technology and intellectual property include provisions that assign intellectual property rights to us. In
addition to the foregoing protections, we generally control access to our proprietary and confidential information through the use of
internal and external controls.
As of March 31, 2012, we held seven U.S. patents expiring between July 19, 2019 and December 8, 2030 and also had 87 U.S.
patent applications pending. As of March 31, 2012, we also had 37 pending foreign patent applications. Each of the foreign patent
applications is related to a U.S. patent or a pending U.S. patent application. Pending patent applications may receive unfavorable
examination and are not guaranteed allowance as issued patents. We may elect to amend, abandon, or otherwise not pursue
prosecution of certain pending patent applications or of certain inventions disclosed in those patent applications due to patent
examination results, strategic concerns, economic considerations or other factors. To the extent that a patent is issued, any such
issued patent may be contested, circumvented, found unenforceable or invalidated and we may be unwilling or unable to prevent
third parties from infringing a particular patent. Moreover, we cannot assure you that we can successfully use our patents to
prevent competitors from copying our products or developing competing technologies. We will continue to assess appropriate
occasions to seek patent protection for aspects of our technology that we believe provide us a significant competitive advantage in
the market.
As of March 31, 2012, we had registered the trademarks for “AUDIENCE,” “hear and be heard,” “Fast Cochlea Transform” and
“the world’s most intelligent voice processor” in the United States. As of March 31, 2012 we had registered the trademark for
“AUDIENCE” in the EU, Japan, South Korea and Taiwan. Additionally, we have trademark applications pending in the United
States for “earSmart,” “the future of voice is hear” and the earSmart logo. We also have trademark applications pending in the EU,
Japan and South Korea for “hear and be heard,” “earSmart” and the earSmart logo. We also have a pending application in South
Korea for “the world’s most intelligent voice processor.” We also have trademark applications pending in China, India and Taiwan
for “AUDIENCE,” “earSmart,” “hear and be heard,”

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“the world’s most intelligent voice processor” and the earSmart logo. Additionally, we have a pending application in Korea for the
earSmart composite mark.

Employees
As of March 31, 2012, we had 206 employees in offices across North America, Asia and Europe including 77 employees in sales
and marketing, 90 in research and development, 14 in manufacturing and operations and 25 in finance and administration. We
consider our current relationship with our employees to be good. None of our employees are represented by labor unions or have
collective bargaining agreements.

Properties
Our principal administrative, sales, marketing, customer support and research and development facility is located at our
headquarters in Mountain View, California. We currently lease approximately 47,536 square feet of office space at the Mountain
View facility pursuant to two leases, with one lease expiring August 4, 2012, subject to extension to December 31, 2013, and the
other December 31, 2013. We also lease approximately 28,561 square feet of office space in Mountain View, California and our
lease for this facility expires on April 30, 2014. In addition to our headquarters, we lease 1,833 square feet of office space in
Scotts Valley, California and our lease for this facility expires on September 16, 2012. We also lease approximately 1,875 square
feet of office space in Lafayette, Colorado for research and development and our lease for this facility expires on July 31, 2012,
subject to extension to July 31, 2014. We also lease 4,556 square feet of office space in China and our lease for this facility
expires on March 4, 2014. We also lease 3,751 square feet of office space in Korea and our lease for this facility expires on
December 31, 2012. We also lease 4,028 square feet of office space in Taiwan and our lease for this facility expires on
January 31, 2014. We believe that our existing properties are in good condition and are sufficient and suitable for the conduct of
our business. We intend to add new facilities or expand existing facilities as we add employees or expand our markets and we
believe that suitable additional space will be available as needed to accommodate any such expansion of our operations.

Legal proceedings
We are currently not a party to any legal proceedings. From time to time, we may be involved in legal actions arising in the
ordinary course of business.

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                                                                     Management
Executive officers and directors
The following table sets forth information regarding our current executive officers and directors and their ages as of March 31,
2012:

                                                        Ag
Name                                                     e           Position
Peter B. Santos                                         52           President, Chief Executive Officer and Director
Kevin S. Palatnik                                       54           Chief Financial Officer
Andrew J. Keane                                         49           Vice President of Marketing
Andrew J. Micallef                                      47           Vice President of Operations
Robert H. Schoenfield                                   48           Vice President of Business Development
Thomas Spade                                            46           Vice President of Sales
Forest Baskett(2)(3)                                    68           Director
Barry L. Cox                                            69           Director
Marvin D. Burkett(1)(2)                                 69           Director
Rich Geruson(1)                                         54           Director
Mohan S. Gyani(3)                                       60           Director and Chairman of the Board
George A. Pavlov(1)(2)(3)                               51           Director

(1)   Member of our audit committee.

(2)   Member of our compensation committee.

(3)   Member of our nominating and corporate governance committee.

Executive officers
Peter B. Santos has served as our president, chief executive officer and director since October 2005. From June 2004 to October
2005, Mr. Santos served as our vice president of marketing and business development. From 2001 to 2003, Mr. Santos was vice
president of marketing and business development at Barcelona Design, Inc., an analog semiconductor intellectual property
company. From 1998 to 2001, Mr. Santos was vice president of marketing at Voyan Technology Inc., a DSL systems provider.
From 1996 to 1998, Mr. Santos served as director of services marketing at Cadence Design Systems, Inc., an electronic design
automation software company. Mr. Santos also spent six years at LSI Corp., an ASIC solutions company, where he led worldwide
ASIC product marketing and four years in semiconductor device engineering at Raytheon Company, a defense contractor.
Mr. Santos received a B.A. from Colby College and an M.B.A. from the University of North Carolina. We believe that Mr. Santos
possesses specific attributes that qualify him to serve as a member of our board of directors, including his extensive experience in
the semiconductor and telecommunications industry and the operational insight and expertise he has accumulated as our
president and chief executive officer.
Kevin S. Palatnik has served as our chief financial officer since August 2011. From 1994 to 1999 and June 2001 to November
2010, Mr. Palatnik held various positions at Cadence Design Systems, Inc., including corporate controller and most recently as
senior vice president and chief financial officer. Mr. Palatnik also spent 14 years at IBM Corporation where he held various
engineering and executive financial positions. Mr. Palatnik received a B.S. and an M.B.A. from Syracuse University.
Andrew J. Keane has served as our vice president of marketing since November 2011. From February 2006 to May 2011,
Mr. Keane served as vice president and general manager of Tesla Computing at

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NVIDIA Corp., a visual computing technologies company. From 1995 to 2005, Mr. Keane held either vice president of marketing
or vice president of sales and marketing positions at Ageia Technologies, Inc., a fabless semiconductor company, Cooligy, Inc., a
thermal management solutions company, Morphics Technology, Inc., a communication systems company, Quantum Effects
Devices, Inc., a microprocessor company, PMC-Sierra, Inc., a semiconductor company, and 3Dfx Interactive, Inc., a manufacturer
of graphics cards. Mr. Keane earned a B.S. from the Rensselaer Polytechnic Institute and an M.B.A from the University of
California, Berkeley.
Andrew J. Micallef has served as our vice president of operations since July 2010. From April 2007 to February 2010, Mr. Micallef
served as executive vice president of worldwide manufacturing and operations at LSI. From October 2000 to April 2007,
Mr. Micallef held various positions at Agere Systems Inc., an integrated circuit components company, where he most recently
served as executive vice president of global operations. From August 1995 to August 2000, Mr. Micallef also held various
operations and finance positions at Fujitsu-ICL Systems, a provider of IT products and services, and from June 1993 to August
1995 at IBM. Mr. Micallef also spent three years at General Dynamics, where he worked as a mechanical and fluid systems
design engineer. Mr. Micallef earned a B.S. from the University of Notre Dame and an M.B.A. and M.S. in engineering from the
University of Michigan.
Robert H. Schoenfield has served as our vice president of business development since March 2011. From November 2009 to
February 2011, Mr. Schoenfield was vice president of sales for North America at Polaris Wireless, Inc., a software-based location
systems company. From January 1999 to October 2009, Mr. Schoenfield served in several positions with Aeris Communications,
Inc., a mobile network operator, the most recent of which was senior vice president of sales, marketing and business development
and he previously served as president of their South American division. Mr. Schoenfield also held various executive roles
managing sales and business development for Tetra Tech, Inc., an environmental engineering and consulting company, from
November 1995 to October 1998, and Nextel Communications, Inc., a telecommunications company, from April 1992 to
September 1995. Mr. Schoenfield earned a B.S. from San Francisco State University.
Thomas Spade has served as our vice president of sales since August 2010. From August 2009 to August 2010, Mr. Spade was
vice president of global sales for portable power at Boston-Power, Inc., a battery systems company. From May 2007 to August
2009, Mr. Spade served as vice president of global sales at Validity, Inc., a sensor technology company. From April 1998 to May
2007, Mr. Spade held various positions at Synaptics Incorporated, a human interface solutions company, the most recent of which
was vice president of worldwide sales. Previously, Mr. Spade held senior sales positions at Alliance Semiconductor Corporation.
Mr. Spade holds a B.S. from Albion College.

Directors
Barry L. Cox has served as one of our directors since October 2009 and served as our chairman from October 2009 to August
2011. From June 2005 to August 2009, Mr. Cox served as executive chairman of the board of directors of BrightScale. From July
1998 to August 2000, Mr. Cox served as executive chairman of the board of directors at Quantum Effect Devices. Mr. Cox also
held executive roles at Weitek Corp., a semiconductor design company, and ATEQ Corp., a semiconductor equipment
manufacturing company that Mr. Cox co-founded. Mr. Cox also spent eight years at Intel Corporation, most recently as president
of Intel Europe. From February 2003 to April 2006, Mr. Cox served as chairman of the board of directors for Nova Measuring
Instruments Ltd., a semiconductor capital equipment company. Mr. Cox also served on the boards of directors of Softier, Inc., an
IPTV software solutions company, from November 2004 to April 2007, of Nanoconduction, Inc., a nanotechnology

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company, from June 2007 to September 2008, of GigaFin Networks, Inc., a network appliance company, from October 2007 to
November 2008 and of Grandis, Inc., a semiconductor company, from July 2008 to September 2011. Currently, Mr. Cox is a
member of the board of directors of Summit Microelectronics, Inc., a semiconductor company, and Pixelworks, Inc., a video
technology company. Mr. Cox holds a B.S. from the United States Air Force Academy and an M.B.A. from Boston University. We
believe that Mr. Cox possesses specific attributes that qualify him to serve as a member of our board of directors, including his
extensive experiences as an executive in the semiconductor industry and as a board member of other privately held companies.
Forest Baskett has served as one of our directors since April 2006. Dr. Baskett joined New Enterprise Associates, Inc., a venture
capital firm, in 1999 and became a General Partner in 2004. From 1986 to 1999, Dr. Baskett was senior vice president of research
and development and chief technology officer at Silicon Graphics Inc., a computing solutions company. Prior to Silicon Graphics,
Dr. Baskett founded and directed the Western Research Laboratory of Digital Equipment Corporation, a computer manufacturer,
and was a professor of computer science and electrical engineering at Stanford University. During the past five years Dr. Baskett
has served on the boards of directors of Atheros Communications, Inc. from March 2000 to April 2007, Aeluros, Inc. from August
2001 to October 2007, Fulcrum Microsystems, Inc. from August 2001 to August 2011, T-RAM Semiconductor, Inc. from May 2002
to October 2008, Agility Design Solutions, Inc. from July 2003 to December 2008, SiBEAM, Inc. from December 2004 to April
2011, Arch Rock Corporation from September 2005 to September 2010, RingCube Technologies, Inc. from February 2006 to July
2008, Foveon, Inc. from March 2006 to November 2008 and Aprius, Inc. from October 2006 to June 2011. Currently, Dr. Baskett
is a member of the boards of directors of AstroWatt, Inc., Chelsio Communications Inc., Azuray Technologies, Inc., Bandgap
Engineering, Inc., Firefly Green Technologies, Inc., Fusion-io, Inc., Illumitex, Inc., Luxtera, Inc., Solar Junction Corporation,
Terrajoule Corporation (f/k/a Solar Storage Company), SuVolta, Inc., Svaya Nanotechnologies, Inc., Serious Energy, Inc. (f/k/a
Serious Materials, Inc.), Tableau Software, Inc., and Tintri, Inc. Dr. Baskett earned a B.A. from Rice University and a Ph.D. in
computer science from the University of Texas at Austin. We believe that Dr. Baskett possesses specific attributes that qualify him
to serve as a member of our board of directors and as chair of the compensation committee and a member of our audit and
nominating and governance committee, including his experience as a director of technology companies and his background in the
venture capital industry.
Marvin D. Burkett has served as one of our directors since August 2010. From September 2002 to February 2009, Mr. Burkett was
chief financial officer and chief administrative officer for NVIDIA Corp. From February 2000 to September 2002, Mr. Burkett served
in various capacities at Arcot Systems, Inc., a cloud-based authentication company, the most recent of which was as its chief
financial officer. From 1998 to 1999, Mr. Burkett served as executive vice president and chief financial officer of Packard Bell
NEC, Inc., a telecommunications company. From 1972 to 1998, Mr. Burkett served in various capacities at Advanced Micro
Devices, Inc., a semiconductor company, the most recent of which was as its chief financial officer. Prior to Advanced Micro
Devices, Mr. Burkett worked at Raytheon Company. Mr. Burkett served as a director of NetLogic Microsystems, Inc. from
December 2010 until it was acquired by Broadcom Corporation in February 2012. Currently, Mr. Burkett is a member of the board
of directors of Entegris Corporation, G2 Holdings Corporation and Intermolecular, Inc. Mr. Burkett holds a B.S. and an M.B.A. from
the University of Arizona. We believe that Mr. Burkett possesses specific attributes that qualify him to serve as a member of our
board of directors and serve as chair of our audit and a member of our compensation committee, including his deep financial
background and his experience in the semiconductor industry.

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Rich Geruson has served as one of our directors since January 2012. Since February 2011, Mr. Geruson has served as president,
chief executive officer and a member of the board of directors of Phoenix Technologies, Inc., a maker of core systems software for
PCs, servers and mobile devices. From November 2008 to February 2011, Mr. Geruson served on the board of directors of
SoundHound Inc. From November 2007 to July 2010, Mr. Geruson served on the board of directors of Jentro Technologies
GmbH, a mobile location solutions company. From May 2007 to July 2008, Mr. Geruson served on the board of directors of Mobio
Networks, Inc., a mobile consumer applications company. From October 2007 to March 2008, Mr. Geruson served on the board of
directors of InvenSense, Inc., a motion-sensor technology company. From September 2003 to September 2007, Mr. Geruson
served as chief executive officer of Voice Signal Technologies, Inc., a maker of voice recognition software for mobile phones. Prior
to VoiceSignal Technologies, Mr. Geruson served as senior vice president at Nokia Americas’ mobile phone business from 1997
to 2002. Mr. Geruson served as vice president and general manager of IBM’s networking distribution business in North America
and vice president of worldwide marketing for IBM’s network hardware division from 1995 to 1997. Mr. Geruson served as vice
president at Toshiba Americas mobile computing business from 1991 to 1995. Prior, Mr. Geruson was also an executive at
McKinsey & Co. Currently, Mr. Geruson serves on the boards of directors of Phizzle, Inc., ViVOtech, Inc., RX Networks, Inc. and
Jake Knows, Inc. Mr. Geruson holds a B.A. from La Salle University and a Ph.D. in economics, an M.Phil. in management and a
Graduate Diploma in economic development, each from Oxford University. We believe that Mr. Geruson possesses specific
attributes that qualify him to serve as a member of our board of directors, including his experience as an officer of technology
companies in the computing, mobile device and voice recognition industries.
Mohan S. Gyani has served as one of our directors since March 2011 and as our chairman since August 2011. Since May 2005,
Mr. Gyani has served in various capacities at Roamware, Inc., a mobile roaming solutions company, the most recent of which was
vice chairman. From March 2000 to November 2002, Mr. Gyani served as president and chief executive officer of AT&T Wireless
Services, Inc., a telecommunications company. From September 1995 to 1999, Mr. Gyani was an executive vice president and
chief financial officer of AirTouch Communications, Inc., a wireless telephone service provider. Prior to AirTouch Communications,
Mr. Gyani spent 15 years with Pacific Telesis Group, Inc. of Pacific Bell, a telecommunications company. From June 2007 to June
2010, Mr. Gyani served on the board of directors of Mobile Telesystems, Inc. Currently, Mr. Gyani serves on the boards of
directors of Keynote Systems, Inc., Safeway, Inc., Union Bank, N.A., Ruckus Wireless, Inc., Ring Central, Inc. and Mformation
Technologies, Inc. Mr. Gyani holds a B.A. and an M.B.A. from San Francisco State University. We believe that Mr. Gyani
possesses specific attributes that qualify him to serve as a member of our board of directors and a member of our nominating and
corporate governance committee, including his service as a director of a diverse set of companies and his broad experience in the
telecommunications industry.
George A. Pavlov has served as one of our directors since December 2003. Mr. Pavlov has served as a general partner of
Tallwood Venture Capital, a venture capital firm focused on semiconductor technologies, since its founding in June 2000. From
April 2000 to July 2001, Mr. Pavlov served as the chief executive officer of eTime Capital, Inc., a financial services company. From
April 1996 to April 2000, Mr. Pavlov served as a general partner and chief financial officer at Mayfield Fund, a venture capital firm.
From February 1991 to April 1996, Mr. Pavlov served as managing director and chief financial officer with Blum Capital Partners,
a private equity firm. Mr. Pavlov also spent four years in financial and sales management positions at NeXT Computer, Inc., a
computer hardware and software company. From May 2009 to May 2010, Mr. Pavlov served on the board of directors of Ozmo
Devices, Inc. Currently, Mr. Pavlov is a member of the boards of directors of Alphion Corp., Amulaire Thermal

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Technology, Inc., Astute Networks, Inc., Calypto Design Systems, Inc., Crossing Automation, Inc., Ikanos Communications, Inc.,
Quintic Corporation and SVTC Technologies, Inc. Mr. Pavlov holds a B.S. from Boston College. We believe that Mr. Pavlov
possesses specific attributes that qualify him to serve as a member of our board of directors and as chair of the nominating and
governance committee and a member of our audit and compensation committees, including his deep financial and accounting
background and his service as a director of various semiconductor companies.

Board composition and risk oversight
Our board of directors currently consists of seven members. Upon the closing of the offering contemplated by this prospectus, our
amended and restated bylaws will permit our board of directors to establish by resolution the authorized number of directors and
eight directors are currently authorized.
Each of our directors is subject to election at each annual meeting of our stockholders. Our amended and restated certificate of
incorporation and amended and restated bylaws will provide that the number of our directors shall be fixed from time to time by
resolution of the majority of our board of directors.
Under Delaware law, our directors may be removed for cause by the affirmative vote of the holders of a majority of our voting
stock.
Our board of directors is responsible for, among other things, overseeing the conduct of our business, reviewing and, where
appropriate, approving our long-term strategic, financial and organizational goals and plans and reviewing the performance of our
chief executive officer and other members of senior management. Following the end of each year, our board of directors will
conduct an annual self-evaluation, which includes a review of any areas in which the board of directors or management believes
the board of directors can make a better contribution to our corporate governance, as well as a review of the committee structure
and an assessment of the board of directors’ compliance with corporate governance principles. In fulfilling the board of directors’
responsibilities, directors have full access to our management and independent advisors.
Our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. Our senior
management is responsible for assessing and managing our risks on a day-to-day basis. Our audit committee oversees and
reviews with management our policies with respect to risk assessment and risk management and our significant financial risk
exposures and the actions management has taken to limit, monitor or control such exposures and our compensation committee
oversees risk related to compensation policies. Both our audit and compensation committees report to the full board of directors
with respect to these matters, among others.

Director independence
In September 2011, and in February 2012 with respect to Mr. Geruson, our board of directors undertook a review of the
independence of the directors and considered whether any director has a material relationship with us that could compromise his
ability to exercise independent judgment in carrying out his responsibilities. Based upon information requested from and provided
by each director concerning his background, employment, and affiliations, including family relationships, our board of directors
determined that each of Messrs. Baskett, Burkett, Geruson, Gyani and Pavlov are “independent directors” as defined under the
rules of The NASDAQ Global Market, constituting a majority of independent directors of our board of directors as required by the
rules of The NASDAQ Global Market.

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Board committees
Our board of directors currently has an audit committee, a compensation committee and a nominating and corporate governance
committee. Upon completion of the offering contemplated by this prospectus each committee will operate under a charter that has
been approved by our board of directors. Following the completion of the offering contemplated by this prospectus, copies of the
charters for our audit committee, compensation committee and nominating and corporate governance committee will be available
without charge, upon request in writing to Audience, Inc., 440 Clyde Avenue, Mountain View, California 94043; Attn: Secretary, or
on the investor relations portion of our website, www.audience.com. The inclusion of our website address in this prospectus does
not include or incorporate by reference the information on our website into this prospectus.
Audit committee . Our audit committee oversees our corporate accounting and financial reporting processes. The audit
committee generally oversees:
•   our accounting and financial reporting processes as well as the audit and integrity of our financial statements;
•   the qualifications and independence of our independent registered public accounting firm;
•   the performance of our independent registered public accounting firm; and
•   our compliance with disclosure controls and procedures and internal controls over financial reporting, as well as the
    compliance of our employees, directors and consultants with ethical standards adopted by us.
The audit committee also has certain responsibilities, including without limitation, the following:
•   selecting and hiring the independent registered public accounting firm;
•   supervising and evaluating the independent registered public accounting firm;
•   evaluating the independence of the independent registered public accounting firm;
•   approving audit and non-audit services and fees;
•   reviewing financial statements, and discussing with management and the independent registered public accounting firm, our
    annual audited and quarterly financial statements, the results of the independent audit and the quarterly reviews and the
    reports and certifications regarding internal controls over financial reporting and disclosure controls; and
•   reviewing reports and communications from the independent registered public accounting firm.
Our audit committee consists of Mr. Burkett, who is the committee chairman, and Messrs. Geruson and Pavlov, each of whom is a
nonemployee member of our board of directors. Our board of directors has determined that Mr. Burkett is a financial expert as
contemplated by the rules of the SEC implementing Section 407 of the Sarbanes Oxley Act of 2002. Our board of directors has
considered the independence and other characteristics of each member of our audit committee. Our board of directors believes
that the composition of the audit committee meets the requirements for independence under the current requirements of The
NASDAQ Global Market and SEC rules and regulations. We believe that the audit committee charter and the functioning of the
audit committee comply with the applicable requirements of The NASDAQ Global Market and SEC rules and regulations. Our
audit committee also serves as our qualified legal compliance committee. We intend to comply with future requirements to the
extent they become applicable to us.

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Compensation committee . The compensation committee oversees our corporate compensation policies, plans and benefit
programs and has the responsibilities described in the “Compensation discussion and analysis” below.
Our compensation committee consists of Mr. Baskett, who is the committee chairman, and Messrs. Burkett and Pavlov, each of
whom is a nonemployee member of our board of directors. We believe that each member of the compensation committee meets
the requirements for independence under the current requirements of The NASDAQ Global Market, is a nonemployee director as
defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act) and is an outside
director as defined pursuant to Section 162(m) of the Internal Revenue Code. We believe that the compensation committee
charter and the functioning of the compensation committee comply with the applicable requirements of The NASDAQ Global
Market and SEC rules and regulations. We intend to comply with future requirements to the extent they become applicable to us.
The functions of this committee include, among other things:
•   overseeing our compensation policies, plans and benefit programs;
•   reviewing and approving for our executive officers other than our chief executive officer: the annual base salary, annual
    incentive bonus, including the specific goals and dollar amount, equity compensation, employment agreements, severance
    agreements and change in control arrangements and any other benefits, compensation or arrangements;
•   reviewing and recommending to the independent members of our board the approval of the following for our chief executive
    officer: the annual salary, annual incentive bonus, including specific goals and dollar amount, equity compensation,
    employment agreements, severance agreements and change in control arrangements and any other benefits, compensation or
    arrangements;
•   preparing the compensation committee report that the SEC requires to be included in our annual proxy statement; and
•   administrating our equity compensation plans.
Nominating and corporate governance committee.        Our nominating and corporate governance committee consists of
Mr. Pavlov, who is the committee chairman and Messrs. Baskett and Gyani, each of whom is a nonemployee director of our board
of directors. Our board of directors has determined that each member of our nominating and governance committee meets the
requirements for independence under the current requirements of The NASDAQ Global Market. We believe that the nominating
and corporate governance committee charter and the functioning of the nominating and corporate governance committee comply
with the applicable requirements of The NASDAQ Global Market and SEC rules and regulations. We intend to comply with future
requirements to the extent they become applicable to us.
The functions of this committee include, among other things:
•   assisting our board of directors in identifying prospective director nominees and recommending nominees to the board of
    directors for each annual meeting of stockholders;
•   reviewing developments in corporate governance practices and developing and recommending governance principles
    applicable to our board of directors;
•   reviewing the succession planning for each of our executive officers;

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•     overseeing the evaluation of our board of directors and management; and
•     recommending members for each board committee to our board of directors.

Code of business conduct and ethics
We have adopted a code of business conduct and ethics that is applicable to all of our employees, officers and directors, and we
have also adopted a code of ethics for principal executives and senior financial officers.

Director compensation
The following table provides information for 2011 regarding all compensation awarded to, earned by or paid to each director for
their services as a director. Mr. Santos did not receive any separate compensation as a director. Mr. Geruson joined our board of
directors in January 2012 and therefore did not receive any compensation for 2011.

                                      Fees earned or                               Option                                         All other
Name                                    paid in cash                          awards(1)(7)                                    compensation                       Total

Forest Baskett          $                                —         $                         —            $                                    —          $          —
Marvin D.
  Burkett                                                —                                   —                                                 —                     —
Barry L.
  Cox(2)                                         120,000                                     —                                                 —              120,000
Mohan S.
  Gyani(3)                                               —                             95,470 (4)                                              —               95,470
George A.
  Pavlov                                                 —                                   —                                                 —                     —
Stephen
  Hall(3)                                                —                                   —                                                 —                     —
Carver
  Mead(5)                                                —                              2,345 (6)                                              —                 2,345

(1)    These amounts represent grant date fair value for the respective directors’ option grants granted in the fiscal year computed in accordance with FASB ASC Topic 718.
       See Note 10 of our consolidated financial statements for a discussion of valuation assumptions made in determining the grant date fair value of our stock options.

(2)    Pursuant to an offer letter dated October 12, 2009, during 2011 Mr. Cox received cash compensation of $120,000 for his services to us as our chairman. Mr. Cox
       stepped down as our chairman in August 2011, but still serves as one of our directors.

(3)    Mr. Gyani replaced Mr. Hall on our board of directors in March 2011 and became our chairman in August 2011.

(4)    Represents the grant date fair value of an option granted on March 3, 2011 to purchase up to 44,625 shares of our common stock at an exercise price per share of
       $5.10. The option vests as to 1/48th of the shares subject to the option award on each monthly anniversary of February 10, 2011, subject to Mr. Gyani’s continued
       service through each vesting date.

(5)    Mr. Mead resigned from our board of directors in September 2011.

(6)    Represents the grant date fair value of an option granted on December 9, 2011 to purchase up to 500 shares of our common stock at an exercise price per share of
       $11.70. The option vests as to 1/36th of the shares subject to the option award on each monthly anniversary of December 9, 2011, subject to Mr. Mead’s continued
       service through each vesting date.

(7)    The aggregate number of shares subject to stock awards and stock options outstanding at December 31, 2011 for each director set forth in the table above was as
       follows:

                                                                                                                 Aggregate                      Aggregate
                                                                                                                 number of                      number of
                                                                                                              stock awards                   stock options
             Name                                                                                              outstanding                     outstanding

             Forest Baskett                                                                                               —                              —
             Marvin D. Burkett                                                                                            —                          44,625
             Barry L. Cox                                                                                                 —                         167,124
             Mohan S. Gyani                                                                                               —                          44,625
             George A. Pavlov                                                                                             —                              —
             Stephen Hall                                                                                                 —                              —
             Carver Mead                                                                                                  —                          42,753

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Nonemployee director compensation
In August 2011 our board of directors approved an increase in the compensation package for our nonemployee directors
beginning on January 1, 2012, based upon the recommendation of data provided by Compensia, Inc. (Compensia), a national
compensation consulting firm engaged by our board of directors to provide executive officer, employee and nonemployee director
compensation advisory services to us. The amount of the annual cash retainer for nonemployee members of the board of
directors was increased to $35,000, to be paid quarterly in arrears. In addition to the standard annual retainer, the board of
directors approved the following annual cash retainers for the following nonemployee members of the board of directors for
service in the following positions:


Chairman of the board                                                                                             $        25,000
Audit committee chair                                                                                                      20,000
Each audit committee member other than the chair                                                                            9,000
Compensation committee chair                                                                                               12,000
Each compensation committee member other than the chair                                                                     5,000
Nominating and governance chair                                                                                             7,500
Each nominating and governance member other than the chair                                                                  4,500
These retainers shall also be paid quarterly in arrears commencing on January 1, 2012.
Our 2011 Plan provides that all nonemployee directors are eligible to receive all types of awards (except for incentive stock
options). Each person who becomes a nonemployee director will be automatically granted an initial award in the form of a
nonstatutory stock option to purchase that number of shares equal to 0.07% of our fully diluted capitalization on or about the date
such person becomes a nonemployee director. The initial award will vest as to 1/48th of the total shares thereunder on each
monthly anniversary of the vesting commencement date, provided that the participant continues to serve as a director through
such dates. Each of our existing nonemployee directors who had not previously received options was granted an option for 14,133
shares, or 0.07% of our fully diluted capitalization on January 25, 2012, which option vests monthly as to 1/48th of the total shares
thereunder. Each nonemployee director will be granted an annual award in the form of a nonstatutory stock option to purchase
that number of shares equal to 0.04% of our fully diluted capitalization at the first meeting of our board of directors following the
annual meeting of our stockholders beginning in 2013 if, as of such date, the nonemployee director will have served on our board
of directors for at least the preceding six months. The annual award will vest as to 1/12th of the shares subject to the annual
award on each monthly anniversary of the vesting commencement date, provided the participant continues as a director through
such dates. On January 25, 2012, our compensation committee also awarded annual option grants to each qualified nonemployee
director for 8,080 shares, or 0.04% of our fully diluted capitalization, due to the likelihood that we would not hold an annual
stockholder meeting in 2012. These options vest as to 1/12th of the shares thereunder monthly commencing on May 1, 2012. The
term of these automatic option grants to nonemployee directors will be 10 years or such earlier expiration date specified in the
applicable award agreement.

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Compensation committee interlocks and insider participation
No member of our compensation committee has ever been an executive officer or employee of our company, other than Mr. Cox
who served on our compensation committee prior to September 2011. None of our executive officers currently serves, or has
served during the last completed year, on the compensation committee or board of directors of any other entity that has one or
more executive officers serving as a member of our board of directors or compensation committee. Before establishing the
compensation committee, our full board of directors made decisions relating to compensation of our executive officers.

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                                            Executive compensation
Compensation discussion and analysis
This compensation discussion and analysis provides information about the material components of our executive compensation
program for:
•   Peter B. Santos, our President and Chief Executive Officer;
•   Kevin S. Palatnik, our Chief Financial Officer;
•   Andrew J. Keane, our Vice President of Marketing;
•   Robert H. Schoenfield, our Vice President of Business Development;
•   Thomas Spade, our Vice President of Sales;
•   James L. Lau, our former Chief Financial Officer; and
•   Lloyd Watts, our Founder and Chief Scientist, formerly our Chief Technology Officer.
We refer to these individuals collectively in this prospectus as the “named executive officers.”
Specifically, this compensation discussion and analysis provides an overview of our executive compensation philosophy, the
overall objectives of our executive compensation program, and each compensation component that we provide. In addition, we
explain how and why the compensation committee of our board of directors arrived at specific compensation policies and
decisions involving our executive officers during 2011.
This compensation discussion and analysis contains forward-looking statements that are based on our current plans,
considerations, expectations, and determinations regarding future compensation plans and arrangements. The actual
compensation plans and arrangements that we adopt may differ materially from the currently anticipated plans and arrangements
as summarized in this compensation discussion and analysis.
Executive summary
The initial terms and conditions of employment of each of the named executive officers are set forth in written offer letters. With
the exception of his own arrangement, each of these offer letters was negotiated on our behalf by our chief executive officer, with
the oversight and approval of our board of directors and/or the compensation committee.
In hiring our executive officers, we recognized that it would be necessary to recruit candidates from outside our company with the
requisite experience and skills. Accordingly, we sought to develop competitive compensation packages to attract qualified
candidates who could fill our most critical positions. At the same time, we were sensitive to the need to integrate new executive
officers into our executive compensation structure, balancing both competitive and internal equity considerations.
Significant executive compensation actions
For 2011, our board of directors took the following actions with respect to the compensation of our executive officers, including the
named executive officers:
•   increased the base salary of Mr. Santos;
•   adjusted Mr. Watts’ salary and responsibilities as he transitioned from a managerial role serving as our chief technology officer
    to a role focused solely on research as our chief scientist;

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•   hired and negotiated a compensation package for each of Messrs. Schoenfield, Palatnik and Keane;
•   approved new forms of severance agreements for our executive officers;
•   negotiated a severance agreement with Mr. Watts; and
•   negotiated a separation agreement with Mr. Lau.
Significant corporate governance practices
We endeavor to maintain good governance standards in our executive compensation practices. The following policies were in
effect in 2011:
•   We do not view perquisites or other personal benefits as a significant component of our executive compensation program.
    From time to time, we have provided limited perquisites, such as reimbursement of relocation expenses, to certain executive
    officers. Our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the
    same basis as our other salaried employees.
•   We have operated with the roles of chairman of the board and chief executive officer separated since October 2005. Prior to
    August 2011, we did not have an independent chairman of the board.
•   We do not currently offer, nor do we have plans to provide, pension arrangements, retirement plans or nonqualified deferred
    compensation plans or arrangements to our executive officers, other than pursuant to our Section 401(k) plan.
•   The compensation advisors to the compensation committee do not provide any services to us other than executive, employee
    and director compensation advisory services.
Executive compensation philosophy and objectives
We operate in a highly competitive business environment which is characterized by frequent technological advances, rapidly
changing market requirements and the emergence of new market entrants. To succeed in this environment, we must continually
develop and refine new and existing products and services, devise new business models and demonstrate an ability to quickly
identify and capitalize on new business opportunities. To achieve these objectives, we need a highly talented and seasoned team
of technical, sales, marketing, operations and other business professionals.
We compete with many other companies in seeking to attract and retain a skilled management team. To meet this challenge, we
have embraced a compensation philosophy of offering our executive officers competitive compensation and benefits packages
that are focused on long-term value creation and rewarding them for achieving our financial and strategic objectives.
We have developed our executive compensation program to:
•   provide total compensation opportunities that enable us to recruit and retain executive officers with the experience and skills to
    manage our growth and lead us to the next stage of development;
•   establish a clear alignment between the interests of our executive officers and the interests of our stockholders;
•   reinforce a culture of ownership, excellence and responsiveness; and
•   offer total compensation that is competitive and fair.

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Compensation program design
To date, the compensation of our executive officers has generally consisted of base salary, a cash bonus and equity
compensation in the form of stock options. The key component of our executive compensation program has been equity awards
for shares of our common stock. As a private company, we have emphasized the use of equity to incent our executive officers to
focus on the growth of our overall enterprise value and, correspondingly, to create value for our stockholders. In 2011 and prior
years, we have used stock options as our primary equity award vehicle. Going forward, we may use stock options, restricted stock
units and other types of equity-based awards, as we deem appropriate, to offer our employees, including our executive officers,
long-term equity incentives that align their interests with the long-term interests of our stockholders.
We also offer cash compensation in the form of base salaries and a cash bonus component that we believe appropriately
recognizes and rewards our executive officers for their individual contributions to our business. Generally, cash bonuses are
determined after the end of the year and reflect both a formulaic and discretionary component. When making bonus decisions, the
compensation committee considers our financial and operational performance as well as each executive officer’s individual
performance and contributions.
Compensation-setting process
The compensation committee is responsible for overseeing our executive compensation program, as well as determining the
ongoing compensation arrangements for our executive officers other than our chief executive officer. Generally, our chief
executive officer will make recommendations to the compensation committee regarding compensation matters, except with
respect to his own compensation. Following its deliberations, the compensation committee reviews and approves compensation
for our executive officers and makes recommendations on chief executive officer compensation to our board of directors for its
consideration and approval.
The compensation committee is authorized to retain the services of one or more executive compensation advisors, as it sees fit, in
connection with the establishment of our compensation programs and related policies. In 2011, our board of directors and the
compensation committee engaged Compensia, a national compensation consulting firm, to provide executive officer, employee
and nonemployee director compensation advisory services to the compensation committee. Compensia serves at the discretion of
the compensation committee and did not provide any other services to us in 2011.
In the future, we anticipate that our compensation committee will conduct an annual review of our executive officers’
compensation and consider adjustments in executive compensation levels to ensure alignment with our compensation strategy
and competitive market practices.
Executive compensation program components
The following describes each component of our executive compensation program, the rationale for each and how compensation
amounts are determined.
Base salary . We provide base salary to our named executive officers and other employees to compensate them for services
rendered during the fiscal year. Base salary generally will be used to recognize the experience, skills, knowledge and
responsibilities required of each named executive officer, although competitive market conditions also may play a role in setting
the level of base salary. The base salaries of our named executive officers are reviewed on an annual basis and adjustments

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are made to reflect performance-based factors, as well as competitive conditions. We do not apply specific formulas to determine
increases. Generally, executive officers’ base salaries will be adjusted effective during the first quarter of each year.
The 2011 base salaries were set by our board of directors based on the recommendations of our chief executive officer, other
than with respect to his own salary, and were set to reflect our status as a private company. Based on the growth of revenue,
achievement of profitability and our overall performance, the base salary of Mr. Santos was increased in 2011 by 18%. Our board
of directors determined that the new base salary rate was in the range of private companies based on the board’s collective
experience regarding the industry in which we compete for talent. For a summary of the base salaries paid in 2011 see, “—2011
summary compensation table,” below.
Cash bonuses . We use annual cash bonuses to motivate our executive officers to achieve our short-term financial and strategic
objectives while making progress towards our longer-term growth and other goals. Each year, we adopt a cash bonus plan to align
the financial incentives of our executive officers with our short-term operating plan and long-term strategic objectives and the
interests of our stockholders.
The compensation committee approves the design, structure and performance measures, as well as the relative weighting of each
measure, under the cash bonus plan. Generally, the bonuses for our executive officers are linked to the achievement of our
annual financial and operational objectives and individual performance objectives. These bonus opportunities allow us to make a
significant portion of each executive officer’s total cash compensation performance-based and at risk, consistent with our
compensation philosophy.
Target bonus opportunities . For 2011, our annual cash incentive award opportunities were designed to reward our named
executive officers (other than Mr. Watts) based on our performance and, in the discretion of our chief executive officer, the
individual named executive officer’s contribution to that performance. Our compensation committee established a target award
opportunity for each named executive officer. Corporate objectives are the primary factor for the calculation of a bonus. In his
discretion, our chief executive officer may increase or decrease a named executive officer’s bonus (other than the chief executive
officer’s own bonus) based on his subjective determination of the named executive officer’s individual achievement during the
year. The 2011 target award opportunities for our named executive officers were as follows:

                                                                                                                 Target bonus
                                                                                                                   opportunity
                                                                                                              (as a percentage
Named executive officer                                                                                         of base salary)

Peter B. Santos                                                                                                            50.0 %
Kevin S. Palatnik                                                                                                          30.0
Andrew J. Keane                                                                                                            30.0
Robert H. Schoenfield                                                                                                      32.7
Thomas Spade(1)                                                                                                            50.0
James L. Lau                                                                                                               30.0
Lloyd Watts                                                                                                                30.0

(1)   Mr. Spade’s target bonus opportunity was set forth in his sales commission plan.

Our compensation committee determined that our named executive officers should be primarily incentivized based upon
achievement of corporate goals because these officers are primarily responsible for achievement of corporate-level milestones.
For 2011, the process for determination of the bonuses for Mr. Watts and Mr. Lau differed from the other named executive
officers. With respect

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to Mr. Watts, in light of his transition from a managerial role serving as our chief technology officer to a more research focused role
as our chief scientist, our compensation committee determined that Mr. Watts should be primarily incentivized based upon the
progress of his research, as determined in the sole discretion of our chief executive officer based upon our chief executive officer’s
subjective determination of the progress of Mr. Watts’ research. Mr. Lau’s employment with us terminated in November 2011
following a certain period in which he assisted in the transition of his duties to our chief financial officer. Generally, a named
executive officer must remain employed with us through the end of the year to be eligible for a bonus. In recognition of a
successful transition, our compensation committee decided to pay Mr. Lau 75% of his target bonus as part of his separation
agreement.
Executive bonus plan.        In January 2011, our compensation committee approved the general framework of a 2011 executive
bonus plan. Under the bonus plan, our compensation committee established corporate objectives in the following three categories:
(i) financial measures, (ii) customer focus and (iii) product focus. With respect to financial measures, our compensation committee
set 2011 objectives of achieving revenue in excess of $90 million and attaining gross margin and operating margin in excess of
our annual operating plan. With respect to customer focus, our compensation committee set 2011 objectives to attain certain
design wins for each of our handset, computer and media tablet customers. With respect to product focus, our compensation
committee set objectives relating to execution of product roadmaps and product design wins. With respect to any adjustments
arising from individual performance under the bonus plan, our compensation committee tasked our chief executive officer with the
responsibility of establishing and evaluating these objectives (other than his own) as he is closer to the day-to-day operations of
our business and in a better position to assess the key performance requirements for each named executive officer. Any individual
performance adjustments reflect our chief executive officer’s subjective determination of the role of each named executive officer
in contributing to our achievement of the corporate-level goals.
Bonus decisions . In January 2012, our compensation committee reviewed the performance and determined bonus payments
for the named executive officers for 2011 other than Messrs. Santos, Spade and Lau. For Mr. Santos, our compensation
committee reviewed his performance and made a recommendation to our board of directors as to Mr. Santos’ compensation. Our
board of directors, with Mr. Santos abstaining, determined Mr. Santos’ 2011 bonus. Mr. Lau’s 2011 bonus was negotiated in
connection with his separation agreement in October 2011. Mr. Lau’s separation agreement is discussed below in “—Change of
control severance agreements and potential payments upon termination or change of control—Severance benefits received by
James L. Lau.” Mr. Spade’s 2011 bonus was determined by Mr. Santos pursuant to Mr. Spade’s sales commission plan. The
following table shows the 2011 bonus targets and actual bonus awards for each of our named executive officers.

                                                                                              Target bonus           Actual bonus
Named executive officer                                                                        opportunity                  award

Peter B. Santos                                                                           $        175,000   $              175,000
Kevin S. Palatnik                                                                                   35,654                   38,863
Andrew J. Keane                                                                                      6,779                    6,779
Robert H. Schoenfield                                                                               63,173                   66,963
Thomas Spade(1)                                                                                    110,000                  125,021
James L. Lau                                                                                        53,300                   53,300
Lloyd Watts                                                                                         71,880                   79,068

(1)   Mr. Spade’s target bonus opportunity was set forth in his sales commission plan.

Discretionary cash bonuses . No discretionary cash bonuses were paid in 2011 other than to Mr. Santos, in connection with his
annual review, Mr. Palatnik, in connection with his offer letter, and Mr. Watts, in connection with his transition to chief scientist.

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Equity compensation . We use equity awards to incent and reward our executive officers for long-term corporate performance
based on the value of our common stock and, thereby, to align the interests of our executive officers with those of our
stockholders.
Historically, the size and form of the initial equity awards for our executive officers have been established through arms-length
negotiation at the time the individual executive was hired. In making these awards, we considered, among other things, the
prospective role and responsibility of the individual executive, competitive factors, the amount of equity-based compensation held
by the executive officer at his or her former employer, the cash compensation received by the executive officer and the need to
create a meaningful opportunity for reward predicated on the creation of long-term stockholder value. In addition, we have
periodically granted equity awards to our executive officers to ensure that their overall equity position was consistent with our
compensation objectives.
In 2011 we did not grant equity awards to any of our existing named executive officers, however, our board of directors approved
equity awards to Messrs. Palatnik, Keane and Schoenfield in connection with their employment as our executive officers as
follows:

                                                                                                                  Stock option grant
Named executive officer                                                                                          (number of shares)

Kevin S. Palatnik(1)                                                                                                         190,184
Andrew Keane(2)                                                                                                              142,177
Robert Schoenfield(3)                                                                                                        143,333

(1)   Mr. Palatnik joined us in August 2011.

(2)   Mr. Keane joined us in November 2011.

(3)   Mr. Schoenfield joined us in March 2011.

Retirement and other benefits . We have established a tax-qualified Section 401(k) retirement savings plan for our employees,
including our named executive officers, who satisfy certain eligibility requirements. Currently, we do not match contributions made
by participants in the plan. We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code so that
contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until withdrawn
from the plan.
Additional benefits received by our executive officers include medical, dental and vision benefits, medical and dependent care
flexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment insurance and
basic life insurance coverage. These benefits are provided to our executive officers on the same general terms as to all of our
fulltime U.S. employees.
We design our employee benefits programs to be affordable and competitive in relation to the market, as well as compliant with
applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable
laws and practices and the competitive market.
We do not view perquisites or other personal benefits as a significant component of our executive compensation program. From
time to time, we have provided limited perquisites, such as reimbursement of relocation expenses, to certain executive officers.
In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is
appropriate to assist an individual executive in the performance of his or her duties, to make our executive officers more efficient
and effective and for recruitment, motivation or retention purposes. All future practices with respect to perquisites or other
personal benefits will be approved and subject to periodic review by the compensation committee.

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Post-employment compensation
In December 2011, we entered into change of control and severance agreements (severance agreements) with our named
executive officers (other than persons who are no longer our executive officers), which require us to make specific payments and
benefits in connection with terminations of their employment under certain circumstances. These severance agreements
superseded any other agreement or arrangement relating to severance benefits with these executive officers. For Mr. Watts, we
entered into a separate agreement which is not of the same general form as the other named executive officers’ severance
agreements. Mr. Lau’s separation agreement is discussed below in “—Change of control severance agreements and potential
payments upon termination or change of control—Severance benefits received by James L. Lau.”
For a summary of the material terms and conditions of severance terms for our named executive officers, see “—Potential
payments upon termination or change of control as of December 31, 2011.”
Tax and accounting considerations
Deductibility of executive compensation . Generally, Section 162(m) of the Internal Revenue Code disallows a tax deduction to
any publicly held corporation for any remuneration in excess of $1 million paid in any taxable year to its chief executive officer and
each of its three other highest paid named executive officers, other than its chief financial officer. Remuneration in excess of
$1 million may be deducted if, among other things, it qualifies as performance based compensation within the meaning of the
Internal Revenue Code. In this regard, the compensation income realized upon the exercise of stock options granted under a
stockholder-approved stock option plan generally will be deductible so long as the options are granted by a committee whose
members are nonemployee directors and certain other conditions are satisfied.
As we are not currently publicly traded, the compensation committee has not previously taken the deductibility limit imposed by
Section 162(m) into consideration in setting compensation for our executive officers. We expect that, where reasonably
practicable, we will seek to qualify the variable compensation paid to our executive officers for the performance-based
compensation exemption from the deductibility limit. As such, in approving the amount and form of compensation for our executive
officers in the future, we will consider all elements of the cost to us of providing such compensation, including the potential impact
of Section 162(m). The compensation committee may, in its judgment, authorize compensation payments that do not comply with
an exemption from the deductibility limit when it believes that such payments are appropriate to attract and retain executive talent.
Taxation of “parachute” payments . Sections 280G and 4999 of the Internal Revenue Code provide that executive officers and
directors who hold significant equity interests and certain other service providers may be subject to an excise tax if they receive
payments or benefits in connection with a change in control that exceeds certain prescribed limits, and that we, or a successor,
may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer with a gross-up or
other reimbursement payment for any tax liability that he may owe as a result of the application of Sections 280G or 4999 during
2011 and we have not agreed and are not otherwise obligated to provide any named executive officer with such a gross-up or
other reimbursement.
Accounting treatment.     We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718 (ASC
Topic 718) for our stock-based awards. ASC Topic 718 requires companies to measure the compensation expense for all
share-based payment awards made to employees and directors, including stock options and restricted stock awards, based on
the grant date

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fair value of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below,
even though our executive officers may never realize any value from their awards. ASC Topic 718 also requires companies to
recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an
executive officer is required to render service in exchange for the option or other award.

2011 summary compensation table
The following table presents compensation information for 2011 paid to or earned by our chief executive officer, our chief financial
officer, our former chief financial officer and each of our four other most highly compensated executive officers whose aggregate
salary and bonus was more than $100,000. We refer to these executive officers as our “named executive officers” elsewhere in
this prospectus.
                                                                                                       Nonequity
Name and                                                                    Option                 incentive plan                     All other
principal position          Year         Salary(1)         Bonus          awards(2)              compensation(3)                  compensation                      Total

Peter B. Santos             2011     $    312,458     $    20,000     $          —      $                   175,000     $                    639        $         508,097
  President and Chief
  Executive Officer
Kevin S. Palatnik(4)        2011          117,046          30,000           896,340                          38,863                          213                1,082,462
  Chief Financial Officer
Andrew J. Keane(5)          2011           22,254              —            666,672                           6,779                           53                  695,758
  Vice President of
  Marketing
Robert H. Schoenfield(6)    2011          191,667              —            357,578                          66,963                          533                  616,741
 Vice President of
 Business Development
Thomas Spade                2011          220,000              —                 —                          125,021                          639                  345,660
  Vice President of Sales
James L. Lau(7)             2011          221,761              —                 —                           53,300                      119,026 (9)              394,087
  Former Chief Financial
  Officer
Lloyd Watts(8)              2011          238,434          40,833                —                           79,068                          639                  358,974
  Founder and Chief
  Scientist/Former Chief
  Technology Officer


(1)   The amounts in this column include payments in respect of accrued vacation, holidays and sick days.

(2)   These amounts represent grant date fair value for the respective executives’ option grants granted in the fiscal year computed in accordance with FASB ASC
      Topic 718 without regard to estimated forfeitures. See Note 10 of our consolidated financial statements for a discussion of valuation assumptions made in determining
      the grant date fair value of our stock options.

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(3)    These amounts represent bonus payments as described in this prospectus under the section titled “Compensation discussion and analysis—Executive compensation
       program components.”

(4)    Mr. Palatnik became our Chief Financial Officer in August 2011.

(5)    Mr. Keane became our Vice President of Marketing in November 2011.

(6)    Mr. Schoenfield became our Vice President of Business Development in March 2011.

(7)    Mr. Lau ceased to be our Chief Financial Officer in August 2011.

(8)    Mr. Watts ceased to be our Chief Technology Officer and was appointed Chief Scientist in September 2011.

(9)    Includes payments in the aggregate amount of $118,440 made pursuant to the separation agreement with Mr. Lau.

Grants of plan-based awards in 2011
The following table presents information concerning grants of plan-based awards to each of our named executive officers during
2011.
                                                                                                                                All other                               Grant
                                                                                                                                  option           Exercise          date fair
                                                                                                                                 awards:            or base          value of
                                                 Estimated possible                           Estimated possible              number of             price of       stock and
                                                   payouts under                                payouts under                  securities            option            option
                                                 nonequity incentive                           equity incentive               underlying            awards            awards
Name                  Grant date                   plan awards(1)                                plan awards                     options           ($/Sh)(3)            ($)(4)
                                                                                                                   Maximu
                                        Threshold        Target(2)         Maximum     Threshold      Target            m

Peter B. Santos               —    $           —     $    175,000      $        —             —            —           —               —       $          —    $            —
                              —                —               —                —             —            —           —               —                  —                 —

Kevin S. Palatnik     10/31/2011               —                —               —             —            —           —         190,184 (5)          11.70          896,340
                              —                —            35,654              —             —            —           —              —                  —                —

Andrew J. Keane       12/09/2011               —                —               —             —            —           —         142,177 (6)          11.70          666,672
                              —                —             6,779              —             —            —           —              —                  —                —

Robert H.
  Schoenfield         03/03/2011               —                —               —             —            —           —         123,333 (7)           5.10          263,858
                      10/31/2011               —                —               —             —            —           —          20,000 (8)          11.70           93,720
                              —                —            63,173              —             —            —           —              —                  —                —

Thomas Spade                  —                —          110,000               —             —            —           —               —                  —                 —
                              —                —               —                —             —            —           —               —                  —                 —

James L. Lau                  —                —            53,300              —             —            —           —               —                  —                 —
                              —                —                —               —             —            —           —               —                  —                 —

Lloyd Watts                   —                —            71,880              —             —            —           —               —                  —                 —
                              —                —                —               —             —            —           —               —                  —                 —


(1)    The actual amounts paid to our named executive officers for 2011 are set forth in “—2011 summary compensation table” above and the bonuses paid is discussed
       more fully in “Compensation discussion and analysis—Bonus decisions.”

(2)    The target bonus amounts for 2011 were established by the compensation committee. For further information regarding the 2011 target bonus amounts, see the
       section titled “Compensation discussion and analysis—Target bonus opportunities.”

(3)    Shares of our common stock were not publicly traded in 2011. The exercise price of all options was the fair value of a share of our common stock on the date of grant
       as determined in good faith by our board of directors.

(4)    Amounts represent the aggregate fair market value of options granted in 2011 to the named executive officers calculated in accordance with ASC Topic 718 without
       regard to estimated forfeitures. See Note 10 to our consolidated financial statements for a discussion of assumptions made in determining the grant date fair value and
       compensation expense of our stock options.

(5)    1/4th of the total number of shares subject to this stock option will vest on August 10, 2012 (one year following the vesting commencement date) and the remaining
       shares subject to the option vest at a rate of 1/48th of the total number of shares subject to this stock option each month thereafter.

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(6)   1/4th of the total number of shares subject to this stock option will vest on November 28, 2012 (one year following the vesting commencement date) and the remaining
      shares subject to the option vest at a rate of 1/48th of the total number of shares subject to this stock option each month thereafter.

(7)   1/4th of the total number of shares subject to this stock option vested on March 1, 2012 (one year following the vesting commencement date) and the remaining shares
      subject to the option vest at a rate of 1/48th of the total number of shares subject to this stock option each month thereafter.

(8)   5/48th of the total number of shares subject to this stock option vested on March 1, 2012 and the remaining shares subject to the option vest at a rate of 1/48th per
      month of the total number of shares subject to this stock option each month thereafter.

Outstanding equity awards at December 31, 2011
The following table presents the outstanding option awards held by each of our named executive officers as of December 31,
2011. There were no other stock awards outstanding.

                                                                                                                                        Option awards
                                 Number of securities                          Number of securities
                                          underlying                                    underlying                                     Option                    Option
                                 unexercised options                           unexercised options                                    exercise                expiration
Name                                  exercisable(1)                              unexercisable(2)                                    price ($)                     date

Peter B. Santos                                       60,666                                            —                  $                 0.60                12/15/14
                                                      91,746                                            —                                    0.60                10/17/15
                                                     161,009                                            —                                    0.75                07/13/16
                                                     110,015                                         2,340 (3)                               0.90                01/22/18
                                                      66,830                                        33,416 (4)                               2.40                04/07/19
                                                      19,816                                        39,633 (5)                               2.70                08/03/20
                                                      14,705                                       117,645 (6)                               2.70                08/03/20
Kevin S. Palatnik                                            —                                     190,184 (7)                             11.70                 10/31/21
Andrew J. Keane                                              —                                     142,177 (8)                             11.70                 12/09/21
Robert H.
 Schoenfield                                                 —                                     123,333 (9)                              5.10                 03/03/21
                                                             —                                      20,000 (10)                            11.70                 10/31/21
Thomas Spade                                           58,333                                      116,667 (11)                              2.70                09/14/20
James L. Lau                                           79,329                                              —                                 2.40                10/22/19
                                                        7,291                                              —                                 2.70                08/03/20
                                                        6,073                                              —                                 2.70                08/03/20
Lloyd Watts                                          121,298                                             —                                   0.60                12/11/13
                                                      28,031                                             —                                   0.75                07/13/16
                                                      28,125                                          1,875 (12)                             2.40                04/29/18
                                                      92,316                                         46,158 (13)                             2.40                04/07/19
                                                      11,972                                         23,945 (5)                              2.70                08/03/20
                                                       6,055                                         48,445 (6)                              2.70                08/03/20

(1)    The options listed are subject to an early exercise right and may be exercised in full prior to vesting of the shares underlying the option. The share numbers in this
       column represent the shares vested under each option as of December 31, 2011.

(2)    The options listed are subject to an early exercise right and may be exercised in full prior to vesting of the shares underlying the option. The share numbers in this
       column represent the unvested shares under each option as of December 31, 2011.

(3)    1/48th of the total number of shares subject to this stock option will vest monthly starting January 3, 2008 (vesting commencement date).

(4)    1/48th of the total number of shares subject to this stock option will vest monthly starting April 7, 2009 (vesting commencement date).

(5)    1/48th of the total number of shares subject to this stock option will vest monthly starting August 3, 2010 (vesting commencement date).

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(6)    1/36th of the total number of shares subject to this stock option will vest monthly starting August 3, 2011 (vesting commencement date).

(7)    1/4th of the total number of shares subject to this stock option will vest on August 10, 2012 (one year following the vesting commencement date) and the remaining
       shares subject to the option vest at a rate of 1/48th per month of the total number of shares subject to this stock option each month thereafter.

(8)    1/4th of the total number of shares subject to this stock option will vest on November 28, 2012 (one year following the vesting commencement date) and the
       remaining shares subject to the option vest at a rate of 1/48th per month of the total number of shares subject to this stock option each month thereafter.

(9)    1/4th of the total number of shares subject to this stock option vested on March 1, 2012 (one year following the vesting commencement date) and the remaining
       shares subject to the option vest at a rate of 1/48th per month of the total number of shares subject to this stock option each month thereafter.

(10)   5/48th of the total number of shares subject to this stock option vested on March 1, 2012 and the remaining shares subject to the option vest at a rate of 1/48th per
       month of the total number of shares subject to this stock option each month thereafter.

(11)   1/4th of the total number of shares subject to this stock option vested on August 30, 2011 (one year following the vesting commencement date) and the remaining
       shares subject to the option vest at a rate of 1/48th per month of the total number of shares subject to this stock option each month thereafter.

(12)   1/48th of the total number of shares subject to this stock option will vest monthly starting March 28, 2008 (vesting commencement date).

(13)   1/48th of the total number of shares subject to this stock option will vest monthly starting April 7, 2009 (vesting commencement date).

Option exercises and stock vested during 2011
None of the named executive officers held stock awards or exercised stock options during 2011.

Pension benefits
We did not sponsor any defined benefit pension or other actuarial plan for the named executive officers during 2011.

Nonqualified deferred compensation
We did not maintain any nonqualified defined contribution or other deferred compensation plans or arrangements for the named
executive officers during 2011.

Change of control severance agreements and potential payments upon termination or change of
control
2011 change of control severance agreements
Effective December 31, 2011, we entered into change of control severance agreements, or severance agreements, with our
named executive officers (other than Mr. Watts, who entered into an alternative agreement, and Mr. Lau whose employment
terminated in 2011), which require us to make specific payments and benefits in connection with termination of their employment
under certain circumstances. To the extent that we had previous severance agreements with our named executive officers, those
agreements were amended and restated in their entirety by the December 2011 agreements and are of no further force or effect.
These severance agreements superseded any other agreement or arrangement relating to severance benefits with these
executive officers or any terms of their option agreements related to vesting acceleration, extension of the period to exercise or
other terms. The descriptions that follow describe such payments and benefits that may be owed by us to each of our named
executive officers (other than Mr. Lau) upon the named executive officer’s

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termination under certain circumstances. For Mr. Watts, we entered into a severance agreement which is not of the same general
form as the other named executive officers’ severance agreements. For a summary of the material terms and conditions of
severance for Mr. Watts, see “—Severance agreement with Lloyd Watts.”
The severance agreements remain in effect for an initial term of three years. On December 31, 2014, each agreement will
automatically renew for an additional one-year period unless either party provides notice of nonrenewal within 60 days prior to the
date of automatic renewal. The severance agreements also acknowledge that each executive officer is an at-will employee, whose
employment can be terminated at any time.
In order to receive the severance benefits described below, each named executive officer is obligated to execute a release of
claims against us, provided such release of claims becomes effective and irrevocable no later than 60 days following such
executive officer’s termination date.
In the event any payment to one of our named executive officers is subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code (as a result of a payment being classified as a “parachute payment” under Section 280G of the Internal
Revenue Code), the executive officer will be entitled to receive such payment as would entitle him to receive the greatest after-tax
benefit of either the full payment or a lesser payment which would result in no portion of such severance benefits being subject to
excise tax.
For the purpose of the severance agreements, “cause” means generally the occurrence of any of the following:
•   the executive’s material failure to perform his stated duties, and the executive’s continued failure to cure such failure to our
    reasonable satisfaction within 10 days following notice of failure;
•   the executive’s material violation of our policies (including any insider trading policy) or any written agreement or covenant with
    us;
•   the executive’s conviction of, or entry of a plea of guilty or nolo contendere to, a felony (other than motor vehicle offenses the
    effect of which do not materially impair executive’s performance of his employment duties);
•   a willful act by the executive that constitutes gross misconduct and which is injurious to us;
•   the executive’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is
    reasonably expected to result in material injury to us;
•   the unauthorized use or disclosure by the executive of our proprietary information or trade secrets or any other party to whom
    the executive owes an obligation of nondisclosure as a result of the executive’s relationship with us; or
•   the executive’s willful failure to cooperate with an investigation by a governmental authority.
The determination of “cause” will be made in good faith by our board of directors and will be final and binding on an executive.
For the purpose of the severance agreements, “good reason” means generally an executive’s voluntary termination within 30 days
following the expiration of any cure period following the occurrence of one or more of the following without the executive’s
consent:
•   a material reduction of the executive’s authorities, duties or responsibilities;

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•   a material reduction of the executive’s base salary;
•   our failure to obtain assumption of the severance agreement by any successor; or
•   a material change in the geographic location of the executive’s principal workplace.
For Mr. Santos, the occurrence of either of the following events also constitute grounds for good reason: (i) following a change of
control, a change in reporting position so that Mr. Santos does not report directly to the board of directors of the parent corporation
in a group of controlled corporations or (ii) not being the chief executive officer of a company that has publicly traded shares.
For Mr. Palatnik, the occurrence of either of the following events also constitute grounds for good reason: (i) following a change of
control, a change in reporting position so that Mr. Palatnik does not report directly to the chief executive officer of the parent
corporation in a group of controlled corporations or (ii) not being the chief financial officer of a publicly held company.
For the named executive officers other than Mr. Santos and Mr. Palatnik, good reason will not be triggered if, following a change
of control, an executive has the same responsibility with respect to our business and operations.
The executive may not resign for good reason without first providing written notice within 90 days of the initial existence of a
condition that is believed to constitute grounds for good reason and a reasonable cure period of not less than 30 days following
the date of such notice.
For the purpose of the severance agreements, “change of control” means generally:
•   a change in our ownership within the meaning of Section 409A of the Internal Revenue Code;
•   a change in effective control within the meaning of Section 409A of the Internal Revenue Code; or
•   a change in the ownership of a substantial portion of our assets within the meaning of Section 409A of the Internal Revenue
    Code.
For the purpose of the severance agreements, “change of control period” means generally the period beginning two months prior
to, and ending 12 months following, a change of control.
Severance agreement with Lloyd Watts
Outside of the general form of the severance agreements entered into with the other named executive officers, we entered into a
stand-alone severance agreement with Mr. Watts in August 2011. Pursuant to Mr. Watts’ severance agreement, if Mr. Watts is
terminated without “cause” or he resigns for “good reason,” then subject to the execution of a release of claims, Mr. Watts
receives:
•   six months continued payments of base salary; and
•   a post-termination exercise period with respect to then outstanding stock options until the earlier of the two year anniversary of
    his termination of employment or the one year anniversary of the effective date of our initial public offering.
For the purpose of Mr. Watts’ severance agreement, “cause” means generally Mr. Watts:
•   commits a crime involving dishonesty, breach of trust or physical harm to any person;
•   willingly engages in conduct that is in bad faith and injurious to us, including but not limited to misappropriation of trade secrets,
    fraud or embezzlement;

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•     commits a material breach of his severance agreement or any other written agreement with us; or
•     willfully refuses to implement or follow a lawful policy or directive of ours.
For the purpose of Mr. Watts’ severance agreement, “good reason” means generally Mr. Watts’ voluntary termination within
30 days following the expiration of any cure period following the occurrence of one or more of the following without Mr. Watts’
consent:
•     a material reduction of his base salary;
•     a material reduction of his duties, authorities or responsibilities; or
•     a material change in the geographic location of his principal workplace.
Mr. Watts’ severance agreement has no term and will terminate upon the date that all of the obligations of the parties have been
satisfied.
In the event any payment to Mr. Watts is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (as a
result of a payment being classified as a parachute payment under Section 280G of the Internal Revenue Code), Mr. Watts will be
entitled to receive such payment as would entitle him to receive the greatest after tax benefit of either the full payment or a lesser
payment which would result in no portion of such severance benefits being subject to excise tax.
The following table summarizes the terms of the severance agreements for our chief executive officer, our chief financial officer
and each of our other named executive officers (other than Mr. Lau):
                                                             Termination without cause or                                             Termination without cause or
                                                                 resignation for good                                                      resignation for good
                                                    reason outside of a change of control period(1)                             reason during a change of control period
                                                         Higher                                                                      Higher
                                                              of                                                                          of
                                                           2011                                            Post                        2011                                      Post
                         Termi-                           target                                         termi-                       target                                   termi-
                         nation                               or                                         nation                           or                                   nation
                         due to            Base            2010           COBRA            Vesting     exercise       Base             2010         COBRA       Vesting      exercise
                         cause,           salary         actual         payments           accele-       period      salary          actual      payments       accele-        period
                       death or             (# of        bonus               (# of          ration         (# of       (# of         bonus             (# of      ration         (# of
                      disability         months)             (%)         months)               (%)     months)      months)              (%)       months)           (%)     months)

Peter B. Santos             None               12             —                 12               —            —            18            150 %          18           100 %           18
Kevin S. Palatnik           None                9             —                  9               —            —            12            100            12           100             12
Andrew J. Keane             None                6             —                  6               —            —             9             75             9           100             12
Robert H.
   Schoenfield              None                6             —                 6                —            —             9             75            9            100             12
Thomas Spade                None                6             —                 6                —            —             9             75            9            100             12
Lloyd Watts                        (2)          6             —                 —                —            24            6             —             —             —              24



(1)      Only Mr. Watts is entitled to benefits for termination for good reason in the absence of a change of control.

(2)      In the event of termination due to death or disability, Mr. Watts will be entitled to receive an extension of his post-termination exercise period with respect to then
         outstanding stock options until the earlier of the two year anniversary of his termination of employment or the one year anniversary of the effective date of our initial
         public offering.

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Potential payments upon termination or change of control as of December 31, 2011
The following table provides information concerning the estimated payments and benefits that would be provided in the
circumstances described above for each of the named executive officers. For the purpose of the table, a qualifying termination of
employment is considered “in connection with a change of control” if such termination occurs within the period 12 months following
a “change of control” (as defined in each agreement). Payments and benefits are estimated assuming that the triggering event
took place on December 31, 2011. There can be no assurance that a triggering event would produce the same or similar results
as those estimated below if such event occurs on any other date or at any other price, of if any other assumption used to estimate
potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential
payments or benefits, any actual payments and benefits may be different.

                                              Termination without cause or                                        Termination without cause or
                                       resignation for good reason outside                                 resignation for good reason during a
Name                                     of a change of control period(1)(2)                                         change of control period(3)
Peter B. Santos
  Cash severance             $                                                350,000            $                                                 787,500 (4)
  COBRA
    payments(5)                                                                17,364                                                                26,586
  Accelerated
    vesting(6)                                                                     —                                                             1,751,541
Santos total:                $                                                367,364            $                                               2,565,627
Kevin S. Palatnik
  Cash severance                                                              225,000                                                              390,000 (4)
  COBRA
    payments(5)                                                                16,884                                                                22,512
  Accelerated
    vesting(6)                                                                     —                                                                    —
Palatnik total:              $                                                241,884            $                                                 412,512
Andrew J. Keane
  Cash severance                                                              117,500                                                              232,500 (4)
  COBRA
    payments(5)                                                                11,256                                                                16,884
  Accelerated
    vesting(6)                                                                     —                                                                    —
Keane total:                 $                                                128,756            $                                                 249,384
Robert H.
  Schoenfield
  Cash severance                                                              115,000                                                              228,750 (4)
  COBRA
    payments(5)                                                                11,256                                                                16,884
  Accelerated
    vesting(6)                                                                     —                                                               814,000
Schoenfield total:           $                                                126,256            $                                               1,059,634
Thomas Spade
  Cash severance                                                              110,000                                                              247,500 (4)
  COBRA
    payments(5)                                                                11,256                                                                16,884
  Accelerated
    vesting(6)                                                                     —                                                             1,050,000
Spade total:                 $                                                121,256            $                                               1,314,384
Lloyd Watts
  Cash
    severance(3)                                                              119,800                                                              119,800
Watts total:                 $                                                119,800            $                                                 119,800

(1)   The cash severance amounts shown in this column would be paid out periodically in accordance with our normal payroll procedures. COBRA premiums will be
      reimbursed consistent with our expense reimbursement policy.

(2)   Only Mr. Watts is entitled to benefits for termination for good reason in the absence of a change of control.

(3)   The cash severance amounts shown in this column would be paid in a lump sum, other than with respect to Mr. Watts. COBRA premiums will be reimbursed consistent
      with our expense reimbursement policy.

(4)   The amount represents the salary and bonus severance amount the named executive officer would receive.

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(5)    The amount represents the cost of covering the named executive officer and his or her eligible dependents coverage under our benefit plans assuming such coverage
       is timely elected under COBRA.

(6)    The amount represents the gain the named executive officer would receive, calculated as the difference between the fair market value of our common stock on the last
       day of 2011 and the exercise price of such accelerated shares. The fair market value of our common stock on the last day of 2011 as determined by our board of
       directors was $0.39 per share.

Severance benefits received by James L. Lau
In October 2011, we entered into a separation agreement and release with Mr. Lau, whose employment terminated on
November 4, 2011. Pursuant to the separation agreement and in consideration for a release of claims, we agreed to pay Mr. Lau
continuing payments of base salary at a rate of $19,740 per month for a period of six months from his termination date. Mr. Lau
also received a lump sum of $53,300, less applicable withholding, which is equivalent to 75% of the annual bonus he was eligible
to earn in 2011. We have also agreed to reimburse Mr. Lau for the payments he makes for COBRA coverage for a period of six
months from his termination date. In addition, we accelerated the vesting of Mr. Lau’s outstanding and unvested stock options for
a period of six additional months beyond his termination of employment date. Finally, we extended the post-termination exercise
period of Mr. Lau’s outstanding options until January 2, 2013.

Employee benefit plans
2011 Plan
Our board of directors adopted, and our stockholders approved, our 2011 Plan in March and April 2011, respectively. In addition,
our board of directors and stockholders approved an increase in the number of shares reserved for issuance under our 2011 Plan
in December 2011. In connection with our initial public offering, our board of directors approved in September 2011 and our
stockholders are expected to approve the amendment and restatement of the 2011 Plan immediately prior to the time the
registration statement of which this prospectus forms a part is declared effective by the SEC. The description below reflects the
amendment and restatement of the 2011 Plan. The 2011 Plan provides for the grant of incentive stock options, within the meaning
of Section 422 of the Internal Revenue Code, to our employees and any of our parent and subsidiary corporations’ employees,
and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units
and performance shares to our employees, directors and consultants and our parent and subsidiary corporations’ employees and
consultants.
A total of 2,506,147 shares of our common stock were reserved for issuance pursuant to the 2011 Plan as of March 31, 2012, plus
any shares that are outstanding under our 2001 Stock Plan (2001 Plan) that terminate or forfeit without being exercised in full on
and after our initial public offering. As of March 31, 2012, options to purchase 1,462,162 shares of our common stock were
outstanding under our 2011 Plan and 1,043,985 shares of common stock remained available for future grant. The number of
shares available for issuance under the 2011 Plan will also include an annual increase on the first day of each year beginning in
2013, equal to the least of:
•     1,101,649 shares;
•     4.5% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or
•     such other amount as our board of directors may determine.

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Our compensation committee will administer our 2011 Plan after the completion of the offering to which this prospectus relates. In
the case of options intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Internal
Revenue Code, the committee will consist of two or more “outside directors” within the meaning of Section 162(m).
The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject
to each such award, the exercisability of the awards and the form of consideration, if any, payable upon exercise. The
administrator also has the authority to amend existing awards to reduce their exercise price, to allow participants the opportunity
to transfer outstanding awards to a financial institution or other person or entity selected by the administrator and to institute an
exchange program by which outstanding awards may be surrendered in exchange for awards with a higher or lower exercise
price.
The exercise price of options granted under our 2011 Plan must at least be equal to the fair market value of our common stock on
the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who
owns 10% of the total combined voting power of all classes of our outstanding stock, the term must not exceed five years and the
exercise price must equal at least 110% of the fair market value on the grant date. The administrator determines all other terms of
options.
After the termination of service of an employee, director or consultant, he or she may exercise his or her option or stock
appreciation right for the period of time stated in his or her award agreement to the extent that the award is vested on the date of
termination. Generally, if termination is due to death or disability, the option or stock appreciation right will remain exercisable for
12 months. In all other cases, the option or stock appreciation right will generally remain exercisable for three months following the
termination of service. However, in no event may an option be exercised later than the expiration of its term.
Stock appreciation rights may be granted under our 2011 Plan, which are awards that allow the recipient to receive the
appreciation in the fair market value of our common stock between the exercise date and the date of grant. The administrator
determines the terms of stock appreciation rights, including when such rights become exercisable and whether to pay any
increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share exercise
price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market
value per share on the date of grant.
Awards of restricted stock may be granted under our 2011 Plan, which are grants of shares of our common stock that vest in
accordance with terms and conditions established by the administrator. The administrator, in its sole discretion, may accelerate
the time at which any restrictions will lapse or be removed. Shares of restricted stock that do not vest are subject to our right of
repurchase or forfeiture. The administrator will determine the number of shares granted and may impose whatever conditions to
vesting it determines to be appropriate (for example, the administrator may set restrictions based on the achievement of specific
performance goals or continued service to us).
Awards of restricted stock units may be granted under our 2011 Plan, which are bookkeeping entries representing an amount
equal to the fair market value of one share of our common stock. The administrator determines the terms and conditions of
restricted stock units including the number of units granted, the vesting criteria (which may include accomplishing specified
performance criteria or continued service to us) and the form and timing of payment. The administrator, in its sole discretion may
accelerate the time at which any restrictions will lapse or be removed.

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Awards of performance units and performance shares may be granted under our 2011 Plan, which are awards that will result in a
payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest.
The administrator will establish organizational or individual performance goals in its discretion, which, depending on the extent to
which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to
participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or
waive any performance objectives or other vesting provisions for such performance units or performance shares. The
administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in shares or in
some combination thereof.
Our 2011 Plan provides that all nonemployee directors are eligible to receive all types of awards (except for incentive stock
options). Each person who first becomes a nonemployee director following the completion of the offering to which this prospectus
relates will be automatically granted an initial award in the form of a nonstatutory stock option to purchase that number of shares
equal to 0.07% of our fully diluted capitalization on or about the date such person becomes a nonemployee director. The initial
award will vest as to 1/48th of the total shares thereunder on the monthly anniversary of the vesting commencement date,
provided that the participant continues to serve as a director through such dates. Each nonemployee director will be granted an
annual award in the form of a nonstatutory stock option to purchase that number of shares equal to 0.04% of our fully diluted
capitalization at the first meeting of our board of directors following the annual meeting of our stockholders beginning in 2013 if, as
of such date, the nonemployee director will have served on our board of directors for at least the preceding six months. The
annual award will vest as to 1/12th of the shares subject to the annual award on the monthly anniversary of the vesting
commencement date, provided the participant continues as a director through such dates. The term of these automatic option
grants to nonemployee directors will be 10 years or such earlier expiration date specified in the applicable award agreement.
Unless the administrator provides otherwise, our 2011 Plan generally does not allow for the transfer of awards and only the
recipient of an award may exercise an award during his or her lifetime.
Our 2011 Plan provides that in the event of a merger or “change in control,” as defined in the 2011 Plan, each outstanding award
will be treated as the administrator determines, including that the successor corporation or its parent or subsidiary will assume or
substitute an equivalent award for each outstanding award. The administrator is not required to treat all awards similarly. If there is
no assumption or substitution of outstanding awards, the awards will fully vest, all restrictions will lapse, all performance goals or
other vesting criteria will be deemed achieved at 100% of target levels and the awards will become fully exercisable. The
administrator will provide notice to the recipient that he or she has the right to exercise the option and stock appreciation right as
to all of the shares subject to the award.
2001 Plan
Our board of directors adopted and our stockholders approved our 2001 Plan. Our 2001 Plan provides for the grant of incentive
stock options within the meaning of Section 422 of the Internal Revenue Code to our employees and any parent or subsidiary
corporation’s employees and for the grant of nonstatutory stock options to our employees, directors and consultants and any
parent or subsidiary corporation’s employees and consultants. The 2001 Plan also allows for awards of stock purchase rights. At
the time our 2011 Plan became effective in March 2011, we ceased to grant new awards under the 2001 Plan.

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Our board of directors or a committee appointed by our board of directors administers our 2001 Plan. Under our 2001 Plan, the
administrator has the power to determine the terms of the awards, including the service providers who will receive awards, the
exercise price, the number of shares subject to each award, the vesting schedule and exercisability of awards and the form of
consideration payable upon exercise of an option. The administrator also has the power to institute an exchange program by
which outstanding awards may be surrendered in exchange for awards with a lower exercise price. Our compensation committee
recommends guidelines for equity compensation arrangements for all employees including guidelines for stock and option awards
and vesting schedules.
Subject to adjustment, as of March 31, 2012, the maximum aggregate number of shares that may be subject to awards granted
under the 2001 Plan was 3,122,735 shares of our common stock. As of March 31, 2012, options to purchase 3,122,735 shares of
our common stock were outstanding under our 2001 Plan and no shares of our common stock remained available for future grant
under the 2001 Plan.
Effective upon the adoption of the 2011 Plan, we ceased to grant awards under our 2001 Plan and instead grant awards under our
2011 Plan. However, the 2001 Plan will continue to govern the terms and conditions of the outstanding awards previously granted
thereunder.
Incentive stock options and nonstatutory stock options may be granted under our 2001 Plan, provided that incentive stock options
may only be granted to employees. The exercise price of incentive stock options within the meaning of Section 422 of the Internal
Revenue Code must equal at least 100% of the fair market value of our common stock on the date of grant and the exercise price
of nonstatutory stock options may not be less than 85% of the fair market value of our common stock on the date of grant. The
term of an option may not exceed 10 years; provided, however, that an incentive stock option held by a participant who owns
more than 10% of the total combined voting power of all classes of our stock, or of certain of our parent or subsidiary corporations,
may not have a term in excess of five years and must have an exercise price of at least 110% of the fair market value of our
common stock on the grant date. The administrator determines the methods of payment of the exercise price of an option, which
may include cash, shares or other property acceptable to the plan administrator. Subject to the provisions of our 2001 Plan and
applicable laws, the administrator determines the remaining terms of the option (e.g., vesting).
After the termination of service of a participant, he or she may exercise his or her option for the period of time stated in his or her
award agreement to the extent that the option is vested on the date of termination. If termination is due to death, the option will
remain exercisable for at least 12 months. If termination is due to disability, the option will remain exercisable for at least six
months. In all other cases, the option will generally remain exercisable for 30 days following the termination of service (unless
such termination is for cause, in which case the options, both vested and unvested, will terminate in their entirety). However, in no
event may an option be exercised later than the expiration of its term.
Stock purchase rights may be granted under our 2001 Plan, however, no such stock purchase rights were granted. Stock
purchase rights may be issued alone, in addition to or in tandem with other awards granted under our 2001 Plan. Stock purchase
rights are rights to purchase our common stock that vest in accordance with terms and conditions established by the administrator
and as proscribed by applicable law. The administrator determines the number of shares subject to a stock purchase right granted
to any service provider. Unless the administrator determines otherwise, we have a repurchase option exercisable upon
termination of the purchaser’s service with us. Shares subject to stock purchase rights that do not vest are subject to our right of
repurchase.

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Unless the administrator provides otherwise, our 2001 Plan generally does not allow for the transfer of awards and only the
recipient of an award may exercise an award during his or her lifetime. The administrator may allow nonstatutory stock options to
be transferred to testamentary trusts or to a participant’s immediate family members.
Our 2001 Plan provides that in the event of our merger with or into another corporation, or a sale of substantially all of our assets,
the successor corporation shall assume or substitute an equivalent award with respect to each outstanding award under the 2001
Plan. In the event that the successor corporation refuses to assume or substitute for the award, the options or stock purchase
rights will terminate upon the merger or sale.
2011 ESPP
Our executive officers and our other employees will be allowed to participate in our 2011 ESPP, which will be effective upon the
completion of the offering to which this prospectus relates. We believe that providing them the opportunity to participate in the
2011 ESPP provides them with a further incentive towards ensuring our success and accomplishing our corporate goals. The
specific provisions of our 2011 ESPP are as provided for below.
Our board of directors adopted our 2011 ESPP in September 2011 and we expect our stockholders will approve it prior to the
completion of this offering. The 2011 ESPP will become effective upon completion of this offering.
A total of 451,764 shares of our common stock will be made available for sale under the 2011 ESPP. In addition, our 2011 ESPP
provides for annual increases in the number of shares available for issuance under plan on the first day of each fiscal year
beginning in 2013, equal to the least of:
•   1% of the outstanding shares of our common stock on the first day of such year;
•   249,328 shares of common stock; or
•   such amount as determined by our board of directors or compensation committee.
Our compensation committee administers the 2011 ESPP and has full and exclusive authority to interpret the terms of the plan
and determine eligibility to participate subject to the conditions of the plan as described below.
All of our employees are eligible to participate if they are employed by us, or any participating subsidiary, for at least 20 hours per
week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock
under the 2011 ESPP if such employee:
•   immediately after the grant would own stock and/or hold outstanding options to purchase stock possessing 5% or more of the
    total combined voting power or value of all classes of our capital stock; or
•   holds rights to purchase stock under all of our employee stock purchase plans that accrue at a rate that exceeds $25,000
    worth of stock for each calendar year.
Our 2011 ESPP is intended to qualify under Section 423 of the Internal Revenue Code. The offering periods generally are
scheduled to start on the first trading day on or after February 15 and August 15 of each year and end approximately six months
later. The first offering period, however, will commence on the first trading day on or after completion of the offering to which this
prospectus relates and will end on the first trading day on or after August 15, 2012. Each offering period generally will include one

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purchase period, which will be the approximately six-month period commencing with one exercise date and ending with the next
exercise date.
Our 2011 ESPP permits participants to purchase common stock through contribution of up to 15% of their eligible compensation,
which includes a participant’s base straight time gross earnings, certain commissions, overtime and shift premium, but exclusive
of payments for incentive compensation, bonuses and other compensation. A participant may purchase a maximum of
2,000 shares during a six-month purchase period.
Accumulated contributions are used to purchase shares of our common stock on a participant’s behalf at the end of each
six-month purchase period. The purchase price of the shares will be 85% of the lower of the fair market value of our common
stock on the first trading day of each offering period or on the exercise date. If the fair market value of our common stock on the
exercise date is less than the fair market value on the first trading day of the offering period, participants will be withdrawn from
the current offering period following their purchase of shares on the purchase date and will be automatically reenrolled in a new
offering period. Participants may end their participation at any time during an offering period and will be paid their accrued
contributions that have not yet been used to purchase shares of common stock. Participation ends automatically upon termination
of employment with us.
A participant generally may not transfer rights granted under the 2011 ESPP. If the compensation committee permits the transfer
of rights, it may only be done other than by will, the laws of descent and distribution, or as otherwise provided under the 2011
ESPP.
In the event of our merger or change in control, as defined under the 2011 ESPP, a successor corporation may assume or
substitute for each outstanding option. If the successor corporation refuses to assume or substitute for the option, the offering
period then in progress will be shortened and a new exercise date will be set. The administrator will notify each participant that the
exercise date has been changed and that the participant’s option will be exercised automatically on the new exercise date unless
prior to such date the participant has withdrawn from the offering period.
Our 2011 ESPP will automatically terminate in 2031, unless we terminate it sooner. Our board of directors and compensation
committee has the authority to amend, suspend or terminate our 2011 ESPP, except that, subject to certain exceptions described
in the 2011 ESPP, no such action may adversely affect any outstanding rights to purchase stock under our 2011 ESPP.
Executive Incentive Compensation Plan
Our Executive Incentive Compensation Plan (Bonus Plan) was adopted by our board of directors in March 2012. The Bonus Plan
allows our board of directors or its committee to provide cash incentive awards to selected employees, including our named
executive officers, based upon performance goals established by our board of directors or its committee.
Under the Bonus Plan, our board of directors or its committee determines the performance goals applicable to any award, which
goals may include, without limitation, the attainment of research and development milestones, sales bookings, business
divestitures and acquisitions, cash flow, cash position, contract awards or backlog, customer renewals, customer retention rates
from an acquired company, business unit or division, earnings (which may include earnings before interest and taxes, earnings
before taxes and net earnings), earnings per share, expenses, gross margin, growth in stockholder value relative to the moving
average of the S&P 500 Index or another index, internal rate of return, inventory turns, inventory levels, market share, net income,
net profit, net sales, new product

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development, new product invention or innovation, number of customers, operating cash flow, operating expenses, operating
income, operating margin, overhead or other expense reduction, product defect measures, product release timelines, productivity,
profit, return on assets, return on capital, return on equity, return on investment, return on sales, revenue, revenue growth, sales
results, sales growth, stock price, time to market, total stockholder return and working capital, and individual objectives such as
peer reviews or other subjective or objective criteria. Performance goals that include our financial results may be determined in
accordance with GAAP or such financial results may consist of non-GAAP financial measures. The performance goals may differ
from participant to participant and from award to award.
Our board of directors or its committee may, in its sole discretion and at any time, increase, reduce or eliminate a participant’s
actual award, and/or increase, reduce or eliminate the amount allocated to the bonus pool. The actual award may be below, at or
above a participant’s target award, in the discretion of our board of directors. Our board of directors or its committee may
determine the amount of any reduction on the basis of such factors as it deems relevant, and it is not required to establish any
allocation or weighting with respect to the factors it considers.
Actual awards are paid in cash only after they are earned, which usually requires continued employment through the date a bonus
is paid. Payment of bonuses occurs as soon as administratively practicable after they are earned, but no later than the dates set
forth in the Bonus Plan.
Our board of directors has the authority to amend, alter, suspend or terminate the Bonus Plan provided such action does not
impair the existing rights of any participant with respect to any earned bonus.
Other benefit plans
In addition to the United States, we currently have employees located in South Korea, Taiwan and Singapore. In addition to
providing statutorily mandated benefit programs in each country, we contribute to private plans for health, pension and insurance
benefits in the countries where those contributions are customarily provided to employees.

Limitation of liability and indemnification
Our amended and restated certificate of incorporation, which will be in effect upon the completion of the offering to which this
prospectus relates, contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted
by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any
breach of fiduciary duties as directors, except liability for:
•   any breach of the director’s duty of loyalty to us or our stockholders;
•   any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
•   unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware
    General Corporation Law; or
•   any transaction from which the director derived an improper personal benefit.
Our amended and restated certificate of incorporation and amended and restated bylaws to be in effect upon the completion of
this offering provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by
Delaware law. Our amended and restated bylaws also provide that we are obligated to advance expenses incurred by a director
or officer in advance of the

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final disposition of any action or proceeding and permit us to secure insurance on behalf of any officer, director, employee or other
agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to
indemnify him or her under the provisions of Delaware law. We have entered and expect to continue to enter into agreements to
indemnify our directors, executive officers and other employees as determined by our board of directors. With specified
exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees,
judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these
bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.
We also maintain directors’ and officers’ liability insurance.
The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and
restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary
duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if
successful, might benefit us and other stockholders. Further, a stockholder’s investment may be adversely affected to the extent
that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification
provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. At present, there is no
pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought and we
are not aware of any threatened litigation that may result in claims for indemnification.

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                                                      Related party transactions
In addition to the director and executive compensation arrangements discussed above under “Executive compensation,” the
following is a description of transactions since January 1, 2009 to which we have been a party in which the amount involved
exceeded or will exceed $120,000 and in which any of our directors, executive officers, beneficial holders of more than 5% of our
capital stock or entities affiliated with them, had or will have a direct or indirect material interest.

Private placements
Series D preferred stock financing
In February and April 2009, we sold an aggregate of 2,926,332 shares of Series D preferred stock at a per share purchase price
of $5.14 pursuant to a stock purchase agreement. Purchasers of the Series D preferred stock include venture capital funds that
hold 5% or more of our capital stock and were represented on our board of directors. The following table summarizes purchases
of Series D preferred stock by the beneficial holders of more than 5% of our capital stock or entities affiliated with them:

                                                                                                               Number of                             Total purchase
Name of stockholder                                           Audience director                           Series D shares                                      price

New Enterprise Associates 11, Limited
  Partnership                                                        Forest Baskett                                1,111,435               $                  5,705,000
Vulcan Capital Venture Capital I LLC                                  Stephen Hall (1)                               584,453                                  3,000,000
Funds affiliated with Tallwood Venture
  Capital(2)                                                     George A. Pavlov                                  1,139,007                                  5,846,527

(1)   Mr. Hall served on our board of directors as the representative of Vulcan Capital Venture Capital I LLC at the time of our Series D preferred stock financing. Mr. Gyani
      replaced Mr. Hall on our board of directors in March 2011.

(2)   Affiliates of Tallwood Venture Capital holding securities whose shares are aggregated for the purpose of reporting share ownership information include Tallwood II
      Associates, L.P. and Tallwood II Annex, L.P.

Series E preferred stock financing
In February and March 2010, we sold an aggregate of 4,135,584 shares of Series E preferred stock at a per share purchase price
of $3.67 pursuant to a stock purchase agreement. Purchasers of the Series E preferred stock include venture capital funds that
hold 5% or more of our capital stock and were represented on our board of directors. The following table summarizes purchases
of Series E preferred stock by the beneficial holders of more than 5% of our capital stock or entities affiliated with them:

                                                                                                               Number of                             Total purchase
Name of stockholder                                           Audience director                           Series E shares                                      price

New Enterprise Associates 11, Limited
  Partnership                                                        Forest Baskett                                1,349,396               $                  4,946,889
Vulcan Capital Venture Capital I LLC                                  Stephen Hall (1)                             1,126,239                                  4,128,794
Funds affiliated with Tallwood Venture
  Capital(2)                                                     George A. Pavlov                                  1,468,622                                  5,383,972

(1)   Mr. Hall served on our board of directors as the representative of Vulcan Capital Venture Capital I LLC at the time of our Series E preferred stock financing. Mr. Gyani
      replaced Mr. Hall on our board of directors in March 2011.

(2)   Affiliates of Tallwood Venture Capital whose shares are aggregated for the purpose of reporting share ownership information include Tallwood I, L.P., Tallwood III,
      L.P., Tallwood III Associates, L.P. and Tallwood III Partners, L.P.

Stock option awards
Certain stock option grants to our directors and executive officers and related option grant policies are described in this
prospectus under the sections titled “Management—Director compensation,” “Executive compensation—Compensation disclosure
and analysis,” “Executive compensation—Grants of plan-based awards in 2011,” “Executive compensation—Outstanding equity
awards at December 31, 2011” and “Executive compensation—Change of control severance agreements and

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potential payments upon termination or change of control.” Pursuant to our director and executive officer compensation policies or
other arrangements, we granted the following options to certain directors and executive officers since January 1, 2009:

                                                                                             Shares subject
Name                                                          Grant date                        to option(#)                                           Exercise price
Peter B. Santos                                                   05/26/09                              100,246 (1)               $                                  2.40
                                                                  08/03/10                               59,449 (1)                                                  2.70
                                                                  08/03/10                              132,350 (2)                                                  2.70
                                                                  01/25/12                              140,475 (2)                                                 13.80
Kevin S. Palatnik                                                 10/31/11                              190,184 (3)                                                 11.70
James L. Lau(6)                                                   10/22/09                              122,833 (3)                                                  2.40
                                                                  08/03/10                               16,666 (1)                                                  2.70
                                                                  08/03/10                               13,882 (1)                                                  2.70
Forest Baskett                                                    01/25/12                               14,133 (1)                                                 13.80
                                                                  01/25/12                                8,080 (5)                                                 13.80
Marvin D. Burkett                                                 08/03/10                               44,625 (1)                                                  2.70
                                                                  01/25/12                                8,080 (5)                                                 13.80
Barry Cox                                                         10/22/09                              240,000 (1)                                                  2.40
                                                                  08/03/10                               27,124 (1)                                                  2.70
                                                                  01/25/12                                8,080 (5)                                                 13.80
Rich Geruson                                                      01/25/12                               14,133 (1)                                                 13.80
Mohan S. Gyani                                                    03/03/11                               44,625 (1)                                                  5.10
                                                                  01/25/12                                8,080 (5)                                                 13.80
George A. Pavlov                                                  01/25/12                               14,133 (1)                                                 13.80
                                                                  01/25/12                                8,080 (5)                                                 13.80
Lloyd Watts                                                       05/26/09                              138,474 (1)                                                  2.40
                                                                  08/03/10                               35,917 (1)                                                  2.70
                                                                  08/03/10                               54,500 (2)                                                  2.70
Andrew J. Keane                                                   12/09/11                              142,177 (3)                                                 11.70
Sanjay Adkar(7)                                                   03/30/10                              146,666 (3)                                                  2.40
Andy J. Micallef                                                  08/03/10                              150,000 (3)                                                  2.70
Robert H. Schoenfield                                             03/03/11                              123,333 (3)                                                  5.10
                                                                  10/31/11                               20,000 (4)                                                 11.70
Manish Singh(8)                                                   03/30/10                              133,333 (3)                                                  2.40
Thomas Spade                                                      09/14/10                              175,000 (3)                                                  2.70
Carver Mead                                                       08/03/10                               21,420 (1)                                                  2.70
                                                                  12/09/11                                  500 (2)                                                 11.70

(1)   Option vests at a rate of 1/48th of the shares subject to this option vesting per month, subject to continued service through each applicable date by the optionholder.

(2)   Option vests at a rate of 1/36th of the shares subject to this option vesting per month, subject to continued service through each applicable date by the optionholder.

(3)   Option vests at a rate of 1/4th of the shares subject to this option on the first anniversary of the vesting commencement date with the remainder of the shares subject
      to this option vesting ratably over the next 36 months, subject to continued service through each applicable date by the optionholder.

(4)   Option vests and becomes exercisable at a rate of 5/48th of the total number of shares subject to this option on the one year service anniversary with the remainder of
      the shares subject to this option vesting and becoming exercisable at a rate of 1/48th per month, subject to continued service through each applicable date by the
      optionholder.

(5)   Option vests as to 1/12th of the shares per month commencing June 1, 2012.

(6)   Mr. Lau ceased to be our Chief Financial Officer in August 2011.

(7)   Mr. Adkar ceased to be our Vice President of Engineering in February 2012.

(8)   Mr. Singh ceased to be our Vice President of Marketing in November 2011.

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Investors’ rights agreement
In connection with our Series E financing, we entered into an amended and restated investors’ rights agreement with certain
purchasers of our preferred stock, including our principal stockholders with
whom certain of our directors are affiliated. Pursuant to this agreement, we granted such stockholders certain registration rights
with respect to certain shares of our common stock which will be issuable upon conversion of the shares of preferred stock held
by them. For a description of these registration rights, see “Description of capital stock—Registration rights.”
The amended and restated investors’ rights agreement also provides for preemptive rights with respect to future sales by us of our
securities. In June 2011, we entered into an amendment to the amended and restated investors’ rights agreement to exclude all
options and other securities issued or issuable under the 2011 Plan from these preemptive rights. The amended and restated
investors’ rights agreement also subjects us to certain affirmative and negative covenants. These preemptive rights and covenants
will terminate upon completion of the offering to which this prospectus relates.

Voting agreement
We have entered into a voting agreement with certain holders of our outstanding preferred stock and common stock, including
entities with which certain of our directors are affiliated, and certain other stockholders, obligating each party to vote or consent at
each stockholder meeting or with respect to each written stockholder consent to elect the nominees of certain parties to our board
of directors. The parties to the voting agreement have agreed, subject to certain conditions, to vote their shares so as to elect as
directors the nominees designated by certain of our investors, including New Enterprise Associates, which has designated Forest
Baskett for election to our board of directors as the Series B preferred stock nominee; the holders of Series AA and Series AA-1
preferred stock, who have the right to designate two nominees and have designated George A. Pavlov for election to our board of
directors; the holders of Series A-1, Series A-2 and Series A-3 preferred stock who have designated Mohan S. Gyani for election
to our board of directors; and the holders of common stock who have the right to designate one nominee for election to our board
of directors and have designated Rich Geruson. In addition, the parties to the voting agreement have agreed that the holders of a
majority of the outstanding shares have the right to designate three nominees for election to our board of directors, one of whom
shall be the chief executive officer. These seats are filled by Peter B. Santos, Barry L. Cox and Marvin D. Burkett. Upon the
closing of this offering, the voting agreement will terminate in its entirety and none of our stockholders will have any special rights
regarding the election or designation of members of our board of directors.

Indemnification agreements
We have entered into indemnity agreements with each of our current directors and officers, in addition to the indemnification
provided for in our bylaws. These agreements will require us to indemnify each such person against expenses and liabilities
incurred by such person for a proceeding related to such person’s services for us and to advance expenses incurred for such
proceeding, all subject to limited exceptions. See “Compensation discussion and analysis—Limitation of liability and
indemnification.”

Policies and procedures for related party transactions
In September 2011, we adopted a related party transactions policy. As provided by our audit committee charter to be effective
upon completion of the offering to which this prospectus relates, our audit committee is responsible for reviewing and approving in
advance any related party transaction.

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All of our directors, officers and employees are required to report to the audit committee any related party transaction prior to
entering into the transaction.
We believe that we have executed all of the transactions set forth under the section titled “Related party transactions” on terms no
less favorable to us than we could have obtained from unaffiliated third parties. It is our intention to ensure that all future
transactions between us and our officers, directors and principal stockholders and their affiliates, are approved by the audit
committee of our board of directors and are on terms no less favorable to us than those that we could obtain from unaffiliated third
parties.

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                                   Principal and selling stockholders
The following table presents information as to the beneficial ownership of our common stock as of March 31, 2012 and as
adjusted to reflect the sale of the common stock in this offering, by:
•   each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
•   each of our directors;
•   each of our named executive officers;
•   all of our directors and executive officers as a group; and
•   each of the selling stockholders.
Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power for securities.
Unless otherwise shown below, to our knowledge, the persons and entities named in the table have sole voting and sole
investment power for all shares beneficially owned, subject to community property laws where applicable. Shares of our common
stock subject to options and warrants that are currently exercisable or exercisable within 60 days of March 31, 2012 are
considered to be outstanding and to be beneficially owned by the person holding the options or warrants to compute the
percentage ownership of that person, but are not treated as outstanding to compute the percentage ownership of any other
person.
The number of shares of our common stock outstanding after this offering includes             shares of common stock being
offered by us and does not include the shares that are subject to the underwriters’ over-allotment option. The percentage of our
common stock outstanding before and after the offering is based on 14,345,060 shares of our common stock outstanding on
March 31, 2012, assuming the conversion of all outstanding shares of preferred stock. The percentage ownership information
assumes no exercise of the underwriters’ overallotment option.

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Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Audience, Inc., 440 Clyde
Avenue, Mountain View, California 94043.

                                                                                                                Number
                                                                Shares beneficially owned                      of shares           Shares beneficially owned
                                                                   prior to the offering                         offered               after the offering
                                                                    Shares         Percentage                                       Shares           Percentage
5% stockholders:
Entities affiliated with New Enterprise
  Associates, Inc.(1)                                              4,282,219                   29.85%
  1954 Greenspring Drive
  Suite 600
  Timonium, Maryland 21093
Entities affiliated with Vulcan Capital
  Venture Capital(2)                                               3,574,041                      24.80
  505 Fifth Avenue, Suite 900
  Seattle, Washington 98104
Entities affiliated with Tallwood Venture
  Capital(3)                                                       4,660,569                      32.49
  3000 Sand Hill Road,
  Building 3, Suite 240
  Menlo Park, California 94025
Directors and executive officers:
Peter B. Santos(4)                                                   562,145                       3.77
James L. Lau(4)                                                       92,693                          *
Kevin S. Palatnik                                                         —                          —
Robert H. Schoenfield(4)                                              38,888                          *
Thomas Spade(4)                                                       76,562                          *
Andrew J. Keane                                                           —                          —
Lloyd Watts(5)                                                       582,073                       3.97
Forest Baskett(6)                                                  4,283,396                      29.86
Marvin D. Burkett(4)                                                  19,523                          *
Barry L. Cox(7)                                                      166,864                       1.16
Rich Geruson(4)                                                        1,177                          *
Mohan S. Gyani(4)                                                     13,945                          *
George A. Pavlov(8)                                                4,661,746                      32.49
All directors and executive officers as a
  group (14 persons)(9)                                          10,567,762                       73.31
Other selling stockholders:

*     Represents beneficial ownership of less than 1%.

(1)   Consists of 4,278,005 shares of common stock issuable upon the conversion of preferred stock held of record by New Enterprise Associates 11, Limited Partnership
      (NEA 11) and 4,214 shares of common stock issuable upon the conversion of preferred stock held of record by NEA Ventures 2006, L.P. (Ven 2006). The shares
      directly held by NEA 11 are indirectly held by NEA Partners 11, Limited Partnership (NEA Partners 11), the sole general partner of NEA 11, NEA 11 GP, LLC (NEA 11
      LLC), the sole general partner of NEA Partners 11 and each of the individual Managers of NEA 11 LLC. The individual Managers (collectively, the Managers) of NEA
      11 LLC are M. James Barrett, Peter J. Barris, Forest Baskett (a member of our board of directors), Ryan D. Drant, Krishna “Kittu” Kolluri, C. Richard Kramlich, Charles
      W. Newhall, III, Mark W. Perry and Scott D. Sandell. The shares directly held by Ven 2006 are indirectly held by Karen P. Welsh, the general partner of Ven 2006. NEA
      11, NEA Partners 11, NEA 11 LLC and the Managers share voting and dispositive power with regard to the shares directly held by NEA 11. Karen P. Welsh, the
      general partner of Ven 2006, holds voting and dispositive power over the shares held by Ven 2006. All indirect holders of the above referenced shares disclaim
      beneficial ownership of all applicable shares except to the extent of their pecuniary interest therein.

(2)   Consists of 3,358,009 shares of common stock issuable upon the conversion of preferred stock held by Vulcan Capital Venture Capital I LLC; 68,919 shares of
      common stock issuable upon exercise and conversion of a preferred stock warrant held by Vulcan Capital Venture Capital I LLC, 33,333 shares of common stock held
      by Vulcan Ventures Incorporated and 113,780 shares of common stock issuable upon the conversion of preferred stock held by Vulcan Ventures Incorporated.

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      Vulcan Ventures Incorporated is the managing member of Vulcan Capital Venture Capital Management I, LLC, which is the manager of Vulcan Capital Venture Capital I
      LLC. Paul Allen is the sole stockholder of Vulcan Ventures Incorporated and, as such, possesses sole voting and investment power. Mr. Allen disclaims beneficial
      ownership of the shares held by Vulcan Capital Venture I LLC except to the extent of his pecuniary interest therein.

(3)   Consists of 8,075 shares of common stock issuable upon the conversion of preferred stock held by Tallwood III Associates, L.P., 26,222 shares of common stock
      issuable upon the conversion of preferred stock held by Tallwood II Associates, L.P., 1,437,061 shares of common stock issuable upon the conversion of preferred
      stock held by Tallwood II, L.P., 595,352 shares of common stock issuable upon the conversion of preferred stock held by Tallwood II Partners, L.P., 1,133,312 shares
      of common stock issuable upon the conversion of preferred stock held by Tallwood II Annex, L.P., 131,990 shares of common stock issuable upon the conversion of
      preferred stock held by Tallwood III Partners, L.P., 286,234 shares of common stock issuable upon the conversion of preferred stock held by Tallwood I, L.P. and
      1,042,323 shares of common stock issuable upon the conversion of preferred stock held by Tallwood III, L.P. Diosdado P. Banatao is the managing member of
      Tallwood Management Co., LLC, which is the general partner of Tallwood I, L.P. Each of Luis Arzubi, Diosdado P. Banatao and George Pavlov is a managing member
      of Tallwood III Management, LLC, which is the general partner of Tallwood III, L.P., Tallwood III Partners, L.P. and Tallwood III Associates, L.P. George Pavlov and
      Diosdado P. Banatao are the managing member of Tallwood II Management, LLC, which is the general partner of Tallwood II Annex, L.P., Tallwood II Associates, L.P.,
      Tallwood II, L.P. and Tallwood II Partners, L.P. All indirect holders of the above referenced shares disclaim beneficial ownership of all applicable shares except to the
      extent of their pecuniary interest therein.

(4)   Consists solely of shares subject to options exercisable within 60 days of March 31, 2012.

(5)   Consists of 266,666 shares of common stock held by Mr. Watts and 315,407 shares subject to options exercisable within 60 days of March 31, 2012.

(6)   See footnote (1) above regarding Mr. Baskett’s relationship with New Enterprise Associates, Inc. and its affiliated entities. Mr. Baskett disclaims beneficial ownership of
      the shares held by NEA 11 and Ven 2006, referenced in footnote (1) above, except to the extent of his pecuniary interest therein. Mr. Baskett does not have voting or
      dispositive power over the shares held of record by Ven 2006.

(7)   Consists of 133,332 shares of common stock held by Mr. Cox and 33,532 shares subject to options exercisable within 60 days of March 31, 2012.

(8)   Consists of shares held by entities affiliated with Tallwood Venture Capital. Mr. Pavlov is a general partner of Tallwood Venture Capital and as a result may be deemed
      to beneficially own the shares owned by entities affiliated with Tallwood Venture Capital. Mr. Pavlov disclaims beneficial ownership of the shares held by entities
      affiliated with Tallwood Venture Capital, except to the extent of his pecuniary interest therein.

(9)   Includes 1,224,976 shares subject to options exercisable within 60 days of March 31, 2012.

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                                         Description of capital stock
The following is a summary of our capital stock and certain provisions of our amended and restated certificate of incorporation and
amended and restated bylaws, as they will be in effect upon the closing of the offering to which this prospectus relates. This
summary does not purport to be complete and is qualified in its entirety by the provisions of our amended and restated certificate
of incorporation and amended and restated bylaws, copies of which have been filed as exhibits to the registration statement of
which this prospectus is a part.
Immediately following the closing of this offering, our authorized capital stock will consist of 500,000,000 shares of common stock,
$0.001 par value per share and 50,000,000 shares of preferred stock, $0.001 par value per share.

Common stock
Based on 1,139,880 shares of common stock outstanding as of March 31, 2012 and the conversion of outstanding preferred stock
as of March 31, 2012 into 13,205,180 shares of common stock upon the completion of this offering, assuming no outstanding
options are exercised prior to the closing of this offering and the issuance of           shares of common stock in this offering,
there will be           shares of common stock outstanding upon the closing of this offering (including 111,602 shares of common
stock issuable upon the exercise of outstanding warrants as of March 31, 2012, at a weighted average exercise price of $3.63 per
share; based on an assumed initial public offering price of $          per share, which is the midpoint of the range of the initial public
offering price listed on the cover page of this prospectus). As of March 31, 2012, assuming the conversion of all outstanding
preferred stock into common stock upon the closing of this offering, we had 116 record holders of our common stock.
Holders of our common stock are entitled to one vote for each share of common stock held of record for the election of directors
and on all matters submitted to a vote of stockholders. Holders of our common stock are entitled to receive dividends ratably, if
any, as may be declared by our board of directors out of legally available funds, subject to any preferential dividend rights of any
preferred stock then outstanding. Upon our dissolution, liquidation or winding up, holders of our common stock are entitled to
shares ratably in our net assets legally available after the payment of all our debts and other liabilities, subject to the preferential
rights of any preferred stock then outstanding. Holders of our common stock have no preemptive, subscription, redemption or
conversion rights. The rights, preferences and privileges of holders of common stock are subject to and may be adversely affected
by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. All of our
outstanding shares of common stock are, and the shares of common stock to be issued pursuant to this offering will be, fully paid
and nonassessable.

Preferred stock
Upon completion of this offering, our board of directors will be authorized, without further vote or action by the stockholders, to
issue from time to time, up to an aggregate of 50,000,000 shares of preferred stock in one or more series and to fix or alter the
designations, rights, preferences and privileges and any qualifications, limitations or restrictions of the shares of each such series
of preferred stock, including the dividend rights, dividend rates, conversion rights, voting rights, terms of redemption including
sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or
designations of such series, any or all of which may be greater than the rights of common stock. The issuance of preferred stock
could adversely affect the voting power of

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holders of our common stock and the likelihood that holders of our common stock will receive dividend payments upon liquidation
and could have the effect of delaying, deferring or preventing a change in control. We have no present plans to issue any shares
of preferred stock.

Warrants
As of March 31, 2012, we had the following warrants outstanding:
•   Warrants to purchase 110,269 shares of Series AA preferred stock at an exercise price of $3.627 per share. Each warrant
    contains provisions for the adjustment of the exercise price and the number of shares issuable upon exercise in the event of
    stock dividends, stock splits, reorganizations and reclassifications, consolidations and the like. If not exercised, the warrants
    expire on the earlier of a closing of an initial public offering or a change of control transaction that meet the requirements
    described in the warrants, or August 20, 2013.
•   A warrant to purchase 1,333 shares of Series E preferred stock at an exercise price of $3.666 per share. The warrant contains
    provisions for the adjustment of the exercise price and the number of shares issuable upon exercise in the event of stock
    dividends, stock splits, reorganizations and reclassifications, consolidations and the like. The warrant contains provisions for an
    automatic net exercise on July 31, 2019, the expiration date of the warrant.

Registration rights
Following the closing of this offering, the holders of an aggregate of 13,316,782 shares of our common stock (consisting of
13,205,180 shares of common stock issuable upon the conversion of our convertible preferred stock and 111,602 shares of
common stock reserved for issuance upon the exercise of outstanding warrants as of March 31, 2012, at a weighted average
exercise price of $3.63 per share; based on an assumed initial public offering price of $           per share, which is the midpoint of
the price range set forth on the cover page of this prospectus), will be entitled to the registration rights set forth below with respect
to registration of the resale of such shares under the Securities Act pursuant to an investors’ rights agreement by and among us
and certain of our stockholders and the Series E preferred stock warrant. In addition, the holder of an aggregate of 266,666
shares of our common stock will be entitled to the incidental registration rights set forth below. As applicable, we refer to these
shares collectively as registrable securities. The rights set forth below will expire on the fifth anniversary of the closing of the
offering or, as to a given holder of registrable securities, when such holder of registrable securities can sell all of such holder’s
registrable securities pursuant to Rule 144 of the Securities Act.
Demand registration rights . At any time after the later of (x) February 3, 2013 or (y) six months after the effective date of the
registration statement of which this prospectus is a part, and subject to certain exceptions, the holders of at least 30% of the
registrable securities may demand that we effect a registration under the Securities Act covering the public offering and sale of all
or part of the registrable securities held by such stockholders, provided that such holders request that we file a registration
statement under the Securities Act covering the registration of at least 50% of the registrable securities then outstanding or a
lesser percent if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed
$20,000,000. Upon any such demand we must use our best efforts to effect the registration of the registrable securities which we
have been requested to register together with all other registrable securities that we may have been requested to register by other
stockholders pursuant to the incidental registration rights described below. We are only obligated to effect three registrations in
response to these demand registration rights. Depending on certain

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conditions, we may defer such registration for up to 90 days. In addition, the underwriters of any underwritten offering will have the
right to limit the number of the registrable securities to be included in the registration statement, subject to certain restrictions.
Incidental registration rights . If we propose to register any securities for public sale, including pursuant to any stockholder
initiated demand registration, holders of the registrable securities will have the right to include their shares in the registration
statement, subject to certain exceptions relating to employee benefit plans and mergers and acquisitions. The underwriters of any
underwritten offering will have the right to limit the number of the registrable securities to be included in the registration statement,
subject to certain restrictions.
Short form registration rights . As soon as practicable after the end of the fiscal year in which the registration statement of which
this prospectus is part becomes effective, we are obligated under the investors’ rights agreement to take action necessary to
qualify and remain eligible for registration on Form S-3 under the Securities Act. At any time when Form S-3 is available, the
holders of at least 60% of the registrable securities may require us to effect a registration on Form S-3 if the proposed aggregate
offering price of the shares to be registered by the holders requesting registration is, net of underwriting discounts and
commissions, at least $5,000,000, subject to certain exceptions, including if we have already effected one demand short form
registration within the six-month period preceding the request. In addition, the underwriters of any underwritten offering will have
the right to limit the number of the registrable securities to be included in the registration statement, subject to certain restrictions.
Expenses of registration . We will pay all registration expenses related to any demand, incidental or short form registration,
including reasonable fees and expenses of counsel for the selling holders of the registrable securities, other than underwriting
discounts and commissions.
Indemnification . Under the investors’ rights agreement, we have agreed to indemnify the holders of the registrable securities,
their respective underwriters and any person who might be deemed to control them against losses, claims, damages or liabilities
arising out of or based upon any material misstatements or omissions in the registration statement or related violations of law
subject to limited exceptions.
Antitakeover effects of provisions of the amended and restated certificate of incorporation and amended and restated
bylaws
Our amended and restated certificate of incorporation and our amended and restated bylaws contain certain provisions that could
have the effect of delaying, deferring or discouraging another party from acquiring control of us. We expect these provisions and
certain provisions of Delaware law, which are summarized below, to discourage coercive takeover practices and inadequate
takeover bids. These provisions are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first
with our board of directors. We believe that the benefits of increased protection due to our potential ability to negotiate more
favorable terms with an unfriendly or unsolicited acquirer outweigh the disadvantages of discouraging a proposal to acquire us.
Undesignated preferred stock . As discussed above, our board of directors has the ability to issue preferred stock with voting or
other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may
have the effect of deterring hostile takeovers or delaying changes in control or management of our company.
Limits on the ability of stockholders to act by written consent or call a special meeting .   Our amended and restated certificate of
incorporation provides that our stockholders may not act by written consent,

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which may lengthen the amount of time required to take stockholder actions. As a result, a holder controlling a majority of our
capital stock would not be able to amend our certificate of incorporation or bylaws or remove directors without holding a meeting
of our stockholders called in accordance with our bylaws.
In addition, our amended and restated certificate of incorporation and amended and restated bylaws provide that special meetings
of the stockholders may be called only by the board of directors acting pursuant to a resolution adopted by a majority of the whole
board of directors, chairperson of the board of directors, chief executive officer or president. Stockholders may not call a special
meeting, which may delay the ability of our stockholders to force consideration of a proposal or for holders controlling a majority of
our capital stock to take any action, including the removal of directors.
Requirements for advance notification of stockholder nominations and proposals . Our amended and restated bylaws establish
advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other
than nominations made by or at the direction of our board of directors. These provisions may have the effect of precluding the
conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter
a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to
obtain control of our company.
Election and removal of directors . Our amended and restated certificate of incorporation and amended and restated bylaws
contain provisions that establish specific procedures for appointing and removing members of our board of directors. Under our
amended and restated certificate of incorporation and amended and restated bylaws, vacancies and newly created directorships
on our board of directors may be filled only by a majority of the directors then serving on our board of directors. Under our
amended and restated certificate of incorporation and amended and restated bylaws, directors may be removed only for cause by
the affirmative vote of the holders of a majority of the shares then entitled to vote at an election of directors.
No cumulative voting . The Delaware General Corporation Law provides that stockholders are not entitled to the right to
cumulate votes in the election of directors unless our restated certificate of incorporation provides otherwise. Our restated
certificate of incorporation and amended and restated bylaws do not expressly provide for cumulative voting. The absence of
cumulative voting makes it more difficult for a minority stockholder to gain a seat on our board of directors to influence our board
of directors’ decision regarding a takeover.
Delaware antitakeover statute . Upon the completion of this offering, we will be subject to the provisions of Section 203 of the
Delaware General Corporation Law regulating corporate takeovers. In general, Section 203 prohibits a publicly held Delaware
corporation from engaging, under certain circumstances, in a business combination with an interested stockholder for a period of
three years following the date the person became an interested stockholder unless:
•   prior to the date of the transaction, our board of directors approved either the business combination or the transaction which
    resulted in the stockholder becoming an interested stockholder;
•   upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested
    stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
    calculated as provided under Section 203; or

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•   at or subsequent to the date of the transaction, the business combination is approved by our board of directors and authorized
    at an annual or special meeting of stockholders and not by written consent, by the affirmative vote of at least two-thirds of the
    outstanding voting stock which is not owned by the interested stockholder.
Generally, a business combination includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the
interested stockholder. An interested stockholder is a person who, together with affiliates and associates, owns or, within three
years prior to the determination of interested stockholder status, did own 15% or more of a corporation’s outstanding voting stock.
We expect the existence of this provision to have an antitakeover effect with respect to transactions our board of directors does
not approve in advance. We also anticipate that Section 203 may discourage takeover attempts that might result in a premium
over the market price for the shares of common stock held by stockholders.
The provisions of Delaware law and the provisions of our amended and restated certificate of incorporation and amended and
restated bylaws, could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they
might also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile
takeover attempts. These provisions might also have the effect of preventing changes in our management. It is possible that these
provisions could make it more difficult to accomplish transactions that stockholders might otherwise deem to be in their best
interests.

Transfer agent and registrar
The transfer agent and registrar for our common stock is Computershare Trust Co., N.A. The transfer agent’s address is 250
Royall Street, Canton, MA 02021 and its telephone number is (800) 662-7232.

Listing on The NASDAQ Global Market
We have applied to list our common stock on The NASDAQ Global Market under the trading symbol “ADNC.”

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                                        Shares eligible for future sale
Prior to this offering, there has not been any public market for our common stock and we make no prediction as to the effect, if
any, that market sales of shares of our common stock or the availability of shares of common stock for sale will have on the
market price of our common stock. Nevertheless, sales of substantial amounts of common stock in the public market, or the
perception that such sales could occur, could adversely affect the market price of common stock and could impair our future ability
to raise capital through the sale of equity securities.
Upon the completion of this offering, we will have an aggregate of              shares of common stock outstanding, assuming no
exercise of the underwriters’ over-allotment option and no exercise of outstanding options or warrants. Of the outstanding shares,
all of the          shares sold in this offering, plus any additional shares sold upon exercise of the underwriters’ over-allotment
option, will be freely tradable, except that any shares purchased by “affiliates” (as that term is defined in Rule 144 under the
Securities Act), may only be sold in compliance with the limitations described below. The remaining               shares of common
stock will be deemed “restricted securities” as defined in Rule 144. Restricted securities may be sold in the public market only if
registered or if they qualify for an exemption from registration under Rule 144 or Rule 701, promulgated under the Securities Act,
which rules are summarized below.
As a result of the contractual restrictions described below and the provisions of Rules 144 and 701, the restricted shares will be
available for sale in the public market as follows:
•   no shares will be eligible for sale upon completion of this offering;
•            shares will be eligible for sale upon the expiration of the lock-up agreements, described below, beginning 180 days
    after the date of this prospectus, subject to extension or reduction in certain circumstances; and
•           shares will be eligible for sale upon the exercise of vested options 180 days after the date of this prospectus, subject
    to extension in certain circumstances.

Lock-up agreements and obligations
Our directors, officers and substantially all of our stockholders, including the selling stockholders, have entered into lock-up
agreements that generally provide that these holders will not offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any securities convertible into or exchangeable for shares of common
stock, enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of the common stock or such other securities or make any demand for or exercise any right with respect to the registration of any
shares of common stock or any security convertible into or exercisable or exchangeable for common stock without the prior written
consent of J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities, Inc. for a period of
180 days from the date of this prospectus, subject to certain exceptions. The 180-day restricted periods described above are
subject to extension such that, in the event that either (1) during the last 17 days of the 180-day restricted period, we issue an
earnings release or material news or a material event relating to us occurs or (2) prior to the expiration of the 180-day restricted
period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day period
or provide notification to J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities, Inc. of
any earnings release, or material news or a material

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event that may give rise to an extension of the 180-day period, the restrictions described above will continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or
occurrence of the material event.
In addition, each grant agreement under each of our Stock Plans contains restrictions similar to those set forth in the lock-up
agreements described above limiting the disposition of securities issuable pursuant to those plans for a period of at least 180 days
following the date of this prospectus.

Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least
90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during
90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the
holding period of any prior owner other than our affiliates, is entitled to sell such shares without complying with the manner of sale,
volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If
such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any
prior owner other than our affiliates, then such person is entitled to sell such shares without complying with any of the
requirements of Rule 144.
In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to
sell upon expiration of the lock-up agreements described above, within any three-month period beginning 90 days after the date of
this prospectus, a number of shares that does not exceed the greater of:
•   1% of the number of shares of common stock then outstanding, which will equal approximately                 shares immediately
    after this offering; or
•   the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on
    Form 144 with respect to such sale.
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of
sale provisions and notice requirements and to the availability of current public information about us.

Rule 701
Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or
contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these
shares in reliance upon Rule 144, but without being required to comply with the public information, holding period, volume
limitation, or notice provisions of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under
Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are
required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701.
As of March 31, 2012, 733,601 shares of our outstanding common stock had been issued in reliance on Rule 701 as a result of
exercises of stock options and stock awards.

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Stock options
We intend to file registration statements on Form S-8 under the Securities Act covering all of the shares of our common stock
subject to options outstanding or reserved for issuance under our stock plans, employee stock purchase plan and shares of our
common stock issued upon the exercise of options by employees. We expect to file this registration statement as soon as
practicable after this offering. However, the shares registered on Form S-8 may be subject to volume limitations, manner of sale,
notice and public information requirements of Rule 144 applicable to affiliates, as well as vesting restrictions, and will not be
eligible for resale until expiration of the lock-up agreements to which they are subject.

Registration rights
Upon completion of this offering, the holders of an aggregate of            shares of our common stock, or their transferees, will be
entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the
Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon
the effectiveness of such registration. For a further description of these rights, see “Description of capital stock—Registration
rights.”

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                            Material U.S. federal income tax and
                       estate tax consequences to non-U.S. holders
The following is a summary of the material U.S. federal income tax and estate tax consequences to non-U.S. holders (as defined
below) of the ownership and disposition of our common stock, but does not purport to be a complete analysis of all the potential
tax considerations relating thereto. This summary is based upon the provisions of the Internal Revenue Code, Treasury
regulations promulgated thereunder, administrative rulings and judicial decisions, all as of the date hereof. These authorities may
be changed, possibly retroactively, so as to result in U.S. federal income tax or estate tax consequences different from those set
forth below. No ruling has been or will be sought from the IRS with respect to the matters discussed below, and there can be no
assurance that the IRS will not take a contrary position regarding the tax consequences of the acquisition, ownership or
disposition of our common stock, or that any such contrary position would not be sustained by a court.
This summary does not address the tax considerations arising under the laws of any non-U.S., state or local jurisdiction or under
U.S. federal gift and estate tax laws, except to the limited extent below. In addition, this discussion does not address tax
considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules,
including, without limitation:
•   banks, insurance companies or other financial institutions;
•   persons subject to the alternative minimum tax;
•   tax-exempt organizations;
•   controlled foreign corporations, passive foreign investment companies and corporations that accumulate earnings to avoid U.S.
    federal income tax;
•   dealers in securities or currencies;
•   traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;
•   persons that own, or are deemed to own, more than 5% of our capital stock, except to the extent specifically set forth below;
•   certain former citizens or long-term residents of the United States;
•   persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk
    reduction transaction;
•   persons who do not hold our common stock as a capital asset within the meaning of Section 1221 of the Internal Revenue
    Code (generally, for investment purposes); or
•   persons deemed to sell our common stock under the constructive sale provisions of the Internal Revenue Code.
In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes holds our common stock, the
tax treatment of a partner generally will depend on the status of the partner and upon the activities of the partnership. Accordingly,
partnerships that hold our common stock and partners in such partnerships should consult their tax advisors.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL
INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF OUR

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COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY
STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Non-U.S. holder defined
For purposes of this discussion, you are a non-U.S. holder if you are any holder, other than a partnership or entity classified as a
partnership for U.S. federal income tax purposes, which is not:
•   an individual citizen or resident of the United States;
•   a corporation or other entity taxable as a corporation created or organized in the United States or under the laws of the United
    States or any political subdivision thereof;
•   an estate whose income is subject to U.S. federal income tax regardless of its source; or
•   a trust (x) whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. persons
    who have the authority to control all substantial decisions of the trust or (y) which has made an election to be treated as a U.S.
    person.

Distributions
We have not made any distributions on our common stock and we do not plan to make any distributions for the foreseeable future.
However, if we do make distributions on our common stock, those payments will constitute dividends for U.S. tax purposes to the
extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the
extent those distributions exceed both our current and our accumulated earnings and profits, they will constitute a return of capital
and will first reduce your basis in our common stock, but not below zero, and then will be treated as gain from the sale of common
stock.
Any dividend paid to you generally will be subject to U.S. withholding tax either at a rate of 30% of the gross amount of the
dividend or such lower rate as may be specified by an applicable income tax treaty. In order to receive a reduced treaty rate, you
must provide us with an IRS Form W-8BEN or other appropriate version of IRS Form W-8 certifying qualification for the reduced
rate. A non-U.S. holder of shares of our common stock eligible for a reduced rate of U.S. withholding tax pursuant to an income
tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the IRS. If the
non-U.S. holder holds the stock through a financial institution or other agent acting on the non-U.S. holder’s behalf, the non-U.S.
holder will be required to provide appropriate documentation to the agent, which then will be required to provide certification to us
or our paying agent, either directly or through other intermediaries.
Dividends received by you that are effectively connected with your conduct of a U.S. trade or business and, if required by an
applicable income tax treaty, attributable to a permanent establishment maintained by you in the United States, are exempt from
such withholding tax. In order to obtain this exemption, you must provide us with an IRS Form W-8ECI or other applicable IRS
Form W-8 properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are
generally taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition, if you
are a corporate non-U.S. holder, dividends you receive that are effectively connected with your conduct of a U.S. trade or
business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable
income tax treaty. Non-U.S. holders are urged to consult any applicable income tax treaties that may provide for different rules.

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Gain on disposition of common stock
You generally will not be required to pay U.S. federal income tax on any gain realized upon the sale or other disposition of our
common stock unless:
•   the gain is effectively connected with your conduct of a U.S. trade or business and, if required by an applicable tax treaty, the
    gain is attributable to a permanent establishment maintained by you in the United States;
•   you are an individual who is present in the United States for a period or periods aggregating 183 days or more during the
    calendar year in which the sale or disposition occurs and certain other conditions are met; or
•   our common stock constitutes a U.S. real property interest by reason of our status as a “United States real property holding
    corporation,” or a USRPHC, for U.S. federal income tax purposes, at any time within the shorter of the five-year period
    preceding the disposition or your holding period for our common stock.
We believe that we are not currently and that we will not become a USRPHC. However, because the determination of whether we
are a USRPHC depends on the fair market value of our U.S. real property relative to the fair market value of our other business
assets, we cannot assure you that we will not become a USRPHC in the future. Even if we become a USRPHC, however, as long
as our common stock is regularly traded on an established securities market, such common stock will be treated as a U.S. real
property interest only if you actually or constructively hold more than 5% of such regularly traded common stock at any time during
the applicable period described in the third bullet above.
If you are a non-U.S. holder described in the first bullet above, you will generally be required to pay tax on the gain derived from
the sale, net of certain deductions or credits, under regular graduated U.S. federal income tax rates. Corporate non-U.S. holders
described in the first bullet above may be subject to branch profits tax equal to 30% (or such lower rate as may be specified by an
applicable income tax treaty) of a portion of its effectively connected earnings and profits for the taxable year, as adjusted for
certain items. If you are an individual non-U.S. holder described in the second bullet above, you will be required to pay a flat 30%
tax on the gain derived from the sale, which tax may be offset by U.S. source capital losses, even though you are not considered
a resident of the United States. You should consult any applicable income tax or other treaties that may provide for different rules.

Federal estate tax
Our common stock beneficially owned by an individual who is not a citizen or resident of the United States, as defined for U.S.
federal estate tax purposes, at the time of death will generally be includable in the decedent’s gross estate for U.S. federal estate
tax purposes, unless an applicable estate tax treaty provides otherwise.

Backup withholding and information reporting
Generally, we must report annually to the IRS the amount of dividends paid to you, your name and address and the amount of tax
withheld, if any. A similar report will be sent to you. Pursuant to applicable income tax treaties or other agreements, the IRS may
make these reports available to tax authorities in your country of residence.
Payments of dividends or of proceeds on the disposition of stock made to you may be subject to additional information reporting
and backup withholding at a current rate of 28% unless you establish

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an exemption, for example by properly certifying your non-U.S. status on an IRS Form W-8BEN or another appropriate version of
IRS Form W-8. Notwithstanding the foregoing, backup withholding and information reporting may apply if either we or our paying
agent has actual knowledge, or reason to know, that you are a U.S. person.
Backup withholding is not an additional tax; rather, the U.S. federal income tax liability of persons subject to backup withholding
will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund or credit may generally
be obtained from the IRS, provided that the required information is furnished to the IRS in a timely manner.

Legislation affecting taxation of our common stock held by or through foreign entities
Legislation enacted in 2010 generally will impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a
disposition of our common stock paid to a “foreign financial institution,” as specially defined under these rules, unless such
institution enters into an agreement with the U.S. government to withhold on certain payments and to collect and provide to the
U.S. tax authorities substantial information regarding U.S. account holders of such institution, which includes certain equity and
debt holders of such institution, as well as certain account holders that are foreign entities with U.S. owners. The legislation also
will generally impose a U.S. federal withholding tax of 30% on dividends and the gross proceeds of a disposition of our common
stock paid to a non financial foreign entity unless such entity provides the withholding agent with a certification identifying the
direct and indirect U.S. owners of the entity. Under certain circumstances, a non-U.S. holder might be eligible for refunds or
credits of such taxes. Under certain transition rules, this withholding will apply to payments of dividends made on or after
January 1, 2014 and to payments of gross proceeds from a sale or disposition of our common stock made on or after January 1,
2015. Prospective investors are encouraged to consult with their own tax advisors regarding the possible implications of this
legislation on their investment in our common stock.
THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS
NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE
PARTICULAR U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, HOLDING
AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN
APPLICABLE LAWS.

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                                                       Underwriting
J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., (collectively, the
Representatives), are acting as the representatives of the underwriters and joint book running managers in connection with this
offering. Under the terms of an underwriting agreement, which has been filed as an exhibit to the registration statement of which
this prospectus forms a part, we and the selling stockholders have agreed to sell to the underwriters named below and each of the
underwriters named below has severally agreed to purchase from us and the selling stockholders and has agreed to sell, the
respective number of shares of common stock shown opposite its name below:

                                                                                                                           Number
Name                                                                                                                      of shares
J.P. Morgan Securities LLC
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
Pacific Crest Securities LLC
    Total


The underwriting agreement provides that the underwriters’ obligation to purchase shares of common stock depends on the
satisfaction of the conditions contained in the underwriting agreement, including:
•   the obligation to purchase all of the shares of common stock offered hereby (other than those shares of common stock covered
    by their option to purchase additional shares from us as described below), if any of the shares are purchased;
•   the respective representations and warranties made by us and the selling stockholders to the underwriters are true;
•   there is no material adverse change in our business or in the financial markets; and
•   we and the selling stockholders deliver customary closing documents to the underwriters.

Commissions and expenses
The following table summarizes the underwriting discounts and commissions we and the selling stockholders will pay to the
underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up
to         additional shares from us. The underwriting fee is the difference between the initial price to the public and the amount
the underwriters pay to us and the selling stockholders, and we and the selling stockholders have agreed to sell for the shares.
                                           Per share                                                     Total
                                      Without                                                 Without
                                   exercise of              With exercise                  exercise of                With exercise
                                     option to               of option to                    option to                 of option to
                                     purchase                   purchase                     purchase                     purchase
                                    additional                 additional                   additional                   additional
                                       shares                     shares                       shares                       shares

Underwriting discounts
  and commissions
  paid by us             $                        $                          $                               $
Underwriting discounts
  and commissions
  paid by the selling
  stockholders           $                        $                          $                               $

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The Representatives have advised us that the underwriters propose to offer the shares of common stock directly to the public at
the public offering price on the cover page of this prospectus and to selected dealers, which may include the underwriters, at such
offering price less a selling concession not in excess of $        per share. After the offering, the Representatives may change
the offering price and other selling terms.
The expenses of this offering, which are payable by us and the selling stockholders, are estimated to be approximately
$       million (excluding underwriting discounts and commissions).

Option to purchase additional shares
We have granted the underwriters an option exercisable for 30 days after the date of this prospectus to purchase, from time to
time, in whole or in part, up to an aggregate of          shares of common stock from us at the public offering price less
underwriting discounts and commissions. This option may be exercised by the underwriters to cover over-allotments, if any, in
connection with this offering. To the extent that the underwriters exercise this option, each underwriter will be committed, so long
as the conditions of the underwriting agreement are satisfied, to purchase a number of additional shares of common stock
proportionate to that underwriter’s initial commitment as indicated in the table above and we will be obligated to sell the additional
shares of common stock to the underwriters.

Lock-up agreements
We, all of our directors and executive officers and holders of substantially all of our outstanding stock, including the selling
stockholders, have agreed that, subject to certain exceptions, we and they will not directly or indirectly, without the prior written
consent of the Representatives (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise transfer or dispose of, directly or indirectly, any
shares of our common stock or securities convertible into or exercisable or exchangeable for our common stock (including, without
limitation, shares of common stock or such other securities that may be deemed to be beneficially owned in accordance with the
rules and regulations of the SEC and shares of common stock that may be issued upon exercise of any stock option or warrant),
or publicly disclose the intention to make any offer, sale, pledge, or disposition, (2) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of shares of common stock or such other
securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such
other securities, in cash or otherwise or (3) make any demand for or exercise any right with respect to the registration of any
shares of common stock or security convertible into or exercisable or exchangeable for common stock for a period of 180 days
after the date of this prospectus.
The 180-day restricted period described in the preceding paragraph will be extended if:
(1)    during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event
       relating to us occurs; or
(2)    prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day
       period beginning on the last day of the 180-day period or provide notification to the Representatives of any earnings release,
       or material news or a material event that may give rise to an extension of the 180-day period,
in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period
beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless such extension
is waived in writing by the Representatives.

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The Representatives, in their sole discretion, may release the common stock and other securities subject to the lock-up
agreements described above in whole or in part at any time with or without notice.

Offering price determination
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated
between the Representatives and us. In determining the initial public offering price of our common stock, the Representatives will
consider:
•   the history and prospects for the industry in which we compete;
•   our financial information;
•   an assessment of management and our business potential and earning prospects;
•   the prevailing securities market conditions at the time of this offering; and
•   the recent market prices of, and the demand for, publicly traded shares of generally comparable companies.

Indemnification
We and the selling stockholders have agreed to indemnify the underwriters against certain liabilities, including liabilities under the
Securities Act and liabilities arising from breaches of the representations and warranties contained in the underwriting agreement
and to contribute to payments that the underwriters may be required to make for these liabilities.

Stabilization, short positions and penalty bids
J.P. Morgan Securities LLC will act as the sole stabilization agent in connection with the offering. The underwriters may engage in
stabilizing transactions, short sales and purchases to cover positions created by short sales and penalty bids or purchases for the
purpose of pegging, fixing or maintaining the price of our common stock, in accordance with Regulation M under the Exchange
Act:
•   Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified
    maximum.
•   A short position involves a sale by the underwriters of shares in excess of the number of shares the underwriters are obligated
    to purchase in the offering, which creates the syndicate short position. This short position may be either a covered short
    position or a naked short position. In a covered short position, the number of shares involved in the sales made by the
    underwriters in excess of the number of shares they are obligated to purchase is not greater than the number of shares that
    they may purchase by exercising their option to purchase additional shares. In a naked short position, the number of shares
    involved is greater than the number of shares in their option to purchase additional shares. The underwriters may close out any
    short position by either exercising their option to purchase additional shares and/or purchasing shares in the open market. In
    determining the source of shares to close out the short position, the underwriters will consider, among other things, the price of
    shares available for purchase in the open market as compared to the price at which they may purchase shares through their
    option to purchase additional shares. A naked short position is more likely to be created if the underwriters are concerned that
    there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect
    investors who purchase in the offering.

                                                                  -146-
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•   Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been
    completed in order to cover syndicate short positions.
•   Penalty bids permit the Representatives to reclaim a selling concession from a syndicate member when the common stock
    originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short
    positions.
These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the
market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the
price of the common stock may be higher than the price that may otherwise exist in the open market. These transactions may be
effected on           or otherwise and, if commenced, may be discontinued at any time.
Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of our common stock. In addition, neither we nor any of the underwriters
make representation that the Representatives will engage in these stabilizing transactions or that any transaction, once
commenced, will not be discontinued without notice.

Electronic distribution
A prospectus in electronic format may be made available on Internet sites or through other online services maintained by one or
more of the underwriters and/or selling group members participating in this offering, or by their affiliates. In those cases,
prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member,
prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the
Representatives on the same basis as other allocations.
Other than the prospectus in electronic format, the information on any underwriter’s or selling group member’s website and any
information contained in any other website maintained by an underwriter or selling group member is not part of the prospectus or
the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or any underwriter
or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors in
deciding whether to purchase any shares of common stock.

Stock exchange
We have applied to list our common stock on The NASDAQ Global Market under the trading symbol “ADNC.”

Discretionary sales
The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total
number of shares offered by them.
Stamp taxes
If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges
under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this
prospectus.

                                                                -147-
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Relationships
The underwriters and certain of their respective affiliates are financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management, investment research,
principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates may in
the future perform, investment banking and advisory services for us from time to time, for which they may in the future receive
customary fees and expenses. The underwriters and their respective affiliates may, from time to time, engage in transactions with
or perform services for us in the ordinary course of their business.
In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad
array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments
(including bank loans) for their own account and for the accounts of their customers and such investment and securities activities
may involve our securities and/or instruments. The underwriters and their respective affiliates may also make investment
recommendations and/or publish or express independent research views in respect of such securities or instruments and may at
any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Selling restrictions
The common stock is being offered for sale in those jurisdictions in the United States, Europe and elsewhere where it is lawful to
make such offers.

European economic area
In relation to each member state of the European Economic Area which has implemented the Prospectus Directive (each, a
“Relevant Member State”), including each Relevant Member State that has implemented the 2010 PD Amending Directive with
regard to persons to whom an offer of securities is addressed and the denomination per unit of the offer of securities (each, an
“Early Implementing Member State”), with effect from and including the date on which the Prospectus Directive is implemented in
that Relevant Member State (the “Relevant Implementation Date”), no offer of common stock will be made to the public in that
Relevant Member State (other than offers (the “Permitted Public Offers”) where a prospectus will be published in relation to the
common stock that has been approved by the competent authority in a Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the
Prospectus Directive), except that with effect from and including that Relevant Implementation Date, offers of common stock may
be made to the public in that Relevant Member State at any time:
      a)     to “qualified investors” as defined in the Prospectus Directive, including:
             A.     (in the case of Relevant Member States other than Early Implementing Member States), legal entities which are
                    authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate
                    purpose is solely to invest in securities, or any legal entity which has two or more of (i) an average of at least
                    250 employees during the last financial year; (ii) a total balance sheet of more than € 43.0 million and (iii) an
                    annual turnover of more than € 50.0 million as shown in its last annual or consolidated accounts; or
             B.     (in the case of Early Implementing Member States), persons or entities that are described in points (1) to (4) of
                    Section I of Annex II to Directive 2004/39/EC, and those who are

                                                                   -148-
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                    treated on request as professional clients in accordance with Annex II to Directive 2004/39/EC, or recognized as
                    eligible counterparties in accordance with Article 24 of Directive 2004/39/EC unless they have requested that
                    they be treated as non professional clients; or
      b)     to fewer than 100 (or, in the case of Early Implementing Member States, 150) natural or legal persons (other than
             “qualified investors” as defined in the Prospectus Directive), as permitted in the Prospectus Directive, subject to
             obtaining the prior consent of the representatives for any such offer; or
      c)     in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of common stock shall result in a requirement for the publication of a prospectus pursuant to Article 3
of the Prospectus Directive or of a supplement to a prospectus pursuant to Article 16 of the Prospectus Directive.
Each person in a Relevant Member State (other than a Relevant Member State where there is a Permitted Public Offer) who
initially acquires any common stock or to whom any offer is made will be deemed to have represented, acknowledged and agreed
that (A) it is a “qualified investor,” and (B) in the case of any common stock acquired by it as a financial intermediary, as that term
is used in Article 3(2) of the Prospectus Directive, (x) the common stock acquired by it in the offering have not been acquired on
behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than
“qualified investors” as defined in the Prospectus Directive, or in circumstances in which the prior consent of the Subscribers has
been given to the offer or resale, or (y) where common stock has been acquired by it on behalf of persons in any Relevant
Member State other than “qualified investors” as defined in the Prospectus Directive, the offer of those shares to it is not treated
under the Prospectus Directive as having been made to such persons.
For the purpose of the above provisions, the expression “an offer to the public” in relation to any common stock in any Relevant
Member State means the communication in any form and by any means of sufficient information on the terms of the offer of any
common stock to be offered so as to enable an investor to decide to purchase any common stock, as the same may be varied in
the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the
expression “Prospectus Directive” means Directive 2003/71 EC (including the 2010 PD Amending Directive, in the case of Early
Implementing Member States) and includes any relevant implementing measure in each Relevant Member State and the
expression “2010 PD Amending Directive” means Directive 2010/73/EU.

United Kingdom
This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, or the
Order, or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to
(d) of the Order (all such persons together being referred to as “relevant persons”). The securities are only available to and any
invitation, offer or agreement to subscribe purchase or otherwise acquire such securities will be engaged in only with relevant
persons. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its
contents.

                                                                  -149-
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                                                            Experts
The financial statements as of December 31, 2010 and 2011 and for each of the three years in the period ended December 31,
2011 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


                                                      Legal matters
The validity of the shares of common stock offered hereby has been passed upon for us and the selling stockholders by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California. Certain members of, and investment entities comprised
of members of, and persons associated with, Wilson Sonsini Goodrich & Rosati, Professional Corporation owned or controlled
approximately 0.1956% of the shares of our common stock as of March 31, 2012, assuming the conversion of all outstanding
shares of our convertible preferred stock into shares of our common stock. Certain legal matters in connection with this offering
will be passed upon for the underwriters by Latham & Watkins LLP, Menlo Park, California.


                               Where you can find more information
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of our
common stock offered by this prospectus. The registration statement, including the attached exhibits and schedules, contains
additional relevant information about us and our common stock. This prospectus does not contain all of the information set forth in
the registration statement and the exhibits and schedules thereto. The rules and regulations of the SEC allow us to omit from this
prospectus certain information included in the registration statement.
For further information about us and our common stock, you may inspect a copy of the registration statement and the exhibits and
schedules to the registration statement without charge at the offices of the SEC at 100 F Street, N.E., Washington D.C. 20549.
You may obtain copies of all or any part of the registration statement from the Public Reference Section of the SEC, 100 F Street,
N.E., Washington D.C. 20549 upon the payment of the prescribed fees. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website at www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants like us that file electronically with the SEC. You can
also inspect our registration statement on this website. We also maintain a website at www.audience.com, at which you may
access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the
SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.
Upon completion of this offering, we will become subject to the reporting and information requirements of the Securities Exchange
Act of 1934, as amended, and we will file reports, proxy statements and other information with the SEC. These reports, proxy
statements and other information will be available for inspection and copying at the SEC’s Public Reference Room and the
website of the SEC referred to above.

                                                                -150-
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                       I ndex to consolidated financial statements
                                                                                   Page
Report of independent registered public accounting firm                            F-2
Consolidated balance sheets                                                        F-3
Consolidated statements of comprehensive income (loss)                             F-5
Consolidated statements of convertible preferred stock and stockholders’ deficit   F-6
Consolidated statements of cash flows                                              F-8
Notes to consolidated financial statements                                         F-9

                                                               F-1
Table of Contents


              Report of independent registered public accounting firm
The reverse stock split described in Note 13 to the consolidated financial statements has not been consummated at April 20,
2012. When it has been consummated, we will be in a position to furnish the following report.
/s/ PricewaterhouseCoopers LLP
San Jose, California
April 20, 2012

               “Report of independent registered public accounting firm
      To the Board of Directors and Stockholders of Audience, Inc.
      In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive
      income (loss), of convertible preferred stock and stockholders’ deficit and of cash flows present fairly, in all material respects,
      the financial position of Audience, Inc. and its subsidiaries (the “Company”) at December 31, 2010 and 2011, and the results
      of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with
      accounting principles generally accepted in the United States of America. These financial statements are the responsibility of
      the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
      We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight
      Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
      whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used
      and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that
      our audits provide a reasonable basis for our opinion.


      San Jose, California
      February 22, 2012 except for the effects of the reverse stock split and subsequent events described in Note 13 and Note 14,
      respectively, as to which the date is              ”

                                                                   F-2
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                                              Audience, Inc.
                                       Consolidated balance sheets
                                         (in thousands, except share and per share data)

                                                                                                             Pro forma
                                                                                               March 31,     March 31,
                                                            December 31,                           2012           2012
                                                            2010                   2011
                                                                                                    (unaudited)
Assets
Current assets:
  Cash and cash equivalents                     $         12,095      $           15,983   $      18,706
  Restricted cash                                             49                      40              40
  Accounts receivable, net of allowance
    for sales returns of $58, $0, and $14,
    respectively                                          12,017                   8,465           8,775
  Inventories                                              9,864                  20,242          20,167
  Prepaid expenses and other current
    assets                                                 1,160                   2,659           4,489
    Total current assets                                  35,185                  47,389          52,177
Property and equipment, net                                1,318                   2,237           2,653
Long-term deposit                                             68                      69             326
Restricted cash                                              170                     170             170
     Total assets                               $         36,741      $           49,865   $      55,326

Liabilities, convertible preferred stock
  and stockholders’ equity (deficit)
Current liabilities:
  Equipment leasing—current portion             $            137      $              103   $          69
  Accounts payable                                         7,528                   7,711           8,816
  Accrued and other current liabilities                    2,225                   4,405           3,939
  Deferred credits and income                                222                     474             229
    Total current liabilities                             10,112                  12,693          13,053
Equipment leasing—noncurrent portion                         103                      —               —
Deferred rent—noncurrent portion                             228                     132              99
Convertible preferred stock warrant liability                315                   1,137           1,304    $       —
     Total liabilities                                    10,758                  13,962          14,456

Commitments and contingencies (Note 7)
Convertible preferred stock:
 $0.001 par value—400,424,913,
   400,424,913 and 400,424,913 shares
   authorized at December 31, 2010 and
   2011 and March 31,2012,
   respectively; 13,205,180, 13,205,180
   and 13,205,180 shares issued and
   outstanding at December 31, 2010
   and 2011 and March 31, 2012,
   respectively; no shares authorized,
   issued or outstanding pro forma
   (unaudited) (Liquidation preference of
   $74,965, $74,965 and $74,965 at
   December 31, 2010 and 2011 and                         74,348                  74,348          74,348            —
March 31, 2012, respectively)

                                F-3
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                                           Audience, Inc.
                               Consolidated balance sheets (continued)
                                       (in thousands, except share and per share data)

                                                                                                           Pro forma
                                                                                         March 31,         March 31,
                                             December 31,                                    2012               2012
                                             2010                   2011

                                                                                             (unaudited)
Stockholders’ equity (deficit):
Common stock:
  $0.001 par
     value—540,000,000,
     600,000,000,
     600,000,000 and
     600,000,000 shares
     authorized at
     December 31, 2010 and
     2011, March 31, 2012
     (unaudited), and pro
     forma (unaudited),
     respectively; 837,312,
     1,023,736 and
     1,139,880 shares issued
     and outstanding at
     December 31, 2010 and
     2011 and March 31, 2012
     (unaudited), respectively,
     and 14,345,060 pro forma
     (unaudited) shares issued
     and outstanding                             1                      1                        1                14
Additional paid-in capital                   2,048                  3,732                    4,582            80,221
Accumulated other
  comprehensive income
  (loss)                                        28                    (31 )                    (83 )             (83 )
Accumulated deficit                        (50,442 )              (42,147 )                (37,978 )         (37,978 )

  Total stockholders’ equity
    (deficit)                              (48,365 )              (38,445 )                (33,478 )   $      42,174

Total liabilities, convertible
  preferred stock and
  stockholders’ equity (deficit)   $       36,741      $           49,865     $             55,326
The accompanying notes are an integral part of these consolidated financial statements.

                                         F-4
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                               Audience, Inc.
           Consolidated statements of comprehensive income (loss)
                                      (in thousands, except share and per share data)

                                                                                         Three months ended
                                        Year ended December 31,                               March 31,
                                     2009            2010               2011               2011                   2012
                                                                                                (unaudited)
Revenue:
 Hardware                      $     5,749     $    47,920      $      97,668     $       28,540      $         19,409
 Licensing                              —               —                  —                  —                 11,699
    Total revenue                    5,749          47,920             97,668             28,540                31,108
Cost of revenue                      5,355          19,314             45,707             10,414                13,419
 Gross profit                          394          28,606             51,961             18,126                17,689
Operating expenses:
 Research and
   development                       8,969          11,445             21,578              5,034                 5,668
 Selling, general and
   administrative                    8,058          12,217             21,237              3,969                 7,524
Total operating expenses            17,027          23,662             42,815              9,003                13,192
Income (loss) from
   operations                      (16,633 )          4,944             9,146              9,123                 4,497
Interest income (expense),
   net                                  11              (17 )              (8 )                (3 )                  3
Other income (expense),
   net                                (136 )           (139 )            (843 )             (337 )                (331 )
Net income (loss)                  (16,758 )          4,788             8,295              8,783                 4,169


Net income (loss) per
  share attributable to
  holders of common
  stock:
  Basic                        $    (32.46 )   $         —      $        0.16     $          0.52     $            0.19
  Diluted                      $    (32.46 )   $         —      $        0.14     $          0.46     $            0.16
Weighted average shares
  used in computing net
  income (loss) per share
  attributable to holders of
  common stock:
  Basic                            516,299         619,640            947,921             871,379             1,079,810
  Diluted                          516,299         619,640          3,384,375           2,466,105             3,831,811
Pro forma net income per
  share attributable to
  holders of common
  stock (unaudited):
  Basic                                                         $        0.64                         $            0.30
  Diluted                                                       $        0.55                         $            0.25
Weighted average shares
  used in computing pro
  forma net income per
  share attributable to
  holders of common
  stock (unaudited):
 Basic                                                                       14,153,101                                           14,284,990

 Diluted                                                                     16,658,283                                           17,119,233

Other comprehensive
  income (loss):
  Foreign currency
    translation
    adjustments       $               59        $            (31 )       $              (59 )      $                   (3 )   $          (52 )
Net comprehensive
 income (loss)        $        (16,699 )        $         4,757          $           8,236         $                8,780     $        4,117

                          The accompanying notes are an integral part of these consolidated financial statements.

                                                                   F-5
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                                 Audience, Inc.
            Consolidated statements of convertible preferred stock and
                              stockholders’ deficit
                                                                     (in thousands, except share data)
                                                                                                                     Accumulated
                                                                                                 Additional                other                                       Total
                                                                                                   paid-in        comprehensive           Accumulated          stockholders’
                        Convertible preferred stock            Common stock                         capital         income (loss)              deficit                deficit

                         Shares                 Amount     Shares             Amount

Balance at
  December 31, 2008     6,143,264    $            44,280   469,166    $            1   $               785    $                —      $        (38,472 )   $          (37,686 )
Issuance of Series D
  preferred stock for
  cash                  2,926,332                 14,961        —                 —                      —                     —                    —                      —
Issuance of common
  stock upon exercise
  of stock options            —                       —     80,235                —                      59                    —                    —                      59
Stock based
  compensation                —                       —         —                 —                    283                     —                    —                     283
Other comprehensive
  income                      —                       —         —                 —                      —                     59                   —                      59
Net loss                      —                       —         —                 —                      —                     —               (16,758 )              (16,758 )

Balance at
  December 31, 2009     9,069,596                 59,241   549,401                 1                  1,127                    59              (55,230 )              (54,043 )
Issuance of Series E
  preferred stock for
  cash                  4,135,584                 15,107        —                 —                      —                     —                    —                      —
Issuance of common
  stock upon exercise
  of stock options            —                       —    287,911                —                    374                     —                    —                     374
Stock based
  compensation                —                       —         —                 —                    547                     —                    —                     547
Other comprehensive
  loss                        —                       —         —                 —                      —                    (31 )                 —                     (31 )
Net income                    —                       —         —                 —                      —                     —                 4,788                  4,788


                                                                                           F-6
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                                  Audience, Inc.
               Consolidated statements of convertible preferred stock
                       and stockholders’ deficit (continued)
                                                           (in thousands, except share data)

                                                                                                                 Accumulated
                                                                                              Additional                Other                                    Total
                                                                                                Paid-in        Comprehensive        Accumulated          Stockholders’
                        Convertible Preferred Stock             Common stock                    Capital         Income (Loss)            Deficit               Deficit

                            Shares             Amount           Shares          Amount

Balance at
  December 31,
  2010                   13,205,180              74,348         837,312              1             2,048                     28          (50,442 )             (48,365 )
Issuance of common
  stock upon exercise
  of stock options               —                    —         186,424             —               294                      —                —                    294
Stock based
  compensation                   —                    —              —              —              1,390                     —                —                  1,390
Other comprehensive
  loss                           —                    —              —              —                 —                     (59 )             —                    (59 )
Net income                       —                    —              —              —                 —                      —             8,295                 8,295

Balance at
  December 31,
  2011                   13,205,180             74,348        1,023,736              1             3,732                    (31 )        (42,147 )             (38,445 )
Issuance of common
  stock upon exercise
  of stock options               —                    —         116,144             —               313                      —                —                    313
Stock based
  compensation                   —                    —              —              —               537                      —                —                    537
Other comprehensive
  loss                           —                    —              —              —                 —                     (52 )             —                    (52 )
Net income                       —                    —              —              —                 —                      —             4,169                 4,169

Balance at
 March 31, 2012
 (unaudited)             13,205,180     $        74,348       1,139,880     $        1    $        4,582   $                (83 )   $    (37,978 )   $         (33,478 )




                                        The accompanying notes are an integral part of these consolidated financial statements.

                                                                                  F-7
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                                        Audience, Inc.
                            Consolidated statements of cash flows
                                                         (in thousands)

                                                                                                   Three months ended
                                                        Year ended December 31,                         March 31,
                                                     2009            2010                2011         2011        2012
                                                                                                         (unaudited)
Cash flows from operating activities
Net income (loss)                              $   (16,758 )    $     4,788        $     8,295     $    8,783     $    4,169
Adjustments to reconcile net income (loss)
  to net cash provided by (used in)
  operating activities
  Depreciation and amortization                        335                 473             834           169             284
  Change in inventory reserves                       1,296                (271 )           409           (36 )           948
  Change in fair value of convertible
     preferred stock warrants                           58                 88              822           337             167
  Stock-based compensation                             283                547            1,390           195             537
  Changes in current assets and liabilities:
     Accounts receivable                              (942 )        (10,917 )            3,552         (6,160 )          (310 )
     Inventories                                    (1,172 )         (8,997 )          (10,787 )       (1,145 )          (873 )
     Prepaid expenses and other assets                 178             (886 )             (741 )          265          (1,488 )
     Accounts payable                                1,090            5,768                183         (1,319 )         1,105
     Accrued and other current liabilities             418            1,242              2,083            (57 )          (499 )
     Deferred credits and income                       295             (139 )              252            (69 )          (245 )
        Net cash provided by (used in)
          operating activities                     (14,919 )         (8,304 )            6,292           963           3,795
Cash flows from investing activities
Purchases of property and equipment                   (338 )         (1,065 )           (1,753 )         (504 )          (700 )
Restricted cash                                         64              505                  9             —               —
Proceeds from maturities of
  available-for-sale securities                      1,000                  —               —              —               —
        Net cash provided by (used in)
          investing activities                         726                (560 )        (1,744 )         (504 )          (700 )
Cash flows from financing activities
Proceeds from issuance of convertible
  preferred stock, net of issuance costs           14,961           15,107                  —              —               —
Proceeds from issuance of common stock                 59              374                 294             82             313
Payment of deferred offering costs                     —                —                 (758 )           —             (599 )
Proceeds from equipment term loan                     411               —                   —              —               —
Repayment of equipment term loan                      (34 )           (137 )              (137 )          (34 )           (34 )
Proceeds from revolving line of credit                800               —                   —              —               —
Repayment of revolving line of credit                  —              (800 )                —              —               —
       Net cash provided by (used in)
          financing activities                     16,197           14,544                (601 )           48            (320 )
Effect of exchange rate change on cash
  and cash equivalents                                  59                 (31 )           (59 )           (3 )           (52 )
    Net increase in cash and cash
      equivalents                                    2,063            5,649              3,888           504           2,723
Cash and cash equivalents
Beginning of period                                  4,383            6,446            12,095          12,095         15,983
End of period                                  $     6,446      $   12,095         $   15,983      $ 12,599       $ 18,706
Supplemental disclosure of cash flow
  information
Cash paid for income taxes                       $            —           $            —           $          150        $   —   $   —

                               The accompanying notes are an integral part of these consolidated financial statements.

                                                                        F-8
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                                      Audience, Inc.
                        Notes to consolidated financial statements
1. Formation and business of Audience, Inc.
Audience, Inc. (we or us) was incorporated in the State of California in July 2000 and subsequently reincorporated in the State of
Delaware in June 2011. In June 2002, we changed our name from Applied Neurosystems Corporation to Audience, Inc. We
provide intelligent voice and audio solutions that improve voice quality and the user experience in mobile devices.
We outsource the manufacture of our voice and audio processors to independent foundries and use third parties for assembly,
packaging and test. We sell our voice and audio processors globally, directly to original equipment manufacturers (OEMs) and
their contract manufacturers (CMs) and indirectly through distributors.
We formed an international operating structure in 2011; however, operating transactions associated with our non-U.S. entities
were immaterial in 2011. Our international operating structure became effective on January 1, 2012 and as of March 31, 2012, we
had five non-U.S. entities and two international branches. Audience International, Inc. is a wholly owned holding company
organized in the Cayman Islands, which we formed to serve as headquarters for our international expansion. On October 1, 2011,
Audience International, Inc. acquired all substantial worldwide rights to the integration and distribution of our voice and audio
processor intellectual property and entered into a qualified cost sharing arrangement with us to share in the ongoing costs of
developing the intangibles. The consolidated financial statements include the results of our operations, and the operations of our
wholly owned subsidiaries and branches. Unless otherwise specified, references to us are references to us and our consolidated
subsidiaries. All intercompany and intracompany accounts and transactions have been eliminated on consolidation.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Such estimates include the allowances for doubtful accounts receivable and
sales returns, inventory write downs, useful lives of long-lived assets, valuation of deferred tax assets and uncertain tax positions,
the measurement of stock-based compensation and the valuation of our various equity instruments. We base our estimates and
judgments on our historical experience, knowledge of current conditions and beliefs of what could occur in the future, considering
available information. Actual results could differ from those estimates.
Unaudited interim consolidated financial statements
The accompanying consolidated interim balance sheet as of March 31, 2012, the consolidated interim statements of
comprehensive income (loss) and cash flows for the three months ended March 31, 2011 and 2012 and the consolidated interim
statement of convertible preferred stock and stockholders’ deficit for the three months ended March 31, 2012 are unaudited. The
unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial
statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments,
necessary to state fairly our financial position as of March 31, 2012. The

                                                                 F-9
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
financial data and the other financial information disclosed in the notes to these consolidated financial statements related to the
three month periods are also unaudited. The results of operations for the three months ended March 31, 2012 are not necessarily
indicative of the results that may be expected for 2012, or for any other future year or interim period.
Unaudited pro forma stockholders’ equity
If the offering contemplated by the prospectus of which these consolidated financial statements form a part is completed, all the
outstanding shares of convertible preferred stock will be converted on a one for one basis into common stock. In addition, the
convertible preferred stock warrant liability will be reclassified to additional paid-in capital. These events are assumed as if such
conversion and reclassification had occurred on March 31, 2012 immediately prior to the closing of the offering without any further
action by the holders of such shares. The pro forma stockholders’ equity, as adjusted for the assumed conversion of convertible
preferred stock, is reflected in the unaudited pro forma balance sheet.
Unaudited pro forma net income per share of common stock
In January 2012, our board of directors authorized the filing of a registration statement with the Securities and Exchange
Commission (SEC) for the sale of shares of our common stock to the public. Pro forma basic and diluted net income per share of
common stock have been computed in contemplation of the closing of this offering and give effect to the automatic conversion of
all our outstanding convertible preferred stock into common stock. As a consequence, where dilutive, the numerator in the pro
forma basic and diluted net income per share calculation is adjusted to eliminate the result of changes in the fair value of
convertible preferred stock warrants as these will become warrants to purchase shares of our common stock upon conversion in
connection with the closing of a qualifying initial public offering.

2. Summary of significant accounting policies
Foreign currency translation
As of December 31, 2011 and March 31, 2012, the functional currency of our non-U.S. entities was the U.S. dollar. Transaction
gains and losses resulting from transactions denominated in currencies other than the U.S. dollar are included in “Other income
(expense), net.” The amounts of transaction gains and losses were not material in any of the periods presented.
We have funded the operations of our Korean, Singapore and Taiwanese entities with intra-company loans for which the
settlement is of a long-term nature. Any gains or losses on translation of such loans, which were not material in any of the periods
presented, are included in accumulated other comprehensive income (loss) in the accompanying consolidated balance sheet.
Cash and cash equivalents
We consider all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be
cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value. Substantially all of our cash and
cash equivalents are maintained at reputable

                                                                F-10
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
financial institutions in the United States, which management believe to be of high credit quality. Deposits at these financial
institutions may, from time to time, exceed federally insured limits.
Available-for-sale securities
We classify our short-term investments as “available-for-sale” and carry them at fair value, with unrealized gains and losses, if
any, reported as a separate component of stockholders’ deficit and included in accumulated other comprehensive income (loss).
Realized gains and losses are calculated on the specific identification method and recorded as interest income. Such investments
have original maturities greater than 90 days.
Restricted cash
We maintained $219,000, $210,000 and $210,000 of restricted cash in certificate of deposit accounts at December 31, 2010 and
2011 and March 31, 2012, respectively, supporting letters of credit required for our facility leases and credit card agreements.
Fair value of financial instruments
Our convertible preferred stock warrants are subject to revaluation at each balance sheet date. Any change in fair value is
recognized as a component of other income (expense), net, until the earlier of (i) the exercise of the warrants or (ii) the completion
of a liquidation event, including the automatic conversion of the convertible preferred stock and related warrants upon
consummation of an initial public offering, at which time the warrants will no longer be remeasured. At the time of exercise or of
the offering, the then current aggregate fair value of these warrants will be reclassified to stockholders’ equity (deficit).
We believe that our equipment leasing debt obligation bears interest at rates which approximate prevailing market rates for
instruments with similar characteristics and, accordingly, its carrying value approximates fair value.
The carrying amounts of the remainder of our financial instruments, which include cash equivalents, short-term investments,
accounts receivable, accounts payable and other current liabilities approximate their fair values due to their short maturities.
In determining fair value, we utilize valuation techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs to the extent possible as well as consider counterparty credit risk.
Accounts receivable
Accounts receivable are recorded at invoiced amounts and do not bear interest. We perform ongoing credit evaluations of our
customers’ financial condition and generally require no collateral. Accounts receivable are written off on a case by case basis, net
of any amounts that may be collected. We review our allowance for doubtful accounts by assessing individual accounts receivable
over a specific age and amount and all other balances on a pooled basis based on historical collection experience and economic
risk assessment. For all periods presented, we have not experienced any bad debt.

                                                                F-11
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
We determine the allowance for sales returns on a quarterly basis through evaluation of historical sales returns and other known
factors and record provisions for estimated sales returns in the same period the related revenue is recognized. To estimate the
allowance for sales returns, we analyze potential quality and reliability issues and historical returns. Accordingly, we account for
any exposure related to defective products as a portion of our allowance for sales returns. This allowance is reflected as a
reduction to accounts receivable in our consolidated balance sheets. Increases to the allowance are recorded as a reduction to
revenue. For all periods presented, we have not experienced material incidents of product returns. Actual sales returns could differ
from these estimates.
Revenue recognition
We derive revenue from the direct sale of voice and audio processors to CMs and OEMs and indirect sales of processors to
OEMs through distributors. We recognize revenue from sales to CMs and OEMs when persuasive evidence of an arrangement
exists, the selling price is fixed or determinable, product delivery has occurred, which is when the risk and reward of ownership
pass to the customer, and collectability of the resulting receivable is reasonably assured. These criteria are usually met when our
processors are shipped to an OEM under our shipping terms, which are typically FOB shipping point. We also ship a significant
portion of our products to the inventory hubs of CMs and recognize the related revenue as the CMs notify us in writing that they
have drawn our products from the hub, at which point delivery and transfer of title and risk of ownership has occurred.
Although we do not recognize revenue from sales to our distributors upon shipment, the title and the risk of ownership for the
products transfer to the distributor upon shipment as the shipping terms are typically FOB shipping point and the distributor is
obligated to pay for the products at that time. We do not offer distributors, CMs or OEMs return rights, rebates, price protection or
other similar rights. However, in the past, we have occasionally accepted returns from distributors. As a result, we defer revenue
recognition, adjustments to revenue and the related costs of revenue until the distributor notifies us in writing of their resale of the
products. The amounts billed to distributors, adjustments to revenue and the cost of inventory shipped to, but not yet sold by the
distributors, are included on our consolidated balance sheets under “Deferred credits and income.” We take into account the
inventories held by our distributors in determining the appropriate level of provision for excess and obsolete inventory.
We earn royalties on mobile phones integrating our licensed processor IP. We recognize royalty revenue based on mobile phone
shipments reported during the quarter in which we receive the report, assuming that all other revenue recognition criteria are met
at that time because we do not have other evidence to reasonably estimate the amount of royalties due. The amount of revenue
recognized is determined by multiplying the number of mobile phones sold during a particular quarter in which our processor IP is
integrated at the agreed-upon royalty rate. We began to recognize revenue pursuant to this arrangement in the three months
ended March 31, 2012.
Concentration of risk
Our products are currently manufactured, assembled and tested by third-party foundries and other contractors in Asia. We do not
have long-term agreements with any of these foundries or contractors. A significant disruption in the operations of one or more of
these foundries or contractors would

                                                                  F-12
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
adversely impact the production of our products for a substantial period of time, which could have a material adverse effect on our
business, financial condition, operating results and cash flows.
Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash
equivalents and trade receivables. We place substantially all of our cash and cash equivalents on deposit with reputable, high
credit quality financial institutions in the United States and therefore bear minimal credit risk. Deposits held with banks may
generally be redeemed upon demand and may, from time to time, exceed the limit of insurance provided on such deposits. Since
inception, we have not sustained any credit losses from instruments held at financial institutions.
Our accounts receivable are derived from direct sales to CMs and OEMs and indirect sales to OEMs through distributors.
Substantially all of our customers are located in Asia and all sales are denominated in U.S. dollars. In 2009, three OEMs
comprised 45%, 36% and 15% of our total revenue. In 2010, one CM comprised 81% of our total revenue. In 2011, two CMs and
one OEM comprised 65%, 10% and 20% of our total revenue, respectively. In the three months ended March 31, 2011, two CMs
comprised 77% and 18% of our total revenue. In the three months ended March 31, 2012, one CM and two OEMs comprised
18%, 38% and 36%, respectively, of our total revenue.
We perform selected credit evaluations of our distributors, CMs and OEMs. We generally do not require collateral and we
establish an allowance for doubtful accounts based upon the expected collectability of accounts receivable. As of December 31,
2010, one customer comprised 91% of total accounts receivable. As of December 31, 2011, two customers comprised 74% and
15% of total accounts receivable, respectively. As of March 31, 2012, two customers comprised 50% and 46% of total accounts
receivable, respectively.
Long-lived assets
We evaluate our long-lived assets, including property and equipment, for impairment whenever events or changes in
circumstances indicate that the carrying value of these assets may not be recoverable. We recognize an impairment loss when
the net book value of such assets exceeds the estimated future undiscounted cash flows attributable to the asset. If impairment is
indicated, we write the asset down to its estimated fair value. For all periods presented, we have not recognized any impairment
losses on our long-lived assets.
Property and equipment
Property and equipment are stated at cost, net of accumulated depreciation and amortization. All property and equipment are
depreciated on a straight-line basis over the estimated useful lives of the assets or the term of the related lease, whichever is
shorter. Estimates of useful lives are as follows:

Computers and equipment                                   3 years
Machinery and equipment                                   3 years
Software                                                  3 years
Furniture and fixtures                                    3 years
Leasehold improvements                                    5 years, or remaining life of lease, whichever is shorter
Upon sale or retirement, the asset’s cost and related accumulated depreciation are removed from the accounts and any related
gain or loss is recorded as an operating expense in the consolidated statements of comprehensive income (loss).

                                                                F-13
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
Minor repairs and maintenance are charged to operations as incurred.
Inventory
Inventories are stated at the lower of standard cost, which approximates actual cost determined on the weighted average basis, or
market value. We routinely evaluate quantities and values of inventory in light of current market conditions and market trends and
record provisions for quantities in excess of demand and product obsolescence. This evaluation may take into consideration
expected demand, generally over a 12-month period, new product development schedules, the effect new products might have on
the sale of existing products, product obsolescence, product merchantability and other factors.
We also regularly review the cost of inventories against their estimated market value and record a provision for inventories that
have a cost in excess of estimated market value in order to carry those inventories at the lower of cost or market value. The
determination of these provisions take into account inventories owned but not yet sold by our distributors.
The recording of these provisions establishes a new and lower cost basis for each specifically identified inventory item and we do
not restore the cost basis to its original level regardless of any subsequent changes in facts or circumstances. Recoveries are
recognized only upon the sale of previously written-down inventories.
Product warranty
We warrant to our customers that our voice and audio processors will work in accordance with the specifications of each product.
Due to the cost and other complexities associated with rectifying any potential product defects, we do not repair any returned
products. If a product may be defective, the customer notifies us and, with our approval, returns the product. We then send a
replacement product to the customer. We account for any exposure related to potentially defective products as a portion of our
allowance for sales returns. We did not experience significant product returns in any of the periods presented.
Shipping and handling costs
Shipping and handling costs for inventory purchases and product shipments are classified as a component of cost of revenue in
the consolidated statements of comprehensive income (loss).
Basic and diluted net income (loss) per share
We apply the two-class method to calculate and present net income (loss) per share of common stock. Under the two-class
method, net income is allocated between common stock and other participating securities based on their participating rights.
Participating securities are defined as securities that may participate in undistributed earnings with common stock, whether that
participation is conditioned upon the occurrence of a specified event or not. Basic net income (loss) per share is computed by
dividing net income (loss) allocable to common stockholders by the weighted average number of shares of common stock
outstanding for the period. Diluted net income (loss) per share is computed by dividing net income (loss) allocable to common
stockholders and income allocable to participating securities, to the extent they are dilutive, by the weighted average number of
shares of common stock outstanding, including the dilutive effects of participating securities on an if-converted basis, plus the
dilutive effects of potential shares of common stock. Our potential dilutive common stock equivalents consist of

                                                                F-14
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
incremental shares of common stock issuable upon the exercise of options, the conversion of convertible preferred stock and the
exercise of warrants.
For all periods presented, we had no unvested early-exercised options to be included in our computation of basic earnings per
share. The net income (loss) per share data presented for all prior periods have been prepared to conform to the provisions of this
accounting guidance.
Capitalized software
Capitalization of software development costs begins upon the establishment of technological feasibility of the product and ends
when the product is available for general release to customers. To date, the period between achieving technological feasibility,
which we have defined as the establishment of a working model which typically occurs when beta testing commences and the
general availability of such software, has been short and software development costs qualifying for capitalization have been
insignificant. We have not capitalized any software development costs since our inception.
Research and development
Research and development expenses consist primarily of personnel costs, product development costs, which include engineering
services, development software and hardware tools, license fees, cost of fabrication of masks, other development materials costs,
depreciation of equipment used in research and development and allocation of facilities costs.
Nonrecurring engineering services, which we bill to OEMs from time to time for cost reimbursement, are recorded in “Deferred
credits and income” on the balance sheet until acceptance, which is upon cash receipt, at which point they are reflected as a
reduction of research and development costs in accordance with the provisions of each agreement. We recorded, as a reduction
of research and development expenses, reimbursements for such services totaling $1.5 million, $1.8 million, $563,000, $0 and
$1.4 million for 2009, 2010, 2011 and the three months ended March 31, 2011 and 2012, respectively.
Income taxes
We account for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are
determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established to
reduce deferred tax assets as necessary when in management’s estimate, based on available objective evidence, it is more likely
than not that we will not realize the benefit of our deferred tax assets.
We recognize in our consolidated financial statements the impact of a tax position that, based on its technical merits, is more likely
than not to be sustained upon examination. The evaluation of a tax position in accordance with this interpretation is a two-step
process. In the first step, recognition, we determine whether it is more likely than not that a tax position will be sustained upon
examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The
second step addresses measurement of a tax position that meets the more-likely-

                                                                F-15
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
than-not criterion. The tax position is measured at the largest amount of benefit that has a greater than 50% likelihood of being
realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold will be
recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that
no longer meet the more-likely-than-not recognition threshold will be derecognized in the first subsequent financial reporting
period in which that threshold is no longer met.
We include interest and penalties related to unrecognized tax benefits within the provision for income taxes which is included in
“Other income (expense)” in the consolidated statements of comprehensive income (loss). We have not incurred any interest or
penalties nor have we recorded any foreign exchange gains or losses related to unrecognized tax benefits in any of the periods
presented.
Advertising expense
All advertising costs are expensed as incurred. We did not incur advertising expenses during any of the periods presented.
Operating leases
We recognize rent expense on a straight-line basis over the term of the applicable lease. The difference between rent expense
and rent paid is recorded as deferred rent and is included in “Accrued and other current liabilities,” for the current portion, and
deferred rent for the long-term portion on the accompanying consolidated balance sheets.
Stock-based compensation
We measure stock-based compensation at the grant date based on the fair value of the stock award using the Black-Scholes
option pricing model. The fair value is recognized as an expense on a straight-line basis over the requisite service period, which is
generally the vesting period. The fair value of our stock awards to nonemployees is estimated based on the fair market value on
each vesting date, and is remeasured at each reporting period until the services required under the arrangement are completed.
Determining the fair value of stock-based awards at the grant date requires the input of various assumptions, including fair value
of the underlying common stock, expected future share price volatility and expected term. We calculate the expected term as the
average of the option’s vesting and contractual terms. The assumptions used in calculating the fair value of stock-based awards
represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As
a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different
in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares
expected to vest. We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted,
exercised and cancelled. If the actual forfeiture rate is materially different from our estimate, stock-based compensation expense
in future periods could be significantly different from what was recorded in the current period.

                                                                 F-16
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
Deferred initial public offering costs
Deferred initial public offering costs, consisting of legal, accounting and other fees and costs are capitalized. The deferred offering
costs will be offset against the proceeds we receive upon the closing of the offering. In the event the offering does not occur in a
timely manner, all of the deferred offering costs will be expensed within operations. There were $2.7 million of such costs included
in the March 31, 2012 balance of “Prepaid and other current assets” in the accompanying consolidated balance sheets. There
were no deferred offering costs capitalized in any of the other periods presented.
Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period, from transactions and
other events and circumstances from nonowner sources. For all periods presented, the difference between net income (loss) and
comprehensive income (loss) was due to currency translation adjustments.
Recent accounting pronouncements
In May 2011, the FASB amended its guidance related to fair value measurements to provide a consistent definition of fair value
and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International
Financial Reporting Standards. The amendments change the wording used to describe many of the requirements in U.S. GAAP
for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the updated
guidance should not result in a change in the application of previous fair value measurement guidance. We adopted this guidance
prospectively beginning in the three months ended March 31, 2012. The adoption of this guidance did not have a material impact
on our financial position, results of operations or our cash flows.
In June 2011, the FASB issued guidance related to the presentation of comprehensive income. This update gives an entity the
option to present the total of comprehensive income, the components of net income, and the components of other comprehensive
income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. We
adopted this guidance retrospectively effective in the three months ended March 31, 2012. Other than requiring additional
disclosures, the adoption of this guidance did not have a material impact on our financial position, results of operations or cash
flows.

                                                                 F-17
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
3. Consolidated balance sheet components
Inventories consisted of the following:

                                                                                                             March 31,
                                                                          December 31,                           2012
                                                                          2010              2011
                                                                                                            (unaudited)
                                                                                    (in thousands)
Work in progress                                                    $     3,014       $     8,684       $         5,284
Finished goods                                                            6,850            11,558                14,883
                                                                    $     9,864      $    20,242        $        20,167


Property and equipment, net consisted of the following:

                                                                                                             March 31,
                                                                          December 31,                           2012
                                                                         2010               2011
                                                                                                            (unaudited)
                                                                                   (in thousands)
Computers and equipment                                             $   1,018        $      1,640       $         1,851
Machinery and equipment                                                   649               1,414                 1,638
Software                                                                  365                 581                   613
Furniture and fixtures                                                    259                 401                   404
Leasehold improvements                                                    627                 431                   630
                                                                         2,918              4,467                 5,136
Accumulated depreciation and amortization                               (1,600 )           (2,230 )              (2,483 )
                                                                    $   1,318       $       2,237       $         2,653


Depreciation and amortization expense was $335,000, $473,000, $834,000, $169,000 and $284,000 for 2009, 2010 and 2011 and
the three months ended March 31, 2011 and 2012, respectively.
Accrued and other current liabilities consisted of the following:

                                                                          December 31,                       March 31,
                                                                         2010               2011                 2012
                                                                                                            (unaudited)
                                                                                   (in thousands)
Compensation                                                        $   1,177       $      2,171        $         1,905
Professional fees                                                         366                909                    958
Royalties                                                                 235                490                    247
Tenant improvements                                                        94                 63                     31
Accrued engineering costs                                                  95                496                    136
Other                                                                     258                276                    662
                                                                    $   2,225       $      4,405        $         3,939


4. Fair value hierarchy
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the
measurement date. Valuation techniques used to

                                                                  F-18
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                                   Audience, Inc.
               Notes to consolidated financial statements (continued)
measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Fair value hierarchy
is based on three levels of inputs that may be used to measure fair value, of which the first two are considered observable and the
last unobservable:
      Level 1       — Quoted prices in active markets for identical assets or liabilities.
      Level 2       — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for
                      similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are
                      observable or can be corroborated by observable market data for substantially the full term of the assets
                      or liabilities.
      Level 3       — Unobservable inputs that are supported by little or no market activity and that are significant to the fair
                      value of the assets or liabilities.
Financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012 were as follows (unaudited):

                                                                                       Total               Level 1                 Level 2                   Level 3
                                                                                                                 (in thousands)
Assets
  Money market funds(1)                                                           $    2,062           $     2,062          $              —          $              —

Liabilities
  Convertible preferred stock warrants(2)                                         $ (1,304 )           $        —           $              —          $        (1,304 )


(1)   Money market funds are included in cash and cash equivalents on the consolidated balance sheet.

(2)   The convertible preferred stock warrants are subject to revaluation at each balance sheet date and any change in fair value is recognized as a component of other
      income (expense), net in the consolidated statements of comprehensive income (loss).

Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2011 were as follows:

                                                                                   Total                   Level 1                 Level 2                   Level 3
                                                                                                             (in thousands)
Assets
  Money market funds(1)                                                  $         2,062          $          2,062          $              —          $              —

Liabilities
  Convertible preferred stock warrants(2)                                $        (1,137 )        $              —          $              —          $        (1,137 )


(1)   Money market funds are included in cash and cash equivalents on the consolidated balance sheet.

(2)   The convertible preferred stock warrants are subject to revaluation at each balance sheet date and any change in fair value is recognized as a component of other
      income (expense), net in the consolidated statements of comprehensive income (loss).

                                                                                  F-19
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                                   Audience, Inc.
               Notes to consolidated financial statements (continued)
Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2010 were as follows:

                                                                                   Total                  Level 1                  Level 2                    Level 3
                                                                                                            (in thousands)
Assets
  Money market funds(1)                                                  $         2,061          $         2,061           $              —            $            —

Liabilities
  Convertible preferred stock warrants(2)                                $          (315 )        $              —          $               —           $         (315 )


(1)   Money market funds are included in cash and cash equivalents on the consolidated balance sheet.

(2)   The convertible preferred stock warrants are subject to revaluation at each balance sheet date and any change in fair value is recognized as a component of other
      income (expense), net in the consolidated statements of comprehensive income (loss).

We used the Black-Scholes option pricing model to determine the fair value of the warrants to purchase convertible preferred
stock, including the consideration of underlying ordinary share price, a risk-free interest rate, expected term and expected
volatility. Certain inputs used in the model are unobservable. As a result, the valuation of the warrants is categorized as Level 3 in
accordance with ASC 820, Fair Value Measurement. The fair values could change significantly based on future market conditions.
The following table sets forth reconciliations for such warrants:

                                                                                                                                                            March 31,
                                                                                                 December 31,                                                   2012
                                                                                     2009              2010                         2011
                                                                                                                                                        (unaudited)
                                                                                                              (in thousands)
Beginning balance                                                            $        169             $       227       $             315           $           1,137
Change in fair value of preferred stock warrants                                       58                       88                    822                         167
Ending balance                                                               $        227             $       315           $      1,137            $           1,304


5. Income taxes
For all periods presented through December 31, 2011, our income (loss) before provision for income taxes was U.S.-based.
Effective January 1, 2012, our international structure became operational, resulting in our generating income (loss) before
provision for income taxes of $6.3 million in the United States and $(2.0) million in foreign jurisdictions for the three months ended
March 31, 2012. The provision for income taxes for all periods presented is reflected in other income (expense), net in the
accompanying statements of comprehensive income (loss). For all periods presented through December 31, 2011, our provision
for income taxes was insignificant. For the three months ended March 31, 2012, our provision for income taxes was $123,000,
which was entirely related to income taxes in foreign jurisdictions.
We regularly assess the realizability of deferred tax assets based upon the weight of all available evidence, including such factors
as the historical tax losses, recent earnings history and expected future taxable income, the amount and timing of which are
uncertain. We believe it is more likely than not that we will be unable to realize all of our deferred tax assets and, accordingly, full
valuation

                                                                                  F-20
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
allowance of $22.8 million, $21.2 million and $16.6 million were established for such amounts as of December 31, 2009, 2010 and
2011, respectively. However, should there be a change in our ability to realize our deferred tax assets, the valuation allowance will
be released, resulting in a decrease to the income tax provision in the period in which we determine that it is more likely than not
that the benefit of our deferred tax assets will be realized. With our recent earnings and projected future income, we believe it is
reasonably possible that we may release a significant portion of the valuation allowance against our U.S. deferred income tax
assets in the next 12 months.
The tax effects of temporary differences and carryforwards that give rise to significant portions of the deferred tax assets consisted
of the following:

                                                                                           December 31,
                                                                               2009                 2010                        2011
                                                                                          (in thousands)
Net operating loss carryforwards                                  $          20,608       $         18,284         $          11,204
Research and development credits                                              1,340                  1,691                     3,305
Accruals and reserves                                                           780                    951                     2,420
Other                                                                            90                    224                      (301 )
                                                                             22,818                   21,150                  16,628
Valuation allowance                                                         (22,818 )                (21,150 )               (16,628 )
Net deferred tax assets                                           $               —       $               —        $               —


As of December 31, 2011, we had net operating loss carryforwards of approximately $26.5 million and $50.7 million available to
reduce future taxable income, if any, for federal and California state income tax purposes, respectively. The federal and California
state net operating loss carryforwards begin to expire in 2024 and 2017, respectively. Our ability to utilize our net operating loss
carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal
Revenue Code of 1986, as amended, and similar state provisions. As of December 31, 2011, we determined that ownership
changes had occurred that would result in limitations on the current and future utilization of our net operating loss carryforwards.
However, the limitations were not significant enough to materially impact the future utilization of the tax attributes. However, if
there is a subsequent event or further change in ownership, these losses and credits may be subject to further limitation resulting
in their expiration before they can be utilized.
We also had federal and California state research and development credit carryforwards of approximately $2.7 million and
$2.7 million as of December 31, 2011. The federal credits will expire starting in 2022 if not utilized. The California state credits
have no expiration date.
Our valuation allowance on our deferred tax assets increased by $6.0 million in 2009, decreased by $1.7 million in 2010 and
decreased by $4.5 million in 2011.
As of December 31, 2009, 2010 and 2011, we had $1.0 million, $1.2 million and $2.9 million of unrecognized tax benefits,
respectively, all of which were offset by a full valuation allowance. The total amount of unrecognized tax benefits, net of federal
benefit for the deduction of such items as state taxes, that, if recognized, would affect our effective tax rate was $2.1 million as of
December 31, 2011. One or more of these unrecognized tax benefits could be subject to valuation allowance if and when
recognized in a future period, which could impact the timing of any related effective tax rate benefit.

                                                                  F-21
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
The following table summarizes the activity related to our gross unrecognized tax benefits:

                                                                                                    December 31,
                                                                                        2009              2010                    2011
                                                                                                   (in thousands)
Gross unrecognized tax benefits beginning of the year                             $      864        $        994         $        1,183
Gross decreases related to prior year positions                                           —                  (13 )                1,264
Gross increases related to current year positions                                        131                 202                    493
Gross unrecognized tax benefits end of the year                                   $      995        $        1,183       $        2,940


We recognize interest and/or penalties related to income tax matters within the provision for income taxes in the statements of
comprehensive income (loss). As of December 31, 2009, 2010 and 2011, we had no accrued interest or penalties due to our net
operating losses and tax credits available to offset any tax adjustments. We file income tax returns in the United States, including
various state and local jurisdictions. Our international entities will file tax returns in various foreign jurisdictions, including China,
Korea, Singapore and Taiwan. We are subject to examination by U.S. federal and state tax authorities for all years since our
inception in 2000 and are subject to examination by foreign tax authorities since the formation of our non-U.S. entities. We
currently have no income tax examinations in progress nor have we had any income tax examinations since our inception.
We believe that an adequate provision has been made for any adjustments that may result from tax examinations should our
previously filed tax returns be examined. However, the outcome of tax audits cannot be predicted with certainty. If any issues
addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to
adjust our provision for income tax in the period such resolution occurs. Although timing of the resolution and/or closure of audits
is highly uncertain, we do not believe it is reasonably possible that our unrecognized tax benefits would materially change in the
next 12 months.

6. Earnings per share
Basic net income (loss) per share allocable to holders of common stock is computed by dividing the net income (loss) allocable to
common stockholders for the period by the weighted average number of shares of common stock outstanding during the period.
Net income (loss) allocable to holders of common stock is calculated using the two-class method, as we have issued securities
other than common stock that contractually entitle the holder to participate in dividends and earnings. Holders of our convertible
preferred stock are each entitled to receive non-cumulative dividends at the annual rates as specified in Note 9 payable prior and
in preference to any dividends on any shares of our common stock. After payment of these preferred stock dividends, any
additional dividends are required to be distributed among the holders of convertible preferred stock and common stock pro rata
(on an as-converted basis). The holders of the convertible preferred stock do not have a contractual obligation to share in our
losses. We consider our convertible preferred stock to be participating securities. The two-class method requires earnings for the
period, after deduction of preferred stock dividends, to be allocated between the holders of common and preferred stock based on
their respective rights to receive dividends. Basic net income (loss) per share is then calculated by dividing net income (loss)
allocable to holders of common stock (after the reduction for any undeclared preferred stock dividends assuming the distribution of
current income for the period) by the weighted average number of shares of common stock outstanding.

                                                                   F-22
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
In computing diluted net income (loss) allocable to holders of common stock, undistributed earnings are reallocated to reflect the
potential impact of dilutive securities. Diluted net income (loss) per share allocable to holders of common stock is computed by
dividing the net income (loss) allocable to holders of common stock for the period by the weighted average number of common
and potential common shares outstanding during the period, if the effect of each class of potential shares of common stock is
dilutive. Potential shares of common stock include incremental shares of common stock issuable upon the exercise of stock
options, conversion of preferred stock and exercise of warrants.
We are not required to present basic and diluted net income (loss) per share for securities other than our common stock. The
following net income (loss) per share amounts only pertain to our common stock:

                                                                                                       Three months
                                                                                                           ended
                                                      Year ended December 31,                            March 31,
                                                   2009           2010               2011              2011                2012
                                                                                                      (unaudited)
Numerator:                                               (in thousands, except share and per share amounts)
Net income (loss)                            $ (16,758 )    $    4,788     $      8,295      $      8,783      $           4,169
Less: amount allocable to holders of
  preferred stock                                     —           (4,788 )          (8,141 )          (8,332 )            (3,967 )
Net income (loss) allocable to holders
 of common stock—basic                       $ (16,758 )     $        —      $        154                451                 202
Undistributed earnings reallocated to
 holders of common stock                              —               —               315                695                 399
Net income (loss) allocable to holders
 of common stock—diluted                     $ (16,758 )     $        —      $        469      $       1,146       $         601


Denominator:
Weighted average shares of common
  stock outstanding—basic                        516,299         619,640          947,921            871,379           1,079,810
Effect of potentially dilutive securities:
Weighted average dilutive effect of
  options to purchase common stock                    —               —          2,436,454         1,594,726           2,752,001
Weighted average shares of common
 stock—diluted                                   516,299         619,640         3,384,375         2,466,105           3,831,811


Net income (loss) per share of
  common stock:
Basic net income (loss) per share
  allocable to holders of common
  stock                                      $    (32.46 )   $        —      $        0.16     $        0.52       $        0.19

Diluted net income (loss) per share
  allocable to holders of common
  stock                                      $    (32.46 )   $        —      $        0.14     $        0.46       $        0.16


Net income has been allocated to shares of common stock and shares of convertible preferred stock based on their respective
rights to share in dividends.

                                                                  F-23
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
The following potentially dilutive shares of common stock subject to options, warrants and convertible preferred stock were
excluded from the computation of diluted net income (loss) per share of common stock for the periods presented because
including them would have had an antidilutive effect:

                                                                                                   Three months ended
                                               Year ended December 31,                                  March 31,
                                             2009            2010                   2011               2011           2012
                                                                                                        (unaudited)
Options to purchase common
 stock                                  2,285,607           3,697,423            185,539            111,547            1,049,185
Convertible preferred stock
 (if-converted basis)                   9,069,596         13,205,180          13,205,180         13,205,180           13,205,180
Common equivalent shares from
 preferred stock warrants                 111,602             111,602            111,602            111,602             111,602
  Total                                11,466,805         17,014,205          13,502,321         13,428,329           14,365,967


Pro forma net income per share
Pro forma basic net income per share has been computed to give effect to the assumed conversion of convertible preferred stock
into common stock upon the closing of our initial public offering on an if-converted basis as of December 31, 2011 and March 31,
2012.

                                                               F-24
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
The following table sets forth the computation of pro forma net income per share (in thousands, except share and per share
amounts):

                                                                                Year ended                      Three months
                                                                              December 31,                    ended March 31,
                                                                                      2011                              2012
                                                                                                               (unaudited)
Numerator:
Net income                                                                  $          8,295              $             4,169
Change in fair value of convertible preferred stock warrants                             822                              167
Net income used in computing pro forma net income per share
 attributable to holders of common stock, basic and diluted                 $          9,117              $             4,336

Denominator, basic:
Weighted average shares used in computing net income per share
  of common stock, basic                                                            947,921                         1,079,810
Pro forma adjustments to reflect automatic conversion of
  convertible preferred stock and warrants                                       13,205,180                        13,205,180
Weighted average shares used in computing pro forma net income
 per share of common stock, basic                                                14,153,101                        14,284,990

Denominator, diluted:
Weighted average shares used in computing net income per share
  of common stock, diluted                                                        3,384,375                         3,831,811
Pro forma adjustments to reflect automatic conversion of
  convertible preferred stock                                                    13,205,180                        13,205,180
Pro forma adjustments to reflect the weighted average dilutive
  effect of convertible preferred stock warrants                                      68,728                           82,242
Weighted average shares used in computing pro forma net income
 per share of common stock, diluted                                              18,658,283                        17,119,233

Pro forma net income per share, basic                                       $           0.64              $              0.30


Pro forma net income per share, diluted                                     $           0.55              $              0.25


7. Commitments and contingencies
Leases
We lease office space under noncancelable operating agreements with various expiration dates through April 30, 2014. Rent
expense for 2009, 2010, 2011 and the three months ended March 31, 2011 (unaudited) and 2012 (unaudited) was $993,000,
$976,000, $1.2 million, $302,000 and $375,000, respectively.

                                                               F-25
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
Future minimum lease payments under noncancelable operating leases as of December 31, 2011 were as follows:

                                                                                                              Operating leases
                                                                                                              (in thousands)
Year ending December 31,
  2012                                                                                                    $               1,133
  2013                                                                                                                    1,020
     Total minimum lease payments                                                                         $               2,153


As of March 31, 2012, we had $69,000 of capital lease obligations due within one year and no capital lease obligations due after
one year. As of March 31, 2012, we had operating lease obligations of $4.3 million, of which $2.4 million was due within one year
and $1.9 million was due after one year.
Litigation
We may be involved, from time to time, in a variety of claims, lawsuits, investigations and proceedings relating to contractual
disputes, intellectual property rights, employment matters, regulatory compliance matters and other litigation matters relating to
various issues that arise in the normal course of business. We determine whether an estimated loss from a contingency should be
accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We assess its potential liability by
analyzing specific matters using available information. We have, in the past, developed our views on estimated losses in
consultation with outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various
combinations of appropriate litigation and settlement strategies. Taking all of the above factors into account, we record an amount
where it is probable that we will incur a loss and where that loss can be reasonably estimated. However, we may ultimately incur
more or less than the estimated amounts initially recorded. Litigation can be costly, divert management’s attention and could,
upon resolution, have a material adverse effect on our business, results of operations, financial condition and cash flows.
We are not currently a party to any legal proceedings.
Purchase commitments
As of December 31, 2010 and 2011 and March 31, 2012, we had purchase commitments with our third-party foundries and other
suppliers of $9.9 million, $11.8 million and $10.3 million due within one year, respectively, and $0 due after one year.
We subcontract with other companies to manufacture our voice and audio processors. During the normal course of business, our
third-party foundries and other suppliers procure components based upon orders we place. If we cancel all or part of the orders,
we may still be liable to the third-party foundries and suppliers for the cost of the components purchased by them to manufacture
our voice and audio processors. We periodically review the potential liability and to date we have not recorded any accruals. Our
financial position, results of operations and cash flows could be negatively impacted if we were required to compensate our
third-party foundries or suppliers, as the case may be, for any costs incurred.

                                                               F-26
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
We may cancel these purchase commitments at any time. However we are required to pay all costs incurred through the
cancellation date. We rarely cancel these agreements once production has started.
Indemnities, commitments and guarantees
During the normal course of business, we may make certain indemnities, commitments and guarantees under which we may be
required to make payments in relation to certain transactions. These indemnities include intellectual property indemnities to certain
of our OEMs, CMs and distributors in connection with the sales of our products, indemnities for liabilities associated with the
infringement of other parties’ technology based upon our processors, indemnities to various lessors in connection with facility
leases for certain claims arising from such facility or lease and indemnities to our directors and officers in connection with their
service to us, to the maximum extent permitted under the laws of Delaware.
In addition, we have contractual commitments to various OEMs, CMs and distributors, which could require us to incur costs to
repair an epidemic defect with respect to our processors outside of our normal business practices if such defect were to occur.
The duration of these indemnities, commitments and guarantees varies and in certain cases, is indefinite. The majority of these
indemnities, commitments and guarantees do not provide for any limitation of the maximum potential future payments that we may
be obligated to make.
We have not recorded any liability for these indemnities, commitments and guarantees in the accompanying consolidated balance
sheets. Where necessary, we accrue for losses for any known contingent liabilities, including those that may arise from
indemnification provisions, when future payment is probable.

8. Capital stock
Common stock
Under our certificate of incorporation, as then in effect, we were authorized to issue 540,000,000, 600,000,000 and 600,000,000
shares of common stock as of December 31, 2010 and 2011 and March 31, 2012, respectively. At December 31, 2010 and 2011
and March 31, 2012, we had reserved sufficient shares of common stock for issuance upon conversion of then outstanding
preferred stock, exercise of then outstanding warrants to acquire preferred stock and exercise of then outstanding stock options.
The holder of each share of common stock is entitled to one vote. Common stockholders are entitled to dividends when and if
declared by our board of directors, subject to the prior rights of the preferred stockholders. Since inception, we have not declared
any cash dividends.
As of December 31, 2010, we had reserved shares of common stock for future issuance as follows:


Shares reserved for convertible preferred stock                                                                       13,205,180
Shares reserved for stock options                                                                                      3,739,588
Shares reserved for warrants                                                                                             111,602

                                                                F-27
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
As of December 31, 2011, we had reserved shares of common stock for future issuance as follows:


Shares reserved for convertible preferred stock                                                                        13,205,180
Shares reserved for stock options                                                                                       5,849,131
Shares reserved for warrants                                                                                              111,602
As of March 31, 2012, we had reserved shares of common stock for future issuance as follows (unaudited):


Shares reserved for convertible preferred stock                                                                        13,205,180
Shares reserved for stock options                                                                                       5,628,882
Shares reserved for warrants                                                                                              111,602
On September 28, 2011, our board of directors approved an initial public offering of shares of our common stock by us under the
Securities Act of 1933. Additionally, on September 28, 2011 our board of directors approved:
•   a decrease in the number of authorized shares of our common stock from 600,000,000 to 500,000,000 shares;
•   the creation and authorization of 50,000,000 shares of undesignated preferred stock, par value $0.001 per share; and
•   an amendment and restatement of our certificate of incorporation or bylaws, as the case may be, which eliminate actions by
    written consent of stockholders; impose advance notice requirements for stockholder proposals; revise the procedures for the
    filling of vacancies on the board of directors and provide that directors may only be removed for cause; provide that special
    meetings of the stockholders may only be called by a majority of our board of directors, the chairman of our board of directors,
    the chief executive officer or the president (in the absence of a chief executive officer); and provide that any future amendment
    to the foregoing provisions must be approved by the holders of at least 66 2/3% of our then outstanding common stock.
These amendments to our certificate of incorporation were approved by our stockholders on April 17, 2012 and will become
effective after the filing of the amended and restated certificate of incorporation with the Secretary of State of the State of
Delaware prior to completion of the offering.

                                                                 F-28
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
9. Convertible preferred stock
Convertible preferred stock as of December 31, 2010 and 2011 and March 31, 2012 (unaudited) consisted of the following (in
thousands, except share data):

                                                                           Shares                Shares               Liquidation
Series                                                                  authorized          outstanding               preference
A-1                                                                      1,168,966                 38,956        $             877
A-2                                                                      3,080,090                102,669                      955
A-3                                                                        466,668                 15,555                      350
AA                                                                      36,683,675              1,112,505                    5,044
AA-1                                                                    10,391,770                346,389                    2,000
B                                                                       67,839,083              2,261,300                   15,025
B-1                                                                     23,396,131                779,866                    5,700
C                                                                       44,580,909              1,486,024                   14,832
D                                                                       88,668,030              2,926,332                   15,021
E                                                                      124,149,591              4,135,584                   15,161
Convertible preferred stock at December 31, 2010 and 2011
 and March 31, 2012                                                    400,424,913            13,205,180         $          74,965


The holders of the various series of convertible preferred stock have various rights and preferences as follows:
Voting Rights.     The holder of each share of convertible preferred stock is entitled to one vote for each share of the common
stock into which shares of Series A-1, Series A-2, Series A-3, Series AA, Series AA-1, Series B, Series B-1, Series C, Series D
and Series E preferred stock could be converted and the holders of common stock and preferred stock shall vote together as a
single class on all matters.
Dividends.     Holders of Series A-1, Series A-2, Series A-3, Series AA, Series AA-1, Series B, Series B-1, Series C, Series D and
Series E convertible preferred stock are entitled to receive dividends at the rate of $1.80, $0.744, $1.80, $0.363, $0.462, $0.531,
$0.585, $0.798, $0.411 and $0.294 per share, per year, respectively. Such dividends are payable when and if declared by our
board of directors and are not cumulative. After payment of these preferred stock dividends, any additional dividends are required
to be distributed among the holders of convertible preferred stock and common stock pro rata, based on the number of shares of
common stock then held by each holder (assuming conversion of all convertible preferred stock into common stock). We have not
declared any cash dividends since inception.
Conversion.       Each share of convertible preferred stock, at the option of the holder, is convertible into a number of fully paid
shares of common stock as determined by dividing the respective convertible preferred stock issue price by the conversion price
in effect at the time. The initial per share conversion price of the shares of Series A-1, Series A-2, Series A-3, Series AA,
Series AA-1, Series B, Series B-1, Series C, Series D and Series E convertible preferred stock was $22.50, $9.30, $22.50,
$4.53426, $5.7738, $6.6444, $7.3089, $9.981, $5.133 and $3.666, respectively, and is subject to adjustment as set forth in our
certificate of incorporation. Conversion is automatic immediately upon the earlier of (i) our sale of our common stock in a firm
commitment underwritten public offering market capitalization of at least $200 million (calculated on an as-converted basis) and
which results in aggregate cash

                                                                F-29
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
proceeds to us of not less than $30 million, or (ii) the date specified by written consent or agreement of the holders of not less than
60% of the then outstanding shares of preferred stock.
Liquidation.     In the event of any liquidation, dissolution or winding up, either voluntary or involuntary, the holders of Series E
convertible preferred stock are entitled to receive $3.666 per share (as adjusted for stock splits, stock dividends, reclassifications
or the like) for each share of Series E convertible preferred stock then held, plus declared but unpaid dividends, prior and in
preference to any distribution of any of our assets to the holders of the other convertible preferred stock or common stock.
Upon completion of the distribution to Series E in the event of any liquidation, dissolution or winding up of our company, the
holders of Series D convertible preferred stock are entitled to receive $5.133 per share (as adjusted for stock splits, stock
dividends, reclassifications or the like) for each share of Series D convertible preferred stock then held, plus declared but unpaid
dividends, prior and in preference to any distribution of any of our assets to the holders of the other series of convertible preferred
stock or common stock.
Upon completion of the distribution to Series D in the event of any liquidation, dissolution or winding up of our company, the
holders of Series C convertible preferred stock are entitled to receive $9.981 per share (as adjusted for stock splits, stock
dividends, reclassifications or the like) for each share of Series C convertible preferred stock then held, plus declared but unpaid
dividends, prior and in preference to any distribution of any of our assets to the holders of the other series of convertible preferred
stock or common stock.
Upon completion of the distribution to Series C in the event of any liquidation, dissolution or winding up of our company, the
holders of Series B and Series B-1 convertible preferred stock are entitled to receive $6.6444 and $7.3089 per share, respectively
(as adjusted for stock splits, stock dividends, reclassifications or the like) for each share of Series B and B-1 convertible preferred
stock then held, plus declared but unpaid dividends, prior and in preference to any distribution of any of our assets to the holders
of the other series of convertible preferred stock or common stock.
Upon completion of the distribution to Series B and Series B-1 in the event of any liquidation, dissolution or winding up of our
company, the holders of Series AA and Series AA-1 convertible preferred stock are entitled to receive $4.53426 and $5.7738 per
share, respectively (as adjusted for stock splits, stock dividends, reclassifications or the like) for each share of Series AA and
Series AA-1 convertible preferred stock then held, plus declared but unpaid dividends, prior and in preference to any distribution of
any of our assets to the holders of Series A-3, Series A-2 and Series A-1 convertible preferred stock or common stock.
Upon completion of the distribution to Series AA and Series AA-1 in the event of any liquidation, dissolution or winding up of our
company, the holders of Series A-2 and Series A-3 convertible preferred stock are entitled to receive $9.30 and $22.50 per share,
respectively (as adjusted for stock splits, stock dividends, reclassifications or the like) for each share of Series A-2 and Series A-3
convertible preferred stock then held, plus declared but unpaid dividends, prior and in preference to any distribution of any of our
assets to the holders of Series A-1 convertible preferred stock or common stock.

                                                                 F-30
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
Upon completion of the distribution to Series A-2 and Series A-3 in the event of any liquidation, dissolution or winding up of our
company, the holders of Series A-1 convertible preferred stock are entitled to receive $22.50 per share (as adjusted for stock
splits, stock dividends, reclassifications or the like) for each share of Series A-1 convertible preferred stock then held, plus
declared but unpaid dividends, prior and in preference to any distribution of any of our assets to the holders of common stock.
After the convertible preferred stock has been paid the liquidation preferences set forth above in full, our remaining assets
available for distribution shall be distributed ratably to the holders of common stock based on the number of shares of common
stock held by each stockholder.
A liquidation, dissolution, or winding down is deemed to occur if we sell, convey, exclusively license, lease or otherwise dispose of
all or substantially all of our property or business or merge with or into or consolidate with any other corporation, limited liability
company or other entity or effect any other transaction or series of related transactions in which the holders of our capital stock
immediately prior to the transaction hold and control less than a majority of our voting power immediately after such transaction.
The reincorporation we effected in June 2011 did not constitute a liquidation, dissolution or winding down.
Warrants
Pursuant to convertible notes we issued in August 2003 in connection with our next round of convertible preferred stock financing,
we issued warrants for 110,269 shares of Series AA convertible preferred stock at an exercise price of $3.627 per share. The
warrants expire upon the earlier of August 20, 2013, the closing of an underwritten public offering with a market capitalization of at
least $150 million or the closing of a change of control. We allocated $189,000 (fair value of the warrants on the date of issuance,
determined using the Black-Scholes option pricing model) of the proceeds from the convertible notes to the warrants. The fair
value of the warrants was originally recorded as a discount on the convertible loan and was accreted as additional interest
expense over the term of the convertible notes. Upon conversion of the notes payable into preferred stock in 2003, the
unamortized balance was transferred to preferred stock. As of March 31, 2012, the warrants had not been exercised.
In connection with our July 2009 line of credit agreement with Silicon Valley Bank, we issued warrants to purchase 1,333 shares
of Series D convertible preferred stock at $5.133 per share or preferred stock issued in our next round of convertible preferred
stock financing resulting in net proceeds to us of not less than $2 million, whichever had a lower per share price. We then
converted the warrants into the right to purchase 1,333 shares of Series E convertible preferred stock at a per share exercise
price of $3.67 in connection with the closing of the Series E preferred stock financing. The warrants expire in July 2019 and were
unexercised as of March 31, 2012.
At December 31, 2010 and 2011 and March 31, 2012, we recorded the fair value of preferred stock warrants of $315,000,
$1.1 million and $1.3 million, respectively, as long-term liabilities, as the warrants expire in August 2013 and July 2019. The
freestanding warrants are subject to remeasurement at each balance sheet date with any change in fair value recognized as a
component of “Other income (expense), net” in our consolidated statements of comprehensive income (loss).

                                                                 F-31
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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
During 2009, 2010, 2011 and the three months ended March 31, 2011 and 2012, we recorded expense of $58,000, $88,000,
$822,000, $337,000 and $167,000, respectively, for the change in fair value of these warrants. We will continue to adjust the
liability for changes in fair value until the earlier of the exercise or expiration of the warrants or the completion of a liquidation
event, including the completion of a qualified initial public offering, at which time all convertible preferred stock warrants will be
converted into warrants to purchase common stock and, accordingly, the liability will be reclassified to equity.

10. Stock-based awards
2001 Plan.     In 2001, our board of directors and stockholders approved the 2001 Stock Plan (2001 Plan) pursuant to which our
board of directors was authorized to issue stock purchase rights, incentive stock options and nonqualified stock options. The 2001
Plan required us to grant options at an exercise price not less than fair market value of our common stock on the date of grant for
incentive options or 85% of fair market value of our common stock on the date of grant for nonqualified stock options. For
employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonqualified
stock options could not be less than 110% of fair market value on the date of grant. The options are generally exercisable over
four years. Although the vesting provisions of individual options may vary, the options must provide for vesting of at least 20% per
year. The 2001 Plan provides that the term of the options shall be no more than 10 years from the date of the grant. Upon
termination of employment, all unvested options are cancelled and returned to the 2001 Plan. As of December 31, 2010,
December 31, 2011 and March 31, 2012, we had reserved 3,739,486, 3,341,975 and 3,122,735 shares respectively, of common
stock for issuance under the 2001 Plan. We ceased granting options under the 2001 Plan in March 2011 upon the adoption of our
2011 Equity Incentive Plan (2011 Plan).
2011 Plan . In March 2011 and June 2011, our board of directors and our stockholders approved the 2011 Plan, under which
our board of directors may issue stock appreciation rights, restricted stock, restricted stock units, incentive stock options and
nonqualified stock options. In connection with our initial public offering, in September 2011 our board of directors approved the
amendment and restatement of the 2011 Plan. In December 2011, our board of directors and stockholders approved the addition
of shares to the 2011 Plan. As of March 31, 2012, we had reserved 2,506,147 shares of common stock for issuance under the
2011 Plan. Immediately prior to the effective time of the registration statement filed in connection with our initial public offering, the
2011 Plan will provide for an annual increase on the first day of each year beginning January 1, 2013 equal to the least of:
(i) 1,101,649, (ii) 4.5% of the outstanding shares of common stock as of the last day of the immediately preceding year; or
(iii) such other amount as the board of directors may determine. The 2011 Plan requires our board of directors to grant options at
an exercise price not less than fair market value of our common stock on the date of grant. For employees holding more than 10%
of the voting rights of all classes of stock, the exercise prices for incentive and nonqualified stock options may not be less than
110% of fair market value of our common stock on the date of grant. The options are generally exercisable over four years.
Although the vesting provisions of individual options may vary, options granted under the 2011 Plan must provide for vesting of at
least 20% per year. The 2011 Plan provides that the term of the options shall be no more than 10 years from the date of the grant.
Upon termination of employment, all unvested options are cancelled and returned to the 2011 Plan.

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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
2011 ESPP.        In September 2011, our board of directors adopted our 2011 Employee Stock Purchase Plan (2011 ESPP), which
will be effective upon the completion of the offering. A total of 451,764 shares of our common stock will be made available for sale
under the 2011 ESPP. In addition, the 2011 ESPP provides for annual increases in the number of shares available for issuance
under the plan on the first day of each year beginning January 1, 2013 equal to the least of: (i) 1% of the outstanding shares of
common stock on the first day of such year; (ii) 249,328 shares of common stock or (iii) such amount determined by the board of
directors or its compensation committee. The 2011 ESPP permits participants to purchase common stock at a discount through
contributions of up to 15% of their eligible compensation. The 2011 ESPP will be implemented through offering periods of
approximately six months in duration. The purchase price of shares will be 85% of the lower of the fair market value of our
common stock on the first trading day of each offering period or on the exercise date. Our executive officers and our other
employees will be permitted to participate in the 2011 ESPP. The 2011 ESPP will automatically terminate in 2031, unless we
terminate it sooner.
A summary of option activity under the 2001 Plan and 2011 Plan is as follows:

                                                                                                 Options outstanding
                                                                         Shares                                    Weighted
                                                                       available             Number                  average
                                                                       for grant            of shares          exercise price
Balances at December 31, 2010                                             42,165            3,697,423         $              2.18
Additional shares reserved                                             2,507,156                   —                           —
Options granted                                                       (1,210,625 )          1,210,625                        9.95
Options exercised                                                             —              (186,424 )                      1.58
Options cancelled                                                        216,471             (216,471 )                      2.91
Options retired—2001 Plan                                               (211,189 )                 —                           —
Balances at December 31, 2011                                         1,343,978             4,505,153         $             4.25
Options granted                                                        (313,837 )             313,837                      13.80
Options exercised                                                            —               (116,144 )                     2.69
Options cancelled                                                       117,949              (117,949 )                     3.53
Options retired—2001 plan                                              (104,105 )                  —                          —
Balances at March 31, 2012 (unaudited)                                1,043,985             4,584,897         $              4.96


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                                     Audience, Inc.
                 Notes to consolidated financial statements (continued)
Information regarding our options as of December 31, 2010 and 2011 and March 31, 2012 is summarized below:
                            Options Outstanding                                                                                          Options Exercisable
                            at December 31, 2010                                                                                         at December 31, 2010
                                                  Weighted
                                                   Average                                                                              Weighted
                                                 Remaining                    Weighted               Aggregate                            Average                  Weighted                  Aggregate
                                                Contractual                    Average                 Intrinsic                       Remaining                    Average                    Intrinsic
           Range of              Number             Life (in                  Exercise                     Value          Number      Contractual                  Exercise                        Value
      Exercise Price         Outstanding             Years)                      Price                  ($'000s)       Exercisable    Life (Years)                    Price                     ($'000s)

      $ 0.60 – $ 0.90             856,663                 5.3         $           0.72                                     807,969             5.3         $            0.71
      $ 2.40 – $ 3.00           2,534,204                 8.9                     2.53                                     477,123             8.0                      2.42
      $ 3.30 – $ 3.30             306,556                 9.9                     3.30                                          —               —                         —

                                3,697,423                 8.2                     2.18          $           10,802       1,285,092             6.3                      1.35             $        4,822



                             Options Outstanding                                                                                          Options Exercisable
                             at December 31, 2011                                                                                         at December 31, 2011
                                                     Weighted
                                                      Average                                                                           Weighted
                                                    Remaining                 Weighted                   Aggregate                        Average                  Weighted                  Aggregate
                                                   Contractual                 Average                     Intrinsic                   Remaining                    Average                    Intrinsic
                Range of           Number              Life (in               Exercise                         Value      Number      Contractual                  Exercise                        Value
           Exercise Price      Outstanding              Years)                   Price                      ($'000s)   Exercisable    Life (Years)                    Price                     ($'000s)

       $   0.60 – $ 0.90            755,519                 4.2       $            0.72                                    753,126             4.2         $           0.72
       $   2.40 – $ 3.00          2,285,729                 8.0                    2.54                                  1,107,324             7.7                     2.48
       $   3.30 – $ 5.10            556,829                 9.0                    4.24                                     87,068             9.0                     3.69
       $   9.30 – $ 11.70           907,076                 9.8       $           11.53                                    198,228             9.8                    11.67

                                  4,505,153                 7.8                    4.25         $            43,005      2,145,746             6.7                     2.76          $           23,689



                              Options Outstanding                                                                                         Options Exercisable
                          at March 31, 2012 (unaudited)                                                                               at March 31, 2012 (unaudited)
                                                      Weighted
                                                       Average                                                                            Weighted
                                                     Remaining                   Weighted            Aggregate                             Average                    Weighted               Aggregate
                                                    Contractual                   Average              Intrinsic                         Remaining                     Average                 Intrinsic
                Range of            Number              Life (in                 Exercise                  Value          Number        Contractual                   Exercise                     Value
           Exercise Price      Outstanding               Years)                     Price               ($’000s)       Exercisable      Life (Years)                     Price                  ($’000s)

       $   0.60 – $ 0.90             747,585                    3.9       $           0.71                                  747,585                  4.0       $           0.71
       $   2.40 – $ 3.00           2,116,887                    7.7                   2.55                                1,159,842                  7.5                   2.49
       $   3.30 – $ 5.10             512,349                    8.8                   4.25                                  130,353                  8.8                   4.29
       $   9.30 – $ 13.80          1,208,076                    9.7                  12.13                                  213,085                  9.6                  11.62

                                   4,584,897                    7.7                      4.96        $      47,388        2,250,865                  6.6                      2.87           $   27,977



As of December 31, 2010, we had 3,317,345 options expected to vest at a weighted average exercise price of $2.18 per share. At
December 31, 2011, we had 4,088,007 options expected to vest at a weighted average exercise price of $4.25 per share. At
March 31, 2012, we had 4,190,178 options expected to vest at a weighted average exercise price of $4.96 per share.
We calculated the intrinsic value of options outstanding, exercisable and expected-to-vest options based on the difference
between the exercise price and the fair market value of our common stock on

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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
the applicable reporting date. The intrinsic value of exercised options was calculated based on the difference between the
exercise price and the fair market value of our common stock as of the exercise date.
Options to nonemployees.     As of March 31, 2012, we had granted options to purchase 17,356 shares of common stock to
nonemployees, which options had a weighted average exercise price of $2.70 per share. These options were valued on the date
of grant using the Black-Scholes option pricing model with the following assumptions: volatility between 42% and 60%, risk-free
interest rates between 1.39% and 4.27%, zero percent expected dividend yield and the contractual life.
At each reporting date, we revalue any unvested options using the Black-Scholes option pricing model. As a result, the
stock-based compensation expense will fluctuate as the fair market value of our common stock fluctuates. Changes in the
estimated fair value of these options will be recognized as stock-based compensation in the period of the change.
Stock-based compensation expense.       The following table summarizes the components of stock-based compensation expense
for 2009, 2010, 2011 and the three months ended March 31, 2011 and 2012. We realized no tax benefits due to our current loss
position and did not capitalize any amounts as part of inventory as such amounts were insignificant.

                                                                                                           Three months
                                                        Year ended December 31,                           ended March 31,
                                                      2009         2010                  2011              2011           2012
                                                                                                            (unaudited)
                                                                              (in thousands)
Cost of revenue                                 $        18      $       62      $        90          $      24      $        25
Research and development                                132             227              416                 81              142
Selling, general and administrative                     133             258              884                 90              370
                                                $       283      $      547         $    1,390        $     195      $       537


Valuation Assumptions.       We estimate the fair value of each stock-based award on the date of grant using the Black-Scholes
option pricing model. Expected volatility is based on the historical volatility of a selected guideline group of publicly traded
companies. The expected term of stock-based awards is based upon the simplified method for estimating expected term. The
risk-free rate for the expected term of the stock-based awards is based on the U.S. Treasury Constant Maturity rate. The
assumptions used to value awards granted during 2009, 2010, 2011 and the three months ended March 31, 2011 and 2012 were
as follows:

                                                                                                            Three months
                                                        Year ended December 31,                            ended March 31,
                                                     2009             2010                  2011           2011         2012
                                                                                                               (unaudited)
Expected term (years)                                6.25                  6.25              6.25           6.25           6.25
Volatility                                             43 %                  42 %           39-40 %           39 %           37 %
Risk-free rate                                  2.07-3.09 %           1.39-2.96 %        1.17-2.3 %          2.3 %         1.11 %
Dividend yield                                         —%                    —%                —%             —%             —%
Expected term.    Expected term represents the period over which we anticipate stock-based awards to be outstanding. As we
have, and expect to undergo significant operational and structural changes in our

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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
business, the historical exercise data no longer provides a reasonable basis upon which to estimate expected term. As a result,
the expected term of the stock-based awards we granted was calculated based on the simplified method. Under the simplified
method, the expected term is equal to the average of stock-based award’s weighted average vesting period and its contractual
term. We expect to continue using the simplified method until we have sufficient information.
Expected volatility. The expected volatility was based on the historical stock volatilities of a group of publicly listed guideline
companies over a period equal to the expected terms of the options, as we do not have any trading history to use the volatility of
our common stock.
Expected dividend yield.     We have never paid cash dividends on our common stock and do not expect to pay dividends on our
common stock.
Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for zero
coupon U.S. Treasury Notes with maturities equal to the award’s expected term.
Fair value of common stock.      The fair value of the shares of common stock underlying the stock-based awards has historically
been the responsibility of and determined by our board of directors. The absence of an active market for our common stock
required our board of directors to estimate the fair value of common stock for purposes of granting stock-based awards and for
determining stock-based compensation expense. In response to these requirements, our board of directors estimated the fair
market value of common stock after consideration of all available information including our operating and financial performance,
valuation studies by independent third-party valuation consultants, the valuations of comparable companies, the hiring of key
personnel, the status of our development and sales efforts, revenue growth, the lack of liquidity of our capital stock and general
and industry specific economic outlook and additional objective and subjective factors relating to our business. If different
estimates or other assumptions had been used, the valuations would have been different.
The fair value of the underlying common stock will be determined by our board of directors until such time as our common stock is
listed on an established stock exchange.
Forfeiture rate.     We estimate our forfeiture rate based on an analysis of our actual forfeitures and will continue to evaluate the
adequacy of the forfeiture rate based on actual forfeiture experience, analysis of employee turnover behavior and other factors.
The impact from a forfeiture rate adjustment will be recognized in full in the period of adjustment and if the actual number of future
forfeitures differs from that estimated, we may be required to record adjustments to stock-based compensation expense in future
periods.
The aggregate intrinsic value of options exercised during 2010, 2011 and the three months ended March 31, 2011 and 2012 was
$685,000, $1.2 million, $832,000 and $1.5 million respectively. Cash received from stock option exercises during 2009, 2010,
2011 and the three months ended March 31, 2011 and 2012 was $59,000, $374,000, $294,000, $82,000 and $313,000,
respectively. Due to our net losses, we did not realize any tax benefits from stock options exercised during 2009, 2010, 2011 and
the three months ended March 31, 2011 and 2012.

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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
At December 31, 2010 and 2011 and March 31, 2012, we had $2.9 million, $5.2 million and $6.2 million, respectively, of total
unrecognized compensation expense, net of estimated forfeitures, related to stock-based awards that we will recognize over a
weighted average period of 3.2 years, 2.5 years and 2.4 years, respectively.

11. Borrowings
Line of credit
In July 2009, we entered into a $5.0 million revolving line of credit agreement with Silicon Valley Bank, under which available
funds are based on eligible accounts receivable. Under the agreement, if the outstanding amount on any advance becomes
greater than 80% of the face amount of the invoice (or 50% against amounts advanced against purchase orders), we are required
to pay the difference to the lender. Borrowings under this facility accrue interest at the greater of the prime rate or 4% per annum
with a penalty of an additional 0.25% applied each time our cash balance goes below $2.5 million. These rates increase 5% per
annum during an event of default. Payment to the lender is generally due when the payment is received on the receivable against
which the line has been drawn.
On July 6, 2011, we amended our line of credit agreement with Silicon Valley Bank. Among other changes, the amendment
(i) increases our line of credit from $5.0 million to $10.0 million and extends the availability of the line until July 6, 2013;
(ii) provides that we may borrow up to $2.0 million (of the $10.0 million total) without reference to the value of our accounts
receivable or purchase orders; (iii) changes the applicable interest rate on the line of credit to the following: (a) for prime rate
loans, a range from the bank’s prime rate to the prime rate plus 0.35% per annum (the higher rate is applicable if our quick ratio
falls below 1.25:1.00), or (b) for LIBOR loans, LIBOR plus 1.75% per annum; and (iv) replaces the credit facility’s financial tests
based on net cash balances with a condition that we maintain a quick ratio of at least 1.25:1.00 (used to determine borrowing
eligibility and interest rate). The amendment also removed the covenant that we maintain a quick ratio of 1.50:1.00 while
equipment loans remain outstanding.
We borrowed $800,000 under our line of credit agreement in December 2009 and we repaid the outstanding balance in April
2010. As of December 31, 2010 and 2011 and March 31, 2012, we had no outstanding borrowings under our line of credit
agreement.
Equipment loan
In July 2009, we entered into a $500,000 equipment term loan payable in 36 equal monthly installments of principal plus accrued
interest. Interest on the loan accrues at a rate of 6.5% per annum, increasing to 11.5% per annum during an event of a default.
Through the termination or repayment of the loan, we were required to maintain a quick ratio of at least 1.50:1.00. This covenant
was removed when we amended our credit agreement with Silicon Valley Bank in July 2011.
The balance remaining as of December 31, 2010 and 2011 and March 31, 2012 was $240,000, $103,000 and $69,000,
respectively. After repayment, no equipment loan advance may be reborrowed. Maturities of the outstanding balance were as
follows: $103,000 in 2012.

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                                  Audience, Inc.
              Notes to consolidated financial statements (continued)
12. Segment and geographic information
We operate in one reportable segment related to the selling and marketing of voice and audio processors and licensing of
processor IP for use in mobile devices. We have identified our president and chief executive officer as the Chief Operating
Decision Maker (CODM), who manages our operations as a whole. For the purpose of evaluating financial performance and
allocating resources, the CODM reviews financial information accompanied by information by customer and by product.
For all periods presented, substantially all of our revenue was generated in Asia. Since our OEMs market and sell their products
worldwide, our revenue by geographic location is not necessarily indicative of the geographic distribution of mobile device sales,
but rather of where the mobile devices are manufactured. Our revenue is therefore based on the country or region in which our
OEMs or their CMs issue their purchase orders to us. Revenue percentages for the geographic regions reported below were
based upon customer headquarters’ locations. The following is a summary of the geographic information related to revenue for the
periods presented:

                                                                                                                 Three months
                                                                                  Year ended                          ended
                                                                                 December 31,                       March 31,
                                                                        2009          2010         2011          2011        2012
                                                                                                                   (unaudited)
China                                                                     36 %          88 %          77 %         95 %              24 %
Japan                                                                      1             2            —             —                —
Korea                                                                     62            10            23             5               37
United States                                                             —             —             —             —                38
Other                                                                      1            —             —             —                 1
Total                                                                    100 %         100 %        100 %         100 %          100 %


As of December 31, 2010 and 2011 and March 31, 2012, substantially all of our long-lived tangible assets were located in the
United States.

13. Reverse stock split
In April 2012, our board of directors and stockholders approved a one-for-30 reverse split of our outstanding common and
preferred stock that will be effective prior to the effectiveness of our Registration Statement on Form S-1 for the initial public
offering. All share and per share information included in the accompanying financial statements and notes thereto have been
adjusted to reflect this reverse stock split.

14. Subsequent events
We performed an evaluation of subsequent events through April 20, 2012, which is the date the financial statements were issued.

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                                                 Part II
                                Information not required in prospectus
Item 13. Other expenses of issuance and distribution.
The following table presents the costs and expenses, other than underwriting discounts and commissions, payable by us for the
sale of common stock being registered. All amounts are estimates except the SEC registration fee, the Financial Industry
Regulatory Authority (FINRA) filing fees and The NASDAQ Global Market listing fee.


SEC registration fee                                                                                                       $      8,595
FINRA filing fee                                                                                                                  8,000
NASDAQ Global Market listing fee                                                                                                      *
Printing and engraving expenses                                                                                                       *
Legal fees and expenses                                                                                                               *
Accounting fees and expenses                                                                                                          *
Blue sky fees and expenses                                                                                                            *
Custodian and transfer agent fees                                                                                                     *
Miscellaneous fees and expenses                                                                                                       *
    Total                                                                                                                  $    16,595


*     To be completed by amendment

Item 14. Indemnification of directors and officers.
Our amended and restated certificate of incorporation and amended and restated bylaws, each of which will be in effect upon the
completion of this offering, contain provisions relating to the limitation of liability and indemnification of directors and officers. The
amended and restated certificate of incorporation provides that our directors will not be personally liable to us or our stockholders
for monetary damages for any breach of fiduciary duty as a director, except for liability:
•   for any breach of the director’s duty of loyalty to us or our stockholders;
•   for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
•   in respect of unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the
    Delaware General Corporation Law; or
•   for any transaction from which the director derives any improper personal benefit.
Our amended and restated certificate of incorporation will also provide that if Delaware law is amended after the approval by our
stockholders of the certificate of incorporation to authorize corporate action further eliminating or limiting the personal liability of
directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law.
Our amended and restated bylaws will provide that we will indemnify our directors and officers to the fullest extent permitted by
Delaware law, as it now exists or may in the future be amended, against all expenses and liabilities reasonably incurred for their
service for or on our behalf. Our amended and restated bylaws will provide that we shall advance the expenses incurred by a
director or officer in advance of the final disposition of an action or proceeding. The bylaws will also authorize us to indemnify any
of our employees or agents and permit us to secure insurance on behalf of any officer,

                                                                    II-1
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director, employee or agent for any liability arising out of his or her action in that capacity, whether or not Delaware law would
otherwise permit indemnification.
We have entered into indemnification agreements with each of our directors and executive officers and certain other key
employees, a form of which is attached as Exhibit 10.1. The form of agreement provides that we will indemnify each of our
directors, executive officers and such other key employees against any and all expenses incurred by that director, executive
officer or other key employee because of his or her status as one of our directors, executive officers or other key employees, to
the fullest extent permitted by Delaware law, our restated certificate of incorporation and our amended and restated bylaws
(except in a proceeding initiated by such person without board approval). In addition, the form agreement provides that, to the
fullest extent permitted by Delaware law, we will advance all expenses incurred by our directors, executive officers and other key
employees for a legal proceeding.
Reference is made to Section 9 of the underwriting agreement contained in Exhibit 1.1 to this registration statement, providing for
indemnification by the underwriters of our directors and officers against limited liabilities. In addition, Section 1.10 of our amended
and restated investors’ rights agreement contained in Exhibit 4.3 to this registration statement provides for indemnification by us of
certain of our stockholders against liabilities described in our amended and restated investors’ rights agreement.

Item 15. Recent sales of unregistered securities.
Since January 1, 2009, we have issued the following securities that were not registered under the Securities Act:
(1)     Sales of preferred stock
•     In February 2009 and April 2009, we issued 2,926,332 shares of Series D preferred stock to eight accredited investors at a
      price of $5.133 per share for aggregate gross proceeds of approximately $15,020,887.
•     In February 2010 and March 2010, we issued 4,135,584 shares of Series E preferred stock to 14 accredited investors at a
      price of $3.666 per share for aggregate gross proceeds of approximately $15,161,075.
(2)     Issuance of options and common stock
•     From January 1, 2009 through March 31, 2012, we issued and sold an aggregate of 670,714 shares of common stock upon
      the exercise of options issued to certain officers, directors, employees and consultants of the registrant’s 2001 Plan and 2011
      Plan at exercise prices ranging from $0.60 to $11.70 per share, for an aggregate consideration of approximately $34,000.
•     From January 1, 2009 through March 31, 2012, we granted direct issuances or stock options to purchase an aggregate of
      4,243,593 shares of our common stock at exercise prices ranging from $2.40 to $13.80 per share to employees, consultants,
      directors and other service providers under our 2001 Plan and 2011 Plan.
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering and
the registrant believes the transactions were exempt from the registration requirements of the Securities Act in reliance on
Section 4(2) thereof with respect to item (1) above and Rule 701 thereunder with respect to item (2) above, as transactions by an
issuer not involving a public offering or transactions pursuant to compensatory benefit plans and contracts relating to
compensation as provided under such Rule 701.

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Item 16. Exhibits and financial statement schedules.
(a) Exhibits.

Exhibit
number              Description

 1.1                Form of Underwriting Agreement.
 3.1*               Amended and Restated Certificate of Incorporation of the Registrant to be effective upon closing of this
                    offering.
 3.1.1*             Certificate of Incorporation of the Registrant in effect before completion of this offering.
 3.2*               Amended and Restated Bylaws of the Registrant to be effective upon the closing of this offering.
 3.2.1*             Bylaws of the Registrant in effect before completion of this offering.
 4.1†               Form of Common Stock Certificate of the Registrant.
 4.2*               Warrant to Purchase Stock by and between the Registrant and Silicon Valley Bank dated July 31, 2009.
 4.3*               Amended and Restated Investors’ Rights Agreement dated February 3, 2010, by and among the Registrant
                    and certain stockholders of the Registrant.
 4.3.1*             Amendment to the Amended and Restated Investors’ Rights Agreement dated June 24, 2011, by and among
                    the Registrant and certain stockholders of the Registrant.
 5.1†               Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1*               Form of Indemnification Agreement for directors and executive officers.
10.2*               2001 Stock Plan, as amended, and form of agreements used thereunder.
10.3*               2011 Equity Incentive Plan, as amended, and form of agreements used thereunder.
10.4*               Amended and Restated 2011 Equity Incentive Plan.
10.5*               2011 Employee Stock Purchase Plan and form of agreements used thereunder.
10.6*               440 Clyde Avenue Lease Agreement by and between the Registrant and 440 Clyde Avenue Associates, LLC
                    dated October 2, 2008.
10.6.1*             450 Clyde Avenue Lease Agreement by and between the Registrant and 440 Clyde Avenue Associates, LLC
                    dated December 20, 2010.
10.7*               Loan and Security Agreement by and between the Registrant and Silicon Valley Bank dated July 31, 2009.
10.7.1*             First Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated December 4, 2009.
10.7.2*             Second Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated August 17, 2010.
10.7.3*             Third Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated July 6, 2011.
10.8*               Severance Agreement by and between the Registrant and Lloyd Watts dated August 30, 2011.
10.9*               Separation Agreement and Release by and between the Registrant and James L. Lau dated November 5,
                    2011.

                                                                  II-3
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Exhibit
number                      Description

10.10*                      Change of Control Severance Agreement by and between the Registrant and Peter B. Santos dated
                            December 31, 2011.
10.11*                      Change of Control Severance Agreement by and between the Registrant and Kevin S. Palatnik dated
                            January 9, 2012.
10.12*                      Form of Change of Control Severance Agreement by and between the Registrant and each of Andrew J.
                            Keane, Robert H. Schoenfield and Thomas Spade.
10.13+*                     Master Development and Supply Agreement by and between the Registrant and Apple Inc. dated August 6,
                            2008.
10.13.1+*                   Statement of Work under the Master Development and Supply Agreement by and between the Registrant
                            and Apple Inc. dated August 6, 2008.
10.13.2+*                   Statement of Work under the Master Development and Supply Agreement by and between the Registrant
                            and Apple Inc. dated December 19, 2008.
10.13.3+*                   Statement of Work under the Master Development and Supply Agreement by and between the Registrant
                            and Apple Inc. dated March 26, 2010.
10.13.3.1+*                 Amendment No. 1 to the Statement of Work under the Master Development and Supply Agreement by and
                            between the Registrant and Apple Inc. dated March 15, 2012.
10.13.4+*                   Amendment No. 1 to the Statement of Work under the Master Development and Supply Agreement by and
                            between the Registrant and Apple Inc. dated December 22, 2010.
10.14                       2012 Executive Incentive Compensation Plan.
10.15                       Sublease by and between the Registrant and Zynga Inc. dated March 16, 2012.
21.1                        Subsidiaries.
23.1                        Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
23.2†                       Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (See Exhibit 5.1).
24*                         Power of Attorney.

†     To be filed by amendment.
*     Previously filed.
+     Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this Registration Statement and have been filed
      separately with the Securities and Exchange Commission.

(b) Financial Statements Schedules—All schedules are omitted because they are not applicable or the required information is
shown in the financial statements or notes thereto.

Item 17. Undertakings.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification by the Registrant for liabilities arising under the Securities Act may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the provisions described in Item 14 or otherwise, the Registrant has been
advised that in the opinion of the SEC such

                                                                                    II-4
Table of Contents

indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act of 1933, shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein and this offering of
such securities at that time shall be deemed to be the initial bona fide offering thereof.

                                                                 II-5
Table of Contents


                                                          Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 3 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View,
State of California, on the 20th day of April 2012.

                                                                                  Audience, Inc.
                                                                                  By:               /S/   P ETER B. S ANTOS
                                                                                                           Peter B. Santos
                                                                                            President, Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 3 to the Registration Statement has been signed
by the following persons in the capacities and on the dates shown:

                       Signature                                                 Title                                           Date

           /s/      P ETER B. S ANTOS                President, Chief Executive Officer and Director                        April 20, 2012
                      Peter B. Santos                (Principal Executive Officer)
          /s/    K EVIN S. P ALATNIK                 Chief Financial Officer                                                April 20, 2012
                     Kevin S. Palatnik               (Principal Financial and Accounting Officer)
                             *                       Director                                                               April 20, 2012
                      Forest Baskett

                             *                       Director                                                               April 20, 2012
                     Marvin D. Burkett

                             *                       Director                                                               April 20, 2012
                        Barry L. Cox

                             *                       Director                                                               April 20, 2012
                       Rich Geruson

                             *                       Chairman and Director                                                  April 20, 2012
                      Mohan S. Gyani

                             *                       Director                                                               April 20, 2012
                     George A. Pavlov



*By:                  /s/   K EVIN S. P ALATNIK
                                 Kevin S. Palatnik
                                 Attorney-in-Fact

                                                                   II-6
Table of Contents


                                                   Exhibit index
Exhibit
number              Description
 1.1                Form of Underwriting Agreement.
 3.1*               Amended and Restated Certificate of Incorporation of the Registrant to be effective upon closing of this
                    offering.
 3.1.1*             Certificate of Incorporation of the Registrant in effect before completion of this offering.
 3.2*               Amended and Restated Bylaws of the Registrant to be effective upon the closing of this offering.
 3.2.1*             Bylaws of the Registrant in effect before completion of this offering.
 4.1†               Form of Common Stock Certificate of the Registrant.
 4.2*               Warrant to Purchase Stock by and between the Registrant and Silicon Valley Bank dated July 31, 2009.
 4.3*               Amended and Restated Investors’ Rights Agreement dated February 3, 2010, by and among the Registrant
                    and certain stockholders of the Registrant.
 4.3.1*             Amendment to the Amended and Restated Investors’ Rights Agreement dated June 24, 2011, by and among
                    the Registrant and certain stockholders of the Registrant.
 5.1†               Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1*               Form of Indemnification Agreement for directors and executive officers.
10.2*               2001 Stock Plan, as amended, and form of agreements used thereunder.
10.3*               2011 Equity Incentive Plan, as amended, and form of agreements used thereunder.
10.4*               Amended and Restated 2011 Equity Incentive Plan.
10.5*               2011 Employee Stock Purchase Plan and form of agreements used thereunder.
10.6*               440 Clyde Avenue Lease Agreement by and between the Registrant and 440 Clyde Avenue Associates, LLC
                    dated October 2, 2008.
10.6.1*             450 Clyde Avenue Lease Agreement by and between the Registrant and 440 Clyde Avenue Associates, LLC
                    dated December 20, 2010.
10.7*               Loan and Security Agreement by and between the Registrant and Silicon Valley Bank dated July 31, 2009.
10.7.1*             First Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated December 4, 2009.
10.7.2*             Second Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated August 17, 2010.
10.7.3*             Third Amendment to Loan and Security Agreement by and between the Registrant and Silicon Valley Bank
                    dated July 6, 2011.
10.8*               Severance Agreement by and between the Registrant and Lloyd Watts dated August 30, 2011.
10.9*               Separation Agreement and Release by and between the Registrant and James L. Lau dated November 5,
                    2011.
10.10*              Change of Control Severance Agreement by and between the Registrant and Peter B. Santos dated
                    December 31, 2011.
10.11*              Change of Control Severance Agreement by and between the Registrant and Kevin S. Palatnik dated
                    January 9, 2012.
Table of Contents


Exhibit
number                                Description

10.12*                                Form of Change of Control Severance Agreement by and between the Registrant and each of
                                      Andrew J. Keane, Robert H. Schoenfield and Thomas Spade.
10.13+*                               Master Development and Supply Agreement by and between the Registrant and Apple Inc. dated
                                      August 6, 2008.
10.13.1+*                             Statement of Work under the Master Development and Supply Agreement by and between the
                                      Registrant and Apple Inc. dated August 6, 2008.
10.13.2+*                             Statement of Work under the Master Development and Supply Agreement by and between the
                                      Registrant and Apple Inc. dated December 19, 2008.
10.13.3+*                             Statement of Work under the Master Development and Supply Agreement by and between the
                                      Registrant and Apple Inc. dated March 26, 2010.
10.13.3.1+*                           Amendment No. 1 to the Statement of Work under the Master Development and Supply Agreement
                                      by and between the Registrant and Apple Inc. dated March 15, 2012.
10.13.4+*                             Amendment No. 1 to the Statement of Work under the Master Development and Supply Agreement
                                      by and between the Registrant and Apple Inc. dated December 22, 2010.
10.14                                 2012 Executive Incentive Compensation Plan.
10.15                                 Sublease by and between the Registrant and Zynga Inc. dated March 16, 2012.
21.1                                  Subsidiaries.
23.1                                  Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.
23.2†                                 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (See Exhibit 5.1).
24*                                   Power of Attorney.

†     To be filed by amendment.
*     Previously filed.
+     Confidential treatment has been requested for portions of this exhibit. These portions have been omitted from this Registration Statement and have been filed
      separately with the Securities and Exchange Commission.
                                                                                                                                    Exhibit 1.1

                                                      J.P. MORGAN SECURITIES LLC

                                                      UNDERWRITING AGREEMENT
                                                           AUDIENCE, INC.

                                                              Shares of Common Stock

                                                           Underwriting Agreement

                                                                                                                                         , 20
J.P. Morgan Securities LLC
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
As Representatives of
the several Underwriters listed
in Schedule 1 hereto
c/o J.P. Morgan Securities LLC
    383 Madison Avenue
    New York, New York 10179
   Credit Suisse Securities (USA) LLC
   Eleven Madison Avenue
   New York, New York 10010-3629
   Deutsche Bank Securities Inc.
   60 Wall Street
   New York, New York 10005
Ladies and Gentlemen:

      Audience, Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the several Underwriters listed in Schedule 1
hereto (the “Underwriters”), for whom you are acting as representatives (the “Representatives”), an aggregate of            shares of common
stock, par value $ 0.001 per share, of the Company (the “Common Stock”), and certain stockholders of the Company named in Schedule 2
hereto (the “Selling Stockholders”) propose to sell, severally and not jointly, to the several Underwriters an aggregate of         shares of
Common Stock (collectively, the “Underwritten Shares”). In addition, the Company proposes to issue and sell, at the option of the
Underwriters, up to an additional          shares of Common Stock (the “Option Shares”). The Underwritten Shares and the Option Shares are
herein referred to as the “Shares”. The shares of Common Stock to be outstanding after giving effect to the sale of the Shares are referred to
herein as the “Stock”.

     Each of the Company and each of the Selling Stockholders hereby confirm their agreement with the several Underwriters concerning the
purchase and sale of the Shares, as follows:
      1. Registration Statement . The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Securities Act”), a
registration statement (File No. 333-179016 ), including a prospectus, relating to the Shares. Such registration statement, as amended at the
time it became effective, including the information, if any, deemed pursuant to Rule 430A, 430B or 430C under the Securities Act to be part of
the registration statement at the time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration Statement”; and as
used herein, the term “Preliminary Prospectus” means each prospectus included in such registration statement (and any amendments thereto)
before effectiveness, any prospectus filed with the Commission pursuant to Rule 424(a) under the Securities Act and the prospectus included in
the Registration Statement at the time of its effectiveness that omits Rule 430 Information, and the term “Prospectus” means the prospectus in
the form first used (or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in connection with
confirmation of sales of the Shares. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities
Act (the “Rule 462 Registration Statement”), then any reference herein to the term “Registration Statement” shall be deemed to include such
Rule 462 Registration Statement. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Registration
Statement and the Prospectus.

      At or prior to the Applicable Time (as defined below), the Company had prepared the following information (collectively with the pricing
information set forth on Annex B hereto, the “Pricing Disclosure Package”): a Preliminary Prospectus dated        , 20 and each
“free-writing prospectus” (as defined pursuant to Rule 405 under the Securities Act) listed on Annex B hereto.

     “Applicable Time” means [           ] [A/P].M., New York City time, on            , 20   .

      2. Purchase of the Shares by the Underwriters . The Company agrees to issue and sell, and each of the Selling Stockholders agrees,
severally and not jointly, to sell, subject to the terms set forth herein, the Underwritten Shares to the several Underwriters as provided in this
Agreement, and each Underwriter, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions
set forth herein, agrees, severally and not jointly, to purchase at a price per share (the “Purchase Price”) of $ [      ] from the Company the
respective number of Underwritten Shares set forth opposite such Underwriter’s name in Schedule 1 hereto and from each of the Selling
Stockholders the number of Underwritten Shares (to be adjusted by you so as to eliminate fractional shares) determined by multiplying the
aggregate number of Underwritten Shares to be sold by each of the Selling Stockholders as set forth opposite their respective names in
Schedule 2 hereto by a fraction, the numerator of which is the aggregate number of Underwritten Shares to be purchased by such Underwriter
as set forth opposite the name of such Underwriter in Schedule 1 hereto and the denominator of which is the aggregate number of Underwritten
Shares to be purchased by all the Underwriters from all of the Selling Stockholders hereunder.

    In addition, the Company agrees to issue and sell the Option Shares to the several Underwriters as provided in this Agreement, and the
Underwriters, on the basis of the representations, warranties and agreements set forth herein and subject to the conditions set forth

                                                                        -2-
herein, shall have the option to purchase, severally and not jointly, from the Company at the Purchase Price less an amount per share equal to
any dividends or distributions declared by the Company and payable on the Underwritten Shares but not payable on the Option Shares. If any
Option Shares are to be purchased, the number of Option Shares to be purchased by each Underwriter shall be the number of Option Shares
which bears the same ratio to the aggregate number of Option Shares being purchased as the number of Underwritten Shares set forth opposite
the name of such Underwriter in Schedule 1 hereto (or such number increased as set forth in Section 12 hereof) bears to the aggregate number
of Underwritten Shares being purchased from the Company by the several Underwriters, subject, however, to such adjustments to eliminate any
fractional Shares as the Representatives in their sole discretion shall make. Any such election to purchase Option Shares shall be made in
proportion to the maximum number of Option Shares to be sold by the Company.

       The Underwriters may exercise the option to purchase Option Shares at any time in whole, or from time to time in part, on or before the
thirtieth (30 th ) day following the date of the Prospectus, by written notice from the Representatives to the Company and the Attorneys-in-Fact
(as defined below). Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and
time when the Option Shares are to be delivered and paid for, which may be the same date and time as the Closing Date (as hereinafter defined)
but shall not be earlier than the Closing Date or later than the tenth (10 th ) full business day (as hereinafter defined) after the date of such notice
(unless such time and date are postponed in accordance with the provisions of Section 12 hereof). Any such notice shall be given at least two
(2) business days prior to the date and time of delivery specified therein; provided that if the same date and time as the Closing Date is
specified therein, such notice shall not be required to be given at least two (2) business days prior to such date.

       (a) The Company and the Selling Stockholders understand that the Underwriters intend to make a public offering of the Shares as soon
after the effectiveness of this Agreement as in the judgment of the Representatives is advisable, and initially to offer the Shares on the terms set
forth in the Prospectus. The Company and the Selling Stockholders acknowledge and agree that the Underwriters may offer and sell Shares to
or through any affiliate of an Underwriter.

      (b) Payment for the Shares shall be made by wire transfer in immediately available funds to the respective accounts specified by the
Company and the Attorneys-in-Fact or any of them (with regard to payment to the Selling Stockholders), to the Representatives in the case of
the Underwritten Shares, at the offices of Latham & Watkins LLP, 140 Scott Drive, Menlo Park, California at 10:00 A.M., New York City
time, on         , 20 , or at such other time or place on the same or such other date, not later than the fifth (5 th ) business day thereafter, as the
Representatives, the Company and the Attorneys-in-Fact may agree upon in writing or, in the case of the Option Shares, on the date and at the
time and place specified by the Representatives in the written notice of the Underwriters’ election to purchase such Option Shares. The time
and date of such payment for the Underwritten Shares is referred to herein as the “Closing Date,” and the time and date for such payment for
the Option Shares, if other than the Closing Date, is herein referred to as the “Additional Closing Date.”

                                                                          -3-
      Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against
delivery to the Representatives for the respective accounts of the several Underwriters of the Shares to be purchased on such date in definitive
form registered in such names and in such denominations as the Representatives shall request in writing not later than two full business days
prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the sale of such
Shares duly paid by the Company and the Selling Stockholders, as applicable. Delivery of the Shares shall be made through the facilities of The
Depository Trust Company (“DTC”) unless the Representatives shall otherwise instruct. The certificates for the Shares will be made available
for inspection and packaging by the Representatives at the office of DTC or its designated custodian not later than 1:00 P.M., New York City
time, on the business day prior to the Closing Date or the Additional Closing Date, as the case may be.

       (c) Each of the Company and each Selling Stockholder acknowledges and agrees that the Underwriters are acting solely in the capacity of
an arm’s length contractual counterparty to the Company and the Selling Stockholders with respect to the offering of Shares contemplated
hereby (including in connection with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an agent of, the
Company, the Selling Stockholders or any other person. Additionally, none of the Representatives nor any other Underwriter is advising the
Company, the Selling Stockholders or any other person as to any legal, tax, investment, accounting or regulatory matters in any jurisdiction.
The Company and the Selling Stockholders shall consult with their own advisors concerning such matters and shall be responsible for making
its own independent investigation and appraisal of the transactions contemplated hereby, and the Underwriters shall have no responsibility or
liability to the Company or the Selling Stockholders with respect thereto. Any review by the Underwriters of the Company, the transactions
contemplated hereby or other matters relating to such transactions will be performed solely for the benefit of the Underwriters and shall not be
on behalf of the Company or the Selling Stockholders.

     3. Representations and Warranties of the Company . The Company represents and warrants to each Underwriter and the Selling
Stockholders that:

      (a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary Prospectus has been issued by the
Commission, and each Preliminary Prospectus included in the Pricing Disclosure Package, at the time of filing thereof, complied in all material
respects with the Securities Act, and no Preliminary Prospectus, at the time of filing thereof, contained any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in
reliance upon and in conformity with information relating to (i) any Underwriter furnished to the Company in writing by such Underwriter
through the Representatives expressly for use in any Preliminary Prospectus, it being understood and agreed that the only such information
furnished by any Underwriter consists of the information described as such in Section 9(c) hereof or (ii) any Selling Stockholder furnished to
the Company in writing by such Selling Stockholder expressly for use in such Pricing Disclosure Package, it being understood and agreed that
the only such

                                                                       -4-
information furnished by such Selling Stockholder consists of (A) the legal name, address and the number of shares of Common Stock owned
by such Selling Stockholder before and after the offering and (B) the other information with respect to such Selling Stockholder (excluding
percentages) which appear in the table (and corresponding footnotes) under the caption “Principal and selling stockholders” (with respect to
each Selling Stockholder, the “Selling Stockholder Information”).

      (b) Pricing Disclosure Package . The Pricing Disclosure Package as of the Applicable Time did not, and as of the Closing Date and as of
the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that
the Company makes no representation and warranty with respect to any statements or omissions made in reliance upon and in conformity with
information relating to (i) any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for
use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by any Underwriter consists of
the information described as such in Section 9(c) hereof or (ii) any Selling Stockholder furnished to the Company in writing by such Selling
Stockholder expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by
such Selling Stockholder consists of the Selling Stockholder’s Selling Stockholder Information.

       (c) Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, the Company
(including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, used, authorized, approved or
referred to and will not prepare, use, authorize, approve or refer to any “written communication” (as defined in Rule 405 under the Securities
Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each such communication by the Company or its agents and
representatives (other than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”) other than (i) any document
not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents
listed on Annex B hereto, each electronic road show and any other written communications approved in writing in advance by the
Representatives. Each such Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been or will be (within
the time period specified in Rule 433 under the Securities Act) filed in accordance with the Securities Act (to the extent required thereby) and,
when taken together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such Issuer Free Writing Prospectus, did
not, and as of the Closing Date and as of the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that the Company makes no representation and warranty with respect to any statements or omissions made in
each such Issuer Free Writing Prospectus or Preliminary Prospectus in reliance upon and in conformity with information relating to (i) any
Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in such Issuer Free
Writing Prospectus or Preliminary Prospectus, it being understood and agreed that the only such

                                                                       -5-
information furnished by any Underwriter consists of the information described as such in Section 9(c) hereof or (ii) any Selling Stockholder
furnished to the Company in writing by such Selling Stockholder expressly for use in such Pricing Disclosure Package, it being understood and
agreed that the only such information furnished by such Selling Stockholder consists of such Selling Stockholder’s Selling Stockholder
Information.

      (d) Registration Statement and Prospectus. The Registration Statement has been declared effective by the Commission. No order
suspending the effectiveness of the Registration Statement has been issued by the Commission, and no proceeding for that purpose or pursuant
to Section 8A of the Securities Act against the Company or related to the offering of the Shares has been initiated or, to the Company’s
knowledge, threatened by the Commission; as of the applicable effective date of the Registration Statement and any post-effective amendment
thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with the
Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or
supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company makes no representation and warranty with respect to
any statements or omissions made in reliance upon and in conformity with information relating to (i) any Underwriter furnished to the
Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement and the Prospectus and
any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of
the information described as such in Section 9(c) hereof or (ii) or any Selling Stockholder furnished to the Company in writing by such Selling
Stockholder expressly for use in such Pricing Disclosure Package, it being understood and agreed that the only such information furnished by
such Selling Stockholder consists of such Selling Stockholder’s Selling Stockholder Information.

       (e) Financial Statements. The financial statements (including the related notes thereto) of the Company and its consolidated subsidiaries
included in the Registration Statement, the Pricing Disclosure Package and the Prospectus comply in all material respects with the applicable
requirements of the Securities Act and present fairly the financial position of the Company and its consolidated subsidiaries as of the dates
indicated and the results of their operations and the changes in their cash flows for the periods specified; such financial statements have been
prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis throughout
the periods covered thereby, and any supporting schedules included in the Registration Statement present fairly in all material respects the
information required to be stated therein; and the other financial information included in the Registration Statement, the Pricing Disclosure
Package and the Prospectus has been derived from the accounting records of the Company and its consolidated subsidiaries and presents fairly
in all material respects the information shown thereby; and the pro forma financial information and the related notes thereto included in the
Registration Statement, the Pricing Disclosure Package and the Prospectus have been prepared in accordance

                                                                       -6-
with the applicable requirements of the Securities Act and the assumptions underlying such pro forma financial information are reasonable and
are set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

       (f) No Material Adverse Change. Since the date of the most recent financial statements of the Company included in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, (i) there has not been any change in the capital stock (other than the issuance of
shares of Common Stock upon exercise of stock options and warrants described as outstanding in, and the grant of options and awards under
existing equity incentive plans described in the Registration Statement, the Pricing Disclosure Package and the Prospectus), short-term debt
(other than trade payables incurred in the ordinary course of business consistent with past practices) or long-term debt of the Company or any
of its subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Company on any class of
capital stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business,
properties, management, financial position, stockholders’ equity or results of operations of the Company and its subsidiaries taken as a whole;
(ii) neither the Company nor any of its subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of
business) that is material to the Company and its subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that
is material to the Company and its subsidiaries taken as a whole; and (iii) neither the Company nor any of its subsidiaries has sustained any loss
or interference with its business that is material to the Company and its subsidiaries taken as a whole and that is either from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any
court or arbitrator or governmental or regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the Pricing
Disclosure Package and the Prospectus.

      (g) Organization and Good Standing. The Company and each of its subsidiaries have been duly organized and are validly existing and in
good standing under the laws of their respective jurisdictions of organization, are duly qualified to do business and are in good standing in each
jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification,
and have all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have
a material adverse effect on the business, properties, management, financial position, stockholders’ equity, results of operations of the
Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under this Agreement (a “Material
Adverse Effect”). The Company does not own or control, directly or indirectly, any corporation, association or other entity other than the
subsidiaries listed in Exhibit 21 to the Registration Statement. The Company has no significant subsidiaries.

      (h) Capitalization. On the date as of which information is given in the Registration Statement, the Pricing Disclosure Package and the
Prospectus, the Company has an authorized capitalization as set forth under the heading “Capitalization.” All the outstanding shares of capital
stock of the Company (including the Shares to be sold by the Selling Stockholders) have

                                                                        -7-
been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights;
except as described in or expressly contemplated by the Pricing Disclosure Package and the Prospectus, there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any of its subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any capital stock of the Company or any such subsidiary, any such
convertible or exchangeable securities or any such rights, warrants or options; and the capital stock of the Company conforms in all material
respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and all the
outstanding shares of capital stock or other equity interests of each subsidiary owned, directly or indirectly, by the Company have been duly
and validly authorized and issued, are fully paid and non-assessable (except, in the case of any foreign subsidiary, for directors’ qualifying
shares) and are owned directly or indirectly by the Company, free and clear of any lien, charge, encumbrance, security interest, restriction on
voting or transfer or any other claim of any third party.

      (i) Equity Awards. With respect to the stock options (the “Stock Options”) and other stock-based compensation (together with Stock
Options, the “Equity Awards”) granted pursuant to the stock-based compensation plans, arrangements and agreements of the Company and its
subsidiaries (the “Company Stock Plans”), (i) each Stock Option intended to qualify as an “incentive stock option” under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”) so qualifies, (ii) each grant of an Equity Award was duly authorized no later than the
date on which the grant of such Equity Award was by its terms to be effective (the “Grant Date”) by all necessary corporate action, including,
as applicable, approval by the board of directors of the Company (or a duly constituted and authorized committee thereof) and any required
stockholder approval by the necessary number of votes or written consents, and the award agreement governing such grant (if any) was duly
executed and delivered by each party thereto, (iii) each such grant was made in accordance with the terms of the Company Stock Plans, the
Securities Act, the Exchange Act and, in all material respects, with all other applicable federal and state laws and regulatory rules or
requirements, and (iv) each such grant was properly accounted for in accordance with GAAP in the financial statements (including the related
notes) of the Company. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company of
granting, Equity Awards prior to, or otherwise coordinating the grant of Equity Awards with, the release or other public announcement of
material information regarding the Company or its subsidiaries or their results of operations or prospects.

      (j) Due Authorization. The Company has full right, power and authority to execute and deliver this Agreement and the Power of Attorney
and Custody Agreement and to perform its obligations hereunder and thereby; and all action required to be taken for the due and proper
authorization, execution and delivery by it of this Agreement and the Power of Attorney and Custody Agreement and the consummation by it
of the transactions contemplated hereby and thereby has been duly and validly taken.

                                                                       -8-
     (k) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

      (l) The Shares. The Shares to be issued and sold by the Company hereunder have been duly authorized by the Company and, when issued
and delivered and paid for as provided herein, will be duly and validly issued, will be fully paid and nonassessable and will conform in all
material respects to the descriptions thereof in the Registration Statement, the Pricing Disclosure Package and the Prospectus; and the issuance
of the Shares is not subject to any preemptive or similar rights.

     (m) Description of the Underwriting Agreement. This Agreement conforms in all material respects to the description thereof contained in
the Registration Statement, the Pricing Disclosure Package and the Prospectus.

      (n) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or to which any of the property or assets of the Company or any of its subsidiaries is subject; or (iii) in violation of any applicable law or
statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of
clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

      (o) No Conflicts. The execution, delivery and performance by the Company of the Agreement, the issuance and sale of the Shares by the
Company, the issuance by the Company of the Shares to be issued upon the exercise of the Options (as defined below) and the consummation
by the Company of the transactions contemplated by the Agreement will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its subsidiaries is subject, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational documents of the Company or any of its subsidiaries or (iii) result in the violation of any applicable
law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of
clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material
Adverse Effect.

      (p) No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or
governmental or regulatory authority is required for the execution, delivery and performance by the Company of the Agreement, the issuance
and sale of the Shares and the consummation by the Company of the transactions

                                                                         -9-
contemplated by the Agreement, except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations,
orders and registrations or qualifications as may be required by the Financial Industry Regulatory Authority, Inc. (“FINRA”), as may be
required by the Nasdaq Market in connection with the listing of the Shares on such securities exchange and under applicable state and foreign
securities laws in connection with the purchase and distribution of the Shares by the Underwriters.

      (q) Legal Proceedings. Except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, there are no
legal, governmental or regulatory investigations, actions, suits or proceedings pending to which the Company or any of its subsidiaries is or, to
the knowledge of the Company, may be a party or to which any property of the Company or any of its subsidiaries is or, to the knowledge of
the Company, may be the subject that, individually or in the aggregate, if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect; to the knowledge of the Company, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others; and (i) there are no current or
pending legal, governmental or regulatory actions, suits or proceedings that are required under the Securities Act to be described in the
Registration Statement, the Pricing Disclosure Package or the Prospectus that are not so described in the Registration Statement, the Pricing
Disclosure Package or the Prospectus and (ii) there are no statutes, regulations or contracts or other documents that are required under the
Securities Act to be filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure Package or
the Prospectus that are not so filed as exhibits to the Registration Statement or described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus.

      (r) Independent Accountants . PricewaterhouseCoopers LLP, who have certified certain financial statements of the Company and its
subsidiaries is an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules
and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the
Securities Act.

      (s) Title to Real and Personal Property. The Company and its subsidiaries have good and marketable title in fee simple (in the case of
real property) to, or have valid rights to lease or otherwise use, all items of real and personal property and assets that are material to the
respective businesses of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances, claims and defects and
imperfections of title except those that (i) are described in the Registration Statement, the Pricing Disclosure Package or Prospectus, (ii) do not
materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries or (iii) could not
reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

      (t) Title to Intellectual Property. The Company and its subsidiaries own or possess or can obtain on commercially reasonable terms
adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights, domain names, mask works and registrations and applications for registration thereof and any other rights in
semiconductor technology, licenses and know-

                                                                       -10-
how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses as currently conducted and as proposed to be conducted as described in the Registration
Statement, the Pricing Disclosure Package, and the Prospectus, and, to the knowledge of the Company, the conduct of their respective
businesses will not conflict with, misappropriate or infringe in any material respect any such rights of others, except as described in the
Registration Statement, the Pricing Disclosure Package or the Prospectus. The Company and its subsidiaries have not received any written
notice of any claim of infringement, misappropriation or conflict with any such rights of others in connection with its patents, patent rights,
licenses, inventions, trademarks, service marks, trade names, copyrights and know-how, which could reasonably be expected to result in a
Material Adverse Effect.

      (u) No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company or any of its subsidiaries, on
the one hand, and the directors, officers, stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that is
required by the Securities Act to be described in the Registration Statement and the Prospectus and that is not so described in such documents
and in the Pricing Disclosure Package.

      (v) Investment Company Act. The Company is not and, after giving effect to the offering and sale of the Shares and the application of the
proceeds thereof received by the Company as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will
not be required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment
Company Act”).

      (w) Taxes. The Company and its subsidiaries have paid all federal, state, local and foreign taxes and filed all tax returns required to be
paid or filed through the date hereof, or have timely requested extensions thereof; and except as otherwise disclosed in the Registration
Statement, the Pricing Disclosure Package and the Prospectus, there is no tax deficiency that has been, or could reasonably be expected to be,
asserted against the Company or any of its subsidiaries or any of their respective properties or assets, except where the failure to pay or file or
where such deficiency would not, individually or in the aggregate, have a Material Adverse Effect.

      (x) Licenses and Permits. The Company and its subsidiaries possess all licenses (with the exception of licenses to Intellectual Property,
which is covered by Section 3(t)), certificates, permits and other authorizations issued by, and have made all declarations and filings with, the
appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their
respective properties or the conduct of their respective businesses as described in the Registration Statement, the Pricing Disclosure Package
and the Prospectus, except where the failure to possess or make the same would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; and except as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
neither the Company nor any of its subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or
authorization or has any

                                                                        -11-
reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course.

      (y) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is contemplated or threatened, and the Company is not aware of any existing or imminent labor disturbance by, or
dispute with, the employees of any of its or its subsidiaries’ principal suppliers, contractors or customers, except as would not, individually or
in the aggregate, have a Material Adverse Effect.

       (z) Compliance with and Liability under Environmental Laws. (i) The Company and its subsidiaries (a) are in compliance with any and
all applicable federal, state, local and foreign laws, rules, regulations, requirements, decisions, judgments, decrees, orders and the common law
relating to pollution or the protection of the environment, natural resources or human health or safety, including those relating to the generation,
storage, treatment, use, handling, transportation, Release or threat of Release of Hazardous Materials (collectively, “Environmental Laws”),
(b) have received and are in compliance with all permits, licenses, certificates or other authorizations or approvals required of them under
applicable Environmental Laws to conduct their respective businesses, (c) have not received written notice of any actual or potential liability
under or relating to, or actual or potential violation of, any Environmental Laws, including for the investigation or remediation of any Release
or threat of Release of Hazardous Materials, and the Company does not have knowledge of any event or condition that would reasonably be
expected to result in any such notice, (d) are not conducting or paying for, in whole or in part, any investigation, remediation or other corrective
action pursuant to any Environmental Law at any location, and (e) are not a party to any order, decree or agreement that imposes any obligation
or liability under any Environmental Law, and (ii) there are no costs or liabilities associated with Environmental Laws of or relating to the
Company or its subsidiaries, except in the case of each of (i) and (ii) above, for any such matter, as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; and (iii) except as described in the Registration Statement, the Pricing Disclosure
Package and the Prospectus, (a) there are no proceedings that are pending, or, to the Company’s knowledge, contemplated, against the
Company or any of its subsidiaries under any Environmental Laws in which a governmental entity is also a party, other than such proceedings
regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed, (b) the Company is not aware of any
facts or issues regarding compliance with Environmental Laws, or liabilities or other obligations under Environmental Laws, including the
Release or threat of Release of Hazardous Materials, that would reasonably be expected to have a Material Adverse Effect, and (c) the
Company does not anticipate material capital expenditures relating to any Environmental Laws. “Hazardous Materials” means any material,
chemical, substance, waste, pollutant, contaminant, compound, mixture, or constituent thereof, in any form or amount, including petroleum
(including crude oil or any fraction thereof) and petroleum products, natural gas liquids, asbestos and asbestos containing materials, naturally
occurring radioactive materials, brine, and drilling mud, regulated or which can give rise to liability under any Environmental Law. “Release”
means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping,

                                                                        -12-
disposing, depositing, dispersing, or migrating in, into or through the environment, or in, into, from or through any building or structure.

      (aa) Hazardous Materials . There has been no storage, generation, transportation, use, handling, treatment, Release or threat of Release of
Hazardous Materials by, relating to or caused by the Company or any of its subsidiaries (or, to the knowledge of the Company, any other entity
(including any predecessor) for whose acts or omissions the Company or any of its subsidiaries is or could reasonably be expected to be liable)
at, on, under or from any property or facility now or previously owned, operated or leased by the Company or any of its subsidiaries, or at, on,
under or from any other property or facility, in violation of any Environmental Laws or in a manner or amount or to a location that could
reasonably be expected to result in any liability under any Environmental Law, except for any violation or liability which would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

       (bb) Compliance with ERISA. (i) Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), for which the Company or any member of its “Controlled Group” (defined as any organization
which is a member of a controlled group of corporations within the meaning of Section 414 of the Code) would have any liability (each, a
“Plan”) has been maintained in compliance with its terms and the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to, ERISA and the Code, except for noncompliance that could not reasonably be expected to result in material liability
to the Company or its subsidiaries; (ii) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan excluding transactions effected pursuant to a statutory or administrative exemption that could reasonably be
expected to result in material liability to the Company or its subsidiaries; (iii) for each Plan that is subject to the funding rules of Section 412 of
the Code or Section 302 of ERISA, the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, as applicable, has
been satisfied (without taking into account any waiver thereof or extension of any amortization period) and is reasonably expected to be
satisfied in the future (without taking into account any waiver thereof or extension of any amortization period); (iv) the fair market value of the
assets of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such
Plan); (v) no “reportable event” (within the meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to occur that either
has resulted or could reasonably be expected to result in material liability to the Company or its subsidiaries; (vi) neither the Company nor any
member of the Controlled Group has incurred, nor reasonably expects to incur, any liability under Title IV of ERISA (other than contributions
to the Plan or premiums to the PBGC, in the ordinary course and without default) in respect of a Plan (including a “multiemployer plan”, within
the meaning of Section 4001(a)(3) of ERISA); and (vii) there is no pending audit or, to the Company’s knowledge, investigation by the Internal
Revenue Service, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other governmental agency or any foreign
regulatory agency with respect to any Plan that could reasonably be expected to result in material liability to the Company or its subsidiaries
and (viii) each Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination notification or
advisory letter (or opinion letter, if applicable), or has

                                                                         -13-
pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service, and the Company is
aware of any reason why any such determination letter should be revoked or not be reissued. None of the following events has occurred or is
reasonably likely to occur: (x) a material increase in the aggregate amount of contributions required to be made to all Plans by the Company in
the current fiscal year of the Company compared to the amount of such contributions made in the Company’s most recently completed fiscal
year; or (y) a material increase in the Company’s “accumulated post-retirement benefit obligations” (within the meaning of Statement of
Financial Accounting Standards 106) compared to the amount of such obligations in the Company’s most recently completed fiscal year.

      (cc) Disclosure Controls . The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as
defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act applicable to the Company and that
has been designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and
procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow
timely decisions regarding required disclosure.

       (dd) Accounting Controls. The Company and its subsidiaries maintain systems of “internal control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that comply with the requirements of the Exchange Act applicable to the Company and have been
designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including, but not limited to, internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. Except as disclosed in the Registration Statement, the Pricing Disclosure Package and the Prospectus,
the Company is not aware of any material weaknesses in the Company’s internal controls. The Company’s auditors and the Audit Committee
of the Board of Directors of the Company have been advised of: (i) all significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which have adversely affected or are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information; and (ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls over financial reporting.

                                                                       -14-
      (ee) Insurance. The Company and its subsidiaries have insurance covering their respective properties, operations, personnel and
businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are prudent
and customary in the business in which they are engaged; and neither the Company nor any of its subsidiaries has (i) received written notice
from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to
continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.

      (ff) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any director, officer,
agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.

      (gg) Compliance with Money Laundering Laws . The operations of the Company and its subsidiaries are and have been conducted at all
times in compliance with all applicable financial recordkeeping and reporting requirements, including the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the money laundering statutes of all
jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.

      (hh) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer,
agent, employee or affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not, directly or indirectly, use the proceeds of
the offering of the Shares hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

      (ii) No Restrictions on Subsidiaries . Subject to any applicable laws and regulations of the jurisdiction of its incorporation, no subsidiary
of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from
paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company
any loans or advances to such

                                                                        -15-
subsidiary from the Company or from transferring any of such subsidiary’s properties or assets to the Company or any other subsidiary of the
Company.

     (jj) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any contract, agreement or understanding with any
person (other than this Agreement) that would give rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Shares.

      (kk) No Registration Rights . No person has the right to require the Company or any of its subsidiaries to register any securities for sale
under the Securities Act by reason of the filing of the Registration Statement with the Commission, the issuance and sale of the Shares by the
Company or, to the knowledge of the Company, the sale of the Shares to be sold by the Selling Stockholders hereunder, except as set forth in
that certain Amended and Restated Investors’ Rights Agreement dated February 3, 2010, as amended June 24, 2011, other than those that have
been exercised or waived.

     (ll) No Stabilization. The Company has not taken, directly or indirectly, any action designed to or that could reasonably be expected to
cause or result in any stabilization or manipulation of the price of the Shares.

      (mm) Margin Rules . The application of the proceeds received by the Company from the issuance, sale and delivery of the Shares as
described in the Registration Statement, the Pricing Disclosure Package and the Prospectus will not violate Regulation T, U or X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board of Governors.

      (nn) Forward-Looking Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act) contained in the Registration Statement, the Pricing Disclosure Package or the Prospectus has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good faith.

       (oo) Statistical and Market Data. Nothing has come to the attention of the Company that has caused the Company to believe that the
statistical and market-related data included in the Registration Statement, the Pricing Disclosure Package and the Prospectus is not based on or
derived from sources that are reliable and accurate in all material respects.

      (pp) The Options . The unissued Shares issuable upon the exercise of options (the “Options”) to be exercised by certain of the Selling
Stockholders (the “Optionholders”) have been duly authorized by the Company and validly and reserved for issuance, and at the time of
delivery to the Underwriters with respect to such Shares, such Shares will be issued and paid for and delivered in accordance with the
provisions of the Stock Option Agreements between the Company and such Selling Stockholders pursuant to which such Options were granted
(the “Option Agreements”) and will be duly and validly issued, fully paid and non-assessable and will conform to the description thereof in
Pricing Disclosure Package and the Prospectus.

                                                                      -16-
      (qq) The Option Agreements. The Options were duly authorized and validly issued pursuant to the Option Agreements and constitute
valid and binding obligations of the Company and the Optionholders are entitled to the benefits provided by the Option Agreements; the Option
Agreements were duly authorized, executed and delivered and constitute valid and legally binding agreements enforceable against the
Company in accordance with their terms except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors’ rights generally or by equitable principles relating to enforceability; and the Options and the Option Agreements conform to the
descriptions thereof in Pricing Disclosure Package and the Prospectus.

      (rr) Sarbanes-Oxley Act . There is and has been no failure on the part of the Company or, to the knowledge of the Company, any of the
Company’s directors or officers, in their capacities as such, to comply in any material respect with any applicable provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in connection therewith (the “Sarbanes-Oxley Act”), including
Section 402 related to loans.

      (ss) Status under the Securities Act . At the time of filing the Registration Statement and any post-effective amendment thereto, at the
earliest time thereafter that the Company or any offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the
Securities Act) of the Shares and at the date hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act. The Company has paid the registration fee for this offering due under Rule 457 of the Securities Act.

     (tt) Exchange Listing . The Shares are approved for listing on the Nasdaq Stock Market (“Nasdaq Market”).

     4. Representations and Warranties of the Selling Stockholders . Each of the Selling Stockholders severally represents and warrants to
each Underwriter and the Company that:

      (a) Required Consents; Authority . All consents, approvals, authorizations and orders necessary for the execution and delivery by such
Selling Stockholder of this Agreement and the Power of Attorney and Custody Agreement (the “Power of Attorney and Custody Agreement”)
hereinafter referred to, and for the sale and delivery of the Shares to be sold by such Selling Stockholder hereunder, have been obtained (other
than as may be required by the Securities Act, FINRA or the Nasdaq Market in connection with the listing of the Shares on such securities
exchange, and under applicable state and foreign securities laws in connection with the purchase and distribution of the Shares by the
Underwriters), and such Selling Stockholder has full right, power and authority to enter into this Agreement, the Power of Attorney and
Custody Agreement and to sell, assign, transfer and deliver the Shares to be sold by such Selling Stockholder hereunder; this Agreement, the
Power of Attorney and Custody Agreement have each been duly authorized, executed and delivered by such Selling Stockholder.

      (b) No Conflicts . The execution, delivery and performance by such Selling Stockholder of this Agreement, the Power of Attorney and
Custody Agreement, the sale of the Shares to be sold by such Selling Stockholder and the consummation by such Selling Stockholder of the
transactions contemplated herein or therein will not, except with respect to (i) and (iii) below, in cases which would not materially adversely
affect such Selling

                                                                       -17-
Stockholder’s ability to consummate the sale of the Shares, (i) conflict with or result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of such
Selling Stockholder pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to which any of the property or assets of such Selling Stockholder is
subject, (ii) where applicable, result in any violation of the provisions of the charter or by-laws or similar organizational documents of such
Selling Stockholder or (iii) result in the violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or
governmental or regulatory agency, provided that no representation in this subsection (b) is made with respect to the compliance by any party
with any applicable antifraud provisions of federal and state securities laws.

       (c) Title to Shares. Such Selling Stockholder has good and valid title to the Shares to be sold at the Closing Date by such Selling
Stockholder hereunder (other than the Shares to be issued upon exercise of Options), free and clear of all liens, encumbrances, equities or
adverse claims; such Selling Stockholder will have, immediately prior to the Closing Date, assuming due issuance of any Shares to be issued
upon exercise of Options, good and valid title to the Shares to be sold at the Closing Date by such Selling Stockholder, free and clear of all
liens, encumbrances, equities or adverse claims; and, upon delivery of the certificates representing such Shares and payment therefor pursuant
hereto, good and valid title to such Shares, free and clear of all liens, encumbrances, equities or adverse claims, will pass to the several
Underwriters.

     (d) No Stabilization. Such Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares.

       (e) Pricing Disclosure Package . The Pricing Disclosure Package, at the Applicable Time did not, and as of the Closing Date and as of
the Additional Closing Date, as the case may be, will not, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that
such Selling Stockholder’s representations under this Section 4(e) shall only apply to any untrue statement of a material fact or omission to
state a material fact made in reliance upon and in conformity with information relating to such Selling Stockholder furnished by or on behalf of
such Selling Stockholder in writing to the Company expressly for use in the Pricing Disclosure Package, it being understood and agreed that
the only such information furnished by or on behalf of such Selling Stockholder consists of the Selling Stockholder Information.

      (f) Issuer Free Writing Prospectus. Other than the Registration Statement, the Preliminary Prospectus and the Prospectus, such Selling
Stockholder (including its agents and representatives, other than the Underwriters in their capacity as such) has not prepared, used, authorized,
approved or referred to and will not prepare, use, authorize, approve or refer to any Issuer Free Writing Prospectus, other than (i) any document
not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii)

                                                                       -18-
the documents listed on Annex B hereto, each electronic road show and any other written communications approved in writing in advance by
the Company and the Representatives.

      (g) Registration Statement and Prospectus. As of the applicable effective date of the Registration Statement and any post-effective
amendment thereto, the Registration Statement and any such post-effective amendment complied and will comply in all material respects with
the Securities Act, and did not and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading; and as of the date of the Prospectus and any amendment or
supplement thereto and as of the Closing Date and as of the Additional Closing Date, as the case may be, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading; provided that such Selling Stockholder’s representations
under this Section 4(g) shall only apply to any untrue statement of a material fact or omission to state a material fact made in reliance upon and
in conformity with information relating to such Selling Stockholder furnished by or on behalf of such Selling Stockholder in writing to the
Company expressly for use in the Registration Statement, the Pricing Disclosure Package or the Prospectus and any amendment or supplement
thereto, it being understood and agreed that the only such information furnished by or on behalf of such Selling Stockholder consists of the
Selling Stockholder Information.

      (h) Material Information . As of the date hereof, as of the Closing Date and as of the Additional Closing Date, as the case may be, that the
sale of the Shares by such Selling Stockholder is not and will not be prompted by any material information concerning the Company which is
not set forth in the Registration Statement, the Pricing Disclosure Package or the Prospectus.

      Each of the Selling Stockholders represents and warrants that certificates in negotiable form representing all of the Shares to be sold by
such Selling Stockholders hereunder other than any such Shares to be issued upon the exercise of Options, have been, and each of the Selling
Stockholders who is selling Shares upon the exercise of Options represents and warrants that duly completed and executed irrevocable Option
exercise notices, in the forms specified by the relevant Option Agreement, with respect to all of the Shares to be sold by such Selling
Stockholders hereunder have been, placed in custody under a Power of Attorney and Custody Agreement relating to such Shares, in the form
heretofore furnished to you, duly executed and delivered by such Selling Stockholder to Computershare Inc., as custodian (the “Custodian”),
and that such Selling Stockholder has duly executed and delivered Powers of Attorney, in the form heretofore furnished to you, appointing the
person or persons indicated in Schedule II hereto, and each of them, as such Selling Stockholder’s Attorneys-in-fact (the “Attorneys-in-Fact” or
any one of them the “Attorney-in Fact”) with authority to execute and deliver this Agreement on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the Selling Stockholders as provided herein, to authorize the delivery of the
Shares to be sold by such Selling Stockholder hereunder, to authorize (if applicable) the exercise of the Options to be exercised with respect to
the Shares to be sold by such Selling Stockholder hereunder and otherwise to act on behalf of such Selling Stockholder in connection with the
transactions contemplated by this Agreement and the Power of Attorney and Custody Agreement.

                                                                       -19-
       Each of the Selling Stockholders specifically agrees that the Shares represented by the certificates or the irrevocable Option exercise
notice, in either case held in custody for such Selling Stockholder under the Power of Attorney and Custody Agreement, are subject to the
interests of the Underwriters hereunder, and that the arrangements made by such Selling Stockholder for such custody, and the appointment by
such Selling Stockholder of the Attorneys-in-Fact by the Power of Attorney, are to that extent irrevocable. Each of the Selling Stockholders
specifically agrees that the obligations of such Selling Stockholder hereunder shall not be terminated by operation of law, whether by the death
or incapacity of any individual Selling Stockholder, or, in the case of an estate or trust, by the death or incapacity of any executor or trustee or
the termination of such estate or trust, or in the case of a partnership, corporation or similar organization, by the dissolution of such partnership,
corporation or organization, or by the occurrence of any other event. If any individual Selling Stockholder or any such executor or trustee
should die or become incapacitated, or if any such estate or trust should be terminated, or if any such partnership, corporation or similar
organization should be dissolved, or if any other such event should occur, before the delivery of the Shares hereunder, certificates representing
such Shares shall be delivered by or on behalf of such Selling Stockholder in accordance with the terms and conditions of this Agreement and
the Power of Attorney and Custody Agreement, and actions taken by the Attorneys-in-Fact pursuant to the Powers of Attorney shall be as valid
as if such death, incapacity, termination, dissolution or other event had not occurred, regardless of whether or not the Custodian, the
Attorneys-in-Fact, or any of them, shall have received notice of such death, incapacity, termination, dissolution or other event.

      5. Further Agreements of the Company . The Company covenants and agrees with each Underwriter that:

      (a) Required Filings. The Company will file the final Prospectus with the Commission within the time periods specified by Rule 424(b)
and Rule 430A, 430B or 430C under the Securities Act, will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under
the Securities Act; and will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to the extent not previously delivered) to
the Underwriters in New York City prior to 10:00 A.M., New York City time, on the business day next succeeding the date of this Agreement
in such quantities as the Representatives may reasonably request.

      (b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives, four signed copies of the Registration
Statement as originally filed and each amendment thereto, in each case including all exhibits and consents filed therewith; and (ii) to each
Underwriter (A) a conformed copy of the Registration Statement as originally filed and each amendment thereto (without exhibits) and
(B) during the Prospectus Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and supplements
thereto and each Issuer Free Writing Prospectus) as the Representatives may reasonably request. As used herein, the term “Prospectus Delivery
Period” means such period of time after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters a
prospectus relating to the Shares is required by law to be delivered (or required to be delivered but for Rule 172 under the Securities Act) in
connection with sales of the Shares by any Underwriter or dealer.

                                                                         -20-
       (c) Amendments or Supplements, Issuer Free Writing Prospectuses. Before preparing, using, authorizing, approving, referring to or filing
any Issuer Free Writing Prospectus, and before filing any amendment or supplement to the Registration Statement or the Prospectus, the
Company will furnish to the Representatives and counsel for the Underwriters a copy of the proposed Issuer Free Writing Prospectus,
amendment or supplement for review and will not prepare, use, authorize, approve, refer to or file any such Issuer Free Writing Prospectus or
file any such proposed amendment or supplement to which the Representatives reasonably objects.

       (d) Notice to the Representatives. The Company will advise the Representatives promptly, and confirm such advice in writing, (i) when
the Registration Statement has become effective; (ii) when any amendment to the Registration Statement has been filed or becomes effective;
(iii) when any supplement to the Prospectus or any Issuer Free Writing Prospectus or any amendment to the Prospectus has been filed; (iv) of
any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or the
receipt of any comments from the Commission relating to the Registration Statement or any other request by the Commission for any
additional information; (v) of the issuance by the Commission of any order suspending the effectiveness of the Registration Statement or
preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the Prospectus or the initiation or
threatening of any proceeding for that purpose or pursuant to Section 8A of the Securities Act; (vi) of the occurrence of any event within the
Prospectus Delivery Period as a result of which the Prospectus, the Pricing Disclosure Package or any Issuer Free Writing Prospectus as then
amended or supplemented would include any untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing when the Prospectus, the Pricing Disclosure Package or any such Issuer Free
Writing Prospectus is delivered to a purchaser, not misleading; and (vii) of the receipt by the Company of any notice with respect to any
suspension of the qualification of the Shares for offer and sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and the Company will use its reasonable best efforts to prevent the issuance of any such order suspending the effectiveness of the
Registration Statement, preventing or suspending the use of any Preliminary Prospectus, any of the Pricing Disclosure Package or the
Prospectus or suspending any such qualification of the Shares and, if any such order is issued, will obtain as soon as possible the withdrawal
thereof.

      (e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall occur or condition shall exist as a result of
which the Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the circumstances existing when the Prospectus is delivered to a purchaser, not
misleading or (ii) it is necessary to amend or supplement the Prospectus to comply with applicable law, the Company will immediately notify
the Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the Commission and furnish to the Underwriters
and to such dealers as the Representatives may designate such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances existing when the Prospectus is
delivered to a purchaser, be misleading or so that the Prospectus will comply with applicable law and (2) if at any time prior to the Closing
Date (i)

                                                                       -21-
any event shall occur or condition shall exist as a result of which the Pricing Disclosure Package as then amended or supplemented would
include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light
of the circumstances existing when the Pricing Disclosure Package is delivered to a purchaser, not misleading or (ii) it is necessary to amend or
supplement the Pricing Disclosure Package to comply with applicable law, the Company will immediately notify the Underwriters thereof and
forthwith prepare and, subject to paragraph (c) above, file with the Commission (to the extent required) and furnish to the Underwriters and to
such dealers as the Representatives may designate, such amendments or supplements to the Pricing Disclosure Package as may be necessary so
that the statements in the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances existing when
the Pricing Disclosure Package is delivered to a purchaser, be misleading or so that the Pricing Disclosure Package will comply with applicable
law.

      (f) Blue Sky Compliance. The Company will qualify the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives shall reasonably request and will continue such qualifications in effect so long as required for distribution
of the Shares; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities
in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

      (g) Earning Statement. The Company will make generally available to its security holders and the Representatives as soon as practicable
an earning statement that satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated
thereunder covering a period of at least twelve months beginning with the first fiscal quarter of the Company occurring after the “effective
date” (as defined in Rule 158) of the Registration Statement, it being agreed that such obligation may be satisfied by filings made with the
Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”).

      (h) Clear Market. For a period of 180 days after the date of the Prospectus, the Company will not (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Securities Act relating to, any shares
of Stock or any securities convertible into or exercisable or exchangeable for Stock, or publicly disclose the intention to make any offer, sale,
pledge, disposition or filing, or (ii) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences
of ownership of the Stock or any such other securities, whether any such transaction described in clause (i) or (ii) above is to be settled by
delivery of Stock or such other securities, in cash or otherwise, without the prior written consent of the Representatives, other than (a) the
Shares to be sold hereunder, (b) the issuance of any shares of Stock of the Company upon the exercise of options or vesting of restricted stock
units granted by the Company under Company Stock Plans, provided that (x) such options or restricted stock units are identified in the
Registration Statement, the Pricing Disclosure Package and the Prospectus, (y) such options or restricted stock units were

                                                                        -22-
outstanding on the date hereof or are granted after the date hereof to persons who are service providers to the Company or its subsidiaries on
the date of such grant and are issued pursuant to the Company Stock Plans and (z) any person receiving an option grant or restricted stock unit
after the date hereof that is or will be, in whole or in part, exercisable or will vest during the restricted period and possible extension of such
period described below shall execute and deliver to the Representatives a lock-up agreement in the form of Exhibit A hereto for the remainder
of the 180 day restricted period and possible extension of such period described below, (c) the issuance of any shares of Stock of the Company
upon the exercise of warrants or the conversion of preferred stock of the Company outstanding on the date hereof provided that such warrant or
preferred stock is identified in the Registration Statement, the Pricing Disclosure Package and the Prospectus which shares shall remain subject
to lock-up agreements that otherwise govern such shares of Stock, (d) the issuance by the Company of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock in connection with the bona fide acquisition by the Company or any of its
subsidiaries of the securities, businesses, property or assets of another person or entity, or (e) the issuance by the Company of Common Stock
or any securities convertible into or exercisable or exchangeable for Common Stock in connection with bona fide joint ventures, commercial
relationships or other strategic transactions; provided that, in the case of clauses (d) and (e), the aggregate number of shares issued in all such
acquisitions and transactions does not exceed 10% of the outstanding Common Stock immediately following the completion of the offering
contemplated by this Agreement; provided further that, prior to any issuance of any securities pursuant to clauses (d) and (e), the Company
shall cause each recipient of the Common Stock or such other securities to execute and deliver to the Representatives a lock-up agreement in
the form of Exhibit A hereto for the remainder of the 180 day restricted period and possible extension of such period described below in this
paragraph. Notwithstanding the foregoing, if (1) during the last 17 days of the 180-day restricted period, the Company issues an earnings
release or material news or a material event relating to the Company occurs; or (2) prior to the expiration of the 180-day restricted period, the
Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period or provides
notification to the Representatives of any earnings release, or material news or a material event that may give rise to an extension of the
180-day period, the restrictions imposed by this Agreement shall continue to apply until the expiration of the 18-day period beginning on the
issuance of the earnings release or the occurrence of the material news or material event.

      If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in Section 6(a) or a lock-up letter
described in Section 8(m) hereof for an officer or director of the Company and provide the Company with notice of the impending release or
waiver at least three (3) business days before the effective date of the release or waiver, the Company agrees to announce the impending release
or waiver by a press release substantially in the form of Exhibit C hereto through a major news service at least two (2) business days before the
effective date of the release or waiver.

      (i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Shares as described in the Registration Statement, the
Pricing Disclosure Package and the Prospectus under the heading “Use of proceeds”.

                                                                       -23-
     (j) No Stabilization. The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to
cause or result in any stabilization or manipulation of the price of the Stock.

    (k) Exchange Listing. The Company will use its reasonable best efforts to list, subject to notice of issuance, the Shares on the Nasdaq
Market.

      (l) Reports. Until the earlier of (i) the date the Shares are no longer outstanding and (ii) the third anniversary of the date hereof, the
Company will furnish to the Representatives, as soon as they are available, copies of all reports or other communications (financial or other)
furnished to holders of the Shares, and copies of any reports and financial statements furnished to or filed with the Commission or any national
securities exchange or automatic quotation system; provided the Company will be deemed to have furnished such reports and financial
statements to the Representatives to the extent they are filed on EDGAR.

     (m) Record Retention . The Company will, pursuant to reasonable procedures developed in good faith, retain copies of each Issuer Free
Writing Prospectus that is not filed with the Commission in accordance with Rule 433 under the Securities Act.

     (n) Filings. The Company will file with the Commission such reports as may be required by Rule 463 under the Securities Act.

     6. Further Agreements of the Selling Stockholders . Each of the Selling Stockholders covenants and agrees with each Underwriter that:

     (a) Clear Market . Such Selling Stockholder has delivered a lock-up agreement substantially in the form of Exhibit A.

      (b) Tax Form. Such Selling Stockholder will deliver to the Representatives prior to or at the Closing Date a properly completed and
executed United States Treasury Department Form W-9 (or other applicable form or statement specified by the Treasury Department
regulations in lieu thereof) in order to facilitate the Underwriters’ documentation of their compliance with the reporting and withholding
provisions of the Tax Equity and Fiscal Responsibility Act of 1982 with respect to the transactions herein contemplated.

     7. Certain Agreements of the Underwriters . Each Underwriter hereby represents and agrees that:

      (a) It has not used, authorized use of, referred to or participated in the planning for use of, and will not use, authorize use of, refer to or
participate in the planning for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which term includes use of
any written information furnished to the Commission by the Company and not incorporated by reference into the Registration Statement and
any press release issued by the Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined in Rule
433(h)(2) under the Securities Act) that was not included (including through incorporation by reference) in the Preliminary Prospectus or a
previously filed Issuer Free Writing Prospectus, (ii) any Issuer Free Writing Prospectus listed on Annex B or prepared

                                                                        -24-
pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), or (iii) any free writing prospectus prepared by such
underwriter and approved by the Company in advance in writing (each such free writing prospectus referred to in clauses (i) or (iii), an
“Underwriter Free Writing Prospectus”).

      (b) It has not and will not, without the prior written consent of the Company, use any free writing prospectus that contains the final terms
of the Shares unless such terms have previously been included in a free writing prospectus filed with the Commission; provided that
Underwriters may use a term sheet substantially in the form of Annex C hereto without the consent of the Company; provided further that any
Underwriter using such term sheet shall notify the Company, and provide a copy of such term sheet to the Company, prior to, or substantially
concurrently with, the first use of such term sheet.

      (c) It is not subject to any pending proceeding under Section 8A of the Securities Act with respect to the offering (and will promptly
notify the Company and the Selling Stockholders if any such proceeding against it is initiated during the Prospectus Delivery Period).

      8. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to purchase the Underwritten Shares on the Closing Date
or the Option Shares on the Additional Closing Date, as the case may be, as provided herein is subject to the performance by the Company and
each of the Selling Stockholders of their respective covenants and other obligations hereunder and to the following additional conditions:

      (a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the Registration Statement shall be in effect, and
no proceeding for such purpose or pursuant to Section 8A under the Securities Act shall be pending before or threatened by the Commission;
the Prospectus and each Issuer Free Writing Prospectus shall have been timely filed with the Commission under the Securities Act (in the case
of an Issuer Free Writing Prospectus, to the extent required by Rule 433 under the Securities Act) and in accordance with Section 5(a) hereof;
and all requests by the Commission for additional information shall have been complied with to the reasonable satisfaction of the
Representatives.

      (b) Representations and Warranties. The respective representations and warranties of the Company and the Selling Stockholders
contained herein shall be true and correct on the date hereof and on and as of the Closing Date or the Additional Closing Date, as the case may
be; and the statements of the Company and its officers and of each of the Selling Stockholders and their officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be.

       (c) No Downgrade. Subsequent to the earlier of (A) the Applicable Time and (B) the execution and delivery of this Agreement, if there
are any debt securities or preferred stock of or guaranteed by the Company or any of its subsidiaries that are rated by a “nationally recognized
statistical rating organization”, as such term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act, (i) no
downgrading shall have occurred in the rating accorded any such debt securities or preferred stock and (ii) no such organization shall have
publicly announced that it has under surveillance or review, or has changed its outlook with

                                                                       -25-
respect to, its rating of any such debt securities or preferred stock (other than an announcement with positive implications of a possible
upgrading).

      (d) No Material Adverse Change. No material adverse change, or any development involving a prospective material adverse change, in or
affecting the business, properties, management, financial position, stockholders’ equity or results of operations or prospects of the Company
and its subsidiaries taken as a whole, shall have occurred or shall exist, which event or condition is not described in the Pricing Disclosure
Package (excluding any amendment or supplement thereto) and the Prospectus (excluding any amendment or supplement thereto) and the
effect of which in the judgment of the Representatives makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the
Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated by this
Agreement, the Pricing Disclosure Package and the Prospectus.

      (e) Officer’s Certificate. The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the
case may be, (x) a certificate of the chief financial officer or chief accounting officer of the Company and one additional senior executive
officer of the Company who is satisfactory to the Representatives (i) confirming that such officers have carefully reviewed the Registration
Statement, the Pricing Disclosure Package and the Prospectus and, to the knowledge of such officers, the representations of the Company set
forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming that the other representations and warranties of the Company in this
Agreement are true and correct and that the Company has complied with all agreements and satisfied all conditions on its part to be performed
or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be, and (iii) to the effect set forth in
paragraphs (a), (c) and (d) above and (y) a certificate of each of the Selling Stockholders, in form and substance reasonably satisfactory to the
Representatives, (A) confirming that the representations of such Selling Stockholder set forth in Sections 4(e), 4(f) and 4(g) hereof are true and
correct and (B) confirming that the other representations and warranties of such Selling Stockholder in this Agreement are true and correct and
that such Selling Stockholder has complied with all agreements and satisfied all conditions on their part to be performed or satisfied hereunder
at or prior to such Closing Date.

       (f) Comfort Letters. On the date of this Agreement and on the Closing Date or the Additional Closing Date, as the case may be,
PricewaterhouseCoopers LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the respective dates of
delivery thereof and addressed to the Underwriters, in form and substance reasonably satisfactory to the Representatives, containing statements
and information of the type customarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and
certain financial information contained in the Registration Statement, the Pricing Disclosure Package and the Prospectus; provided, that the
letter delivered on the Closing Date or the Additional Closing Date, as the case may be, shall use a “cut-off” date no more than three
(3) business days prior to such Closing Date or such Additional Closing Date, as the case may be.

     (g) Opinion and 10b-5 Statement of Counsel for the Company. Wilson Sonsini Goodrich & Rosati Professional Corporation, counsel for
the Company, shall have furnished to the Representatives, at the request of the Company, their written opinion and 10b-5 statement,

                                                                       -26-
dated the Closing Date or the Additional Closing Date, as the case may be, and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in Annex A-1 hereto.

      (h) Opinion and 10b-5 Statement of Counsel for the Selling Stockholders. Counsels for the Selling Stockholders, shall have furnished to
the Representatives, at the request of the Selling Stockholders, their written opinion and 10b-5 statement, dated the Closing Date and addressed
to the Underwriters, in form and substance reasonably satisfactory to the Representatives, to the effect set forth in Annex A-2 hereto.

      (i) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representatives shall have received on and as of the Closing Date
or the Additional Closing Date, as the case may be, an opinion and 10b-5 statement of Latham & Watkins LLP, counsel for the Underwriters,
with respect to such matters as the Representatives may reasonably request, and such counsel shall have received such documents and
information as they may reasonably request to enable them to pass upon such matters.

     (j) No Legal Impediment to Issuance and/or Sale. No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of the Closing Date or the
Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares by the Company or the sale of the Shares by the Selling
Stockholders; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of the Closing Date or the
Additional Closing Date, as the case may be, prevent the issuance or sale of the Shares by the Company or the sale of the Shares by the Selling
Stockholders.

     (k) Good Standing . The Representatives shall have received on and as of the Closing Date or the Additional Closing Date, as the case
may be, satisfactory evidence of the good standing of the Company and its subsidiaries in their respective jurisdictions of organization and their
good standing as foreign entities in such other jurisdictions as the Representatives may reasonably request, in each case in writing or any
standard form of telecommunication from the appropriate governmental authorities of such jurisdictions.

     (l) Exchange Listing. The Shares to be delivered on the Closing Date or Additional Closing Date, as the case may be, shall have been
approved for listing on the Nasdaq Market, subject to official notice of issuance.

      (m) Lock-up Agreements . The “lock-up” agreements, each substantially in the form of Exhibit A hereto, between you and certain
shareholders, officers and directors of the Company relating to sales and certain other dispositions of shares of Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or Additional Closing Date, as the case may
be.

      (n) Additional Documents. On or prior to the Closing Date or the Additional Closing Date, as the case may be, the Company and the
Selling Stockholders shall have furnished to the Representatives such further certificates and documents as the Representatives may reasonably
request.

                                                                        -27-
      All opinions, letters, certificates and evidence mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters.

     9. Indemnification and Contribution.

       (a) Indemnification of the Underwriters by the Company . The Company agrees to indemnify and hold harmless each Underwriter, its
affiliates, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation,
reasonable legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and
expenses are incurred), joint or several, that arise out of, or are based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or caused by any omission or alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, not misleading, (ii) or any untrue statement or alleged untrue statement of a
material fact contained in the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus, any “issuer
information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any Pricing Disclosure Package (including any
Pricing Disclosure Package that has subsequently been amended), or caused by any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case
except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with any information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described as such in subsection (c) below.

       (b) Indemnification of the Underwriters by the Selling Stockholders . Each of the Selling Stockholders, severally in proportion to the
number of Shares to be sold by such Selling Stockholder hereunder and not jointly, agrees to indemnify and hold harmless each Underwriter,
its affiliates, directors and officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, provided that each Selling
Stockholder’s agreement to indemnify and hold harmless hereunder shall only apply insofar as such losses, claims, damages or liabilities arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity
with any information furnished in writing by or on behalf of such Selling Stockholder expressly for use in the Registration Statement, the
Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Pricing Disclosure Package, it being
understood and agreed that the only such information furnished by or on behalf of such Selling Stockholder consists of such Selling
Stockholder’s Selling Stockholder Information. No Selling Stockholder shall be liable under the indemnity agreement contained in this
paragraph in excess of an amount equal to the aggregate net proceeds (after deducting underwriting commissions and discounts but before

                                                                       -28-
deducting expenses) applicable to the Shares sold by such Selling Stockholder pursuant to this Agreement.

       (c) Indemnification of the Company and the Selling Stockholders. Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act and each of the Selling Stockholders to the
same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out
of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with
any information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly
for use in the Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free Writing Prospectus or any
Pricing Disclosure Package, it being understood and agreed upon that the only such information furnished by any Underwriter consists of the
following information in the Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the
fourth paragraph under the caption “Underwriting” and the information regarding market-making contained in the twelfth paragraph under the
caption “Underwriting”.

       (d) Notice and Procedures. If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand
shall be brought or asserted against any person in respect of which indemnification may be sought pursuant to the preceding paragraphs of this
Section 0, such person (the “Indemnified Person”) shall promptly notify the person against whom such indemnification may be sought (the
“Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may
have under the preceding paragraphs of this Section 0 except to the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have to an Indemnified Person otherwise than under the preceding paragraphs of this Section 0. If any such proceeding
shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person
shall have the right to participate therein, and if it so elects, to assume the defense thereof (jointly with any other electing Indemnifying Person)
with counsel reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the Indemnified Person, be counsel to the
Indemnifying Person) and shall pay the reasonable fees and expenses of such counsel related to such proceeding, as incurred. In any such
proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary;
(ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual
or potential differing interest between them. It is understood and

                                                                        -29-
agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such
reasonable fees and expenses shall be paid or reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be designated in writing by J.P. Morgan Securities LLC, any such
separate firm for the Company, its directors, its officers who signed the Registration Statement and any control persons of the Company shall
be designated in writing by the Company and any such separate firm for the Selling Stockholders shall be designated in writing by the
Attorneys-in-Fact or any one of them. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify
each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for
reasonable fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by the Indemnifying Person
of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have
been sought hereunder by such Indemnified Person, unless such settlement (x) includes an unconditional release of such Indemnified Person, in
form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such
proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.

      (e) Contribution. If the indemnification provided for in paragraphs (a), (b) and (c) above is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in
lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and
the Selling Stockholders, on the one hand, and the Underwriters on the other, from the offering of the Shares or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) but also the relative fault of the Company and the Selling Stockholders, on the one hand, and the Underwriters on the other, in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling Stockholders, on the one hand, and the Underwriters on the
other, shall be deemed to be in the same respective proportions as the net proceeds (after deducting underwriting commissions and discounts
but before deducting expenses) received by the Company and the Selling Stockholders from the sale of the Shares and the total underwriting
discounts and commissions received by the Underwriters in connection therewith, in each case as set forth in the table on the cover of the

                                                                       -30-
Prospectus, bear to the aggregate offering price of the Shares. The relative fault of the Company and the Selling Stockholders, on the one hand,
and the Underwriters, on the other, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Selling
Stockholders or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. No Selling Stockholder shall be required under the contribution agreement contained in this paragraph to
contribute any amount in excess of the aggregate net proceeds (after deducting underwriting commissions and discounts but before deducting
expenses) applicable to the Shares sold by such Selling Stockholder pursuant to this Agreement.

       (f) Limitation on Liability. The Company, the Selling Stockholders and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 0 were determined by pro rata allocation (even if the Selling Stockholders or the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred
to in paragraph (e) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities
referred to in paragraph (e) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by
such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 0, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received
by such Underwriter with respect to the offering of the Shares exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 0 are several in proportion to
their respective purchase obligations hereunder and not joint. For the avoidance of doubt, the aggregate liability of each Selling Stockholder
under such Selling Stockholder’s representations and warranties contained in Section 4 hereof, under the certificate delivered pursuant to
Section 8(d) and under the indemnity and contribution agreements contained in this Section 9 shall not exceed the aggregate net proceeds (after
deducting underwriting commissions and discounts but before deducting expenses) applicable to the Shares sold by such Selling Stockholder
pursuant to this Agreement.

     (g) Non-Exclusive Remedies. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any Indemnified Person at law or in equity.

     10. Effectiveness of Agreement . This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

      11. Termination . This Agreement may be terminated in the absolute discretion of the Representatives, by notice to the Company and the
Selling Stockholders, if after the execution and delivery of this Agreement and prior to the Closing Date or, in the case of the Option Shares,
prior to the Additional Closing Date (i) trading generally shall have been suspended or materially limited on or by any of the New York Stock
Exchange, the American Stock

                                                                       -31-
Exchange, the Nasdaq Market, the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade;
(ii) trading of any securities issued or guaranteed by the Company shall have been suspended on any exchange or in any over-the-counter
market; (iii) a general moratorium on commercial banking activities shall have been declared by federal or New York State authorities; or
(iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis, either within
or outside the United States, that, in the judgment of the Representatives, is material and adverse and makes it impracticable or inadvisable to
proceed with the offering, sale or delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Prospectus.

     12. Defaulting Underwriter .

      (a) If, on the Closing Date or the Additional Closing Date, as the case may be, any Underwriter defaults on its obligation to purchase the
Shares that it has agreed to purchase hereunder on such date, the non-defaulting Underwriters may in their discretion arrange for the purchase
of such Shares by other persons satisfactory to the Company and the Selling Stockholders on the terms contained in this Agreement. If, within
36 hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for the purchase of such Shares, then the
Company and the Selling Stockholders shall be entitled to a further period of 36 hours within which to procure other persons satisfactory to the
non-defaulting Underwriters to purchase such Shares on such terms. If other persons become obligated or agree to purchase the Shares of a
defaulting Underwriter, either the non-defaulting Underwriters or the Company and the Selling Stockholders may postpone the Closing Date or
the Additional Closing Date, as the case may be, for up to five (5) full business days in order to effect any changes that in the opinion of
counsel for the Company, counsel for the Selling Stockholders or counsel for the Underwriters may be necessary in the Registration Statement
and the Prospectus or in any other document or arrangement, and the Company agrees to promptly prepare any amendment or supplement to
the Registration Statement and the Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter” includes, for
all purposes of this Agreement unless the context otherwise requires, any person not listed in Schedule 1 hereto that, pursuant to this
Section 12, purchases Shares that a defaulting Underwriter agreed but failed to purchase.

       (b) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters, the Company and the Selling Stockholders as provided in paragraph (a) above, the aggregate number of Shares
that remain unpurchased on the Closing Date or the Additional Closing Date, as the case may be, does not exceed one-eleventh of the aggregate
number of Shares to be purchased on such date, then the Company and the Selling Stockholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares that such Underwriter agreed to purchase hereunder on such date plus such
Underwriter’s pro rata share (based on the number of Shares that such Underwriter agreed to purchase on such date) of the Shares of such
defaulting Underwriter or Underwriters for which such arrangements have not been made.

     (c) If, after giving effect to any arrangements for the purchase of the Shares of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriters, the Company and

                                                                        -32-
the Selling Stockholders as provided in paragraph (a) above, the aggregate number of Shares that remain unpurchased on the Closing Date or
the Additional Closing Date, as the case may be, exceeds one-eleventh of the aggregate amount of Shares to be purchased on such date, or if
the Company and the Selling Stockholders shall not exercise the right described in paragraph (b) above, then this Agreement or, with respect to
any Additional Closing Date, the obligation of the Underwriters to purchase Shares on the Additional Closing Date shall terminate without
liability on the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this Section 12 shall be without liability
on the part of the Company, except that the Company and the Selling Stockholders will continue to be liable for the payment of expenses as set
forth in Section 13 hereof and except that the provisions of Section 9 hereof shall not terminate and shall remain in effect.

      (d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have to the Company, the Selling Stockholders
or any non-defaulting Underwriter for damages caused by its default.

      13. Payment of Expenses .

       (a) Whether or not the transactions contemplated by this Agreement are consummated or this Agreement is terminated, each of the
Company and the Selling Stockholders will pay or cause to be paid all costs and expenses incident to the performance of their respective
obligations hereunder, including without limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery of the
Shares and any taxes payable in that connection; (ii) the costs incident to the preparation, printing and filing under the Securities Act of the
Registration Statement, the Preliminary Prospectus, any Issuer Free Writing Prospectus, any Pricing Disclosure Package and the Prospectus
(including all exhibits, amendments and supplements thereto) including one or more versions of the Preliminary Prospectus and Prospectus for
distribution in Canada, often in the form of a “Canadian wrapper” (including fees and expenses of Canadian counsel to the Underwriters), and
the distribution thereof; (iii) the costs of reproducing and distributing the Agreement; (iv) the fees and expenses of the Company’s counsel and
independent accountants; (v) the fees and expenses incurred in connection with the registration or qualification and determination of eligibility
for investment of the Shares under the state or foreign securities or blue sky laws of such jurisdictions as the Representatives may designate and
the preparation, printing and distribution of a Blue Sky Memorandum (including the reasonable, related fees and expenses of counsel for the
Underwriters); (vi) the cost of preparing stock certificates; (vii) the costs and charges of any transfer agent and any registrar; (viii) all expenses
and application fees incurred in connection with any filing with, and clearance of the offering by, FINRA; (ix) all expenses incurred by the
Company in connection with any “road show” presentation to potential investors (it being agreed that the Company and the Underwriters shall
each bear half of the costs, respectively, associated with any aircraft chartered in connection with such presentation); and (x) all expenses and
application fees related to the listing of the Shares on the Nasdaq Market. It is understood, however, that except as provided in this Section 13
or Section 9 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, stock transfer taxes on the
resale of any of the Shares owned by them, any advertising expenses connected with any offers they may make and all travel, lodging and other
expenses of the Underwriters or any of their employees incurred by them in connection with the

                                                                        -33-
road show (it being agreed that the Company and the Underwriters shall each bear half of the costs, respectively, associated with any aircraft
chartered in connection with the road show). It is further understood that the Selling Stockholders will pay all of their own costs and expenses,
including the fees of their respective counsel and stock transfer taxes on the sale of their shares, except as provided in any separate agreement
relating to the allocation of payment of expenses between the Company, on the one hand, and the Selling Stockholders, on the other hand.

       (b) If (i) this Agreement is terminated pursuant to clause (ii) of Section 11, (ii) the Company or the Selling Stockholders for any reason
fail to tender the Shares for delivery to the Underwriters (other than pursuant to clauses (i), (iii) and (iv) of Section 11 or Section 12) or (iii) the
Underwriters decline to purchase the Shares for any reason permitted under this Agreement (other than pursuant to clauses (i), (iii) and (iv) of
Section 11 or Section 12), the Company (and, if one or more Selling Stockholders fail to tender their Shares for delivery to the Underwriters
(other than pursuant to clauses (i), (iii) and (iv) of Section 11 or Section 12) or if this Agreement is terminated as a result of such Selling
Stockholder’s or Selling Stockholders’ failure to perform its or their obligations under Section 8 hereof, in each case without any fault on the
part of the Company, the Underwriters or the other Selling Stockholders, each of those Selling Stockholders agrees to reimburse the
Underwriters for all out-of-pocket costs and expenses (including the reasonable fees and expenses of their counsel) reasonably incurred by the
Underwriters in connection with this Agreement and the offering contemplated hereby; provided that, if a Selling Stockholder fails to tender its
Shares for delivery to the Underwriters (without any fault on the part of the Company, the Underwriters or the other Selling Stockholders), such
Selling Stockholder agrees to reimburse the Underwriters only for its pro rata portion of such out-of-pocket costs and expenses (including the
reasonable fees and expenses of their counsel) based upon the number of Shares agreed to be sold by such Selling Stockholder pursuant to this
Agreement relative to the total number of Shares agreed to be sold by the Selling Stockholders and the Company pursuant to this Agreement.

       14. Persons Entitled to Benefit of Agreement . This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective successors and the officers and directors and any controlling persons referred to in Section 0 hereof. Nothing in this Agreement
is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement or
any provision contained herein. No purchaser of Shares from any Underwriter shall be deemed to be a successor merely by reason of such
purchase.

     15. Survival . The respective indemnities, rights of contribution, representations, warranties and agreements of the Company, the Selling
Stockholders and the Underwriters contained in this Agreement or made by or on behalf of the Company, the Selling Stockholders or the
Underwriters pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Shares
and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the
Company, the Selling Stockholders or the Underwriters.

     16. Certain Defined Terms . For purposes of this Agreement, (a) except where otherwise expressly provided, the term “affiliate” has the
meaning set forth in Rule 405 under the Securities Act; (b) the term “business day” means any day other than a day on which banks

                                                                         -34-
are permitted or required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule 405 under the Securities
Act; and (d) the term “significant subsidiary” has the meaning set forth in Rule 1-02 of Regulation S-X under the Exchange Act.

     17. Miscellaneous .

    (a) Authority of the Representatives. Any action by the Underwriters hereunder may be taken by the Representatives on behalf of the
Underwriters, and any such action taken by the Representatives shall be binding upon the Underwriters.

       (b) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or
transmitted and confirmed by any standard form of telecommunication (including, but not limited to, facsimile and electronic mail). Notices to
the Underwriters shall be given to the Representatives c/o J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179
(fax: (212) 622-8358); Attention: Equity Syndicate Desk. Notices to the Company shall be given to it at Audience, Inc., 440 Clyde Avenue,
Mountain View, California 94043, (fax: (650) 254-2826); Attention: Peter Santos, CEO. Notices to the Selling Stockholders shall be given to
the Attorneys-in-Fact at          ,         ,      , (Fax:        ); Attention:        .

     (c) Governing Law. This Agreement and any claim, controversy or dispute arising under or related to this Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such state.

      (d) Counterparts. This Agreement may be signed in counterparts (which may include counterparts delivered by any standard form of
telecommunication), each of which shall be an original and all of which together shall constitute one and the same instrument.

      (e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure
therefrom, shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

     (f) Headings. The headings herein are included for convenience of reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.

                                                                      -35-
     If the foregoing is in accordance with your understanding, please indicate your acceptance of this Agreement by signing in the space
provided below.

                                                                                     Very truly yours,

                                                                                     AUDIENCE, INC.


                                                                                     By:
                                                                                                  Title:

                                                                                     [SELLING STOCKHOLDERS]


                                                                                     By:
                                                                                                  Name:
                                                                                                  Title:


                                                                                     By:
                                                                                                  Name:
                                                                                                  Title:

                                                                                     As Attorneys-in-Fact acting on behalf of each of the
                                                                                     Selling Stockholders named in Schedule 2 to this
                                                                                     Agreement.

Accepted:         , 201

For themselves and on behalf of the several
Underwriters listed in Schedule 1 hereto.

J.P. MORGAN SECURITIES LLC

By:
                    Authorized Signatory

CREDIT SUISSE SECURITIES (USA) LLC

By:
      Authorized Signatory

                                                                   Sch. 1-1
DEUTSCHE BANK SECURITIES INC.

By:
              Authorized Signatory

                                     -2-
                                                        Schedule 1

Underwriter                          Number of Shares
J.P. Morgan Securities LLC
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.




                                     Total

                                             Sch. 2-1
                                                             Schedule 2

                                          Number of
Selling Stockholders:                 Underwritten Shares:




                        Annex A-1-1
                                                                                                                                    Annex A-1

                               Form of Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation

      (1) Based solely on oral confirmation of such matters from a representative of the Staff of the SEC and information contained on the
SEC’s EDGAR website, the Registration Statement was declared effective under the Securities Act as of the date and time specified in such
opinion; each of the Preliminary Prospectus and the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b)
under the Securities Act specified in such opinion on the date specified therein; and, to such counsel’s knowledge, no order suspending the
effectiveness of the Registration Statement has been issued and no proceeding for that purpose or pursuant to Section 8A of the Securities Act
against the Company or in connection with the offering is pending or threatened by the Commission.

       (2) The Company has been duly incorporated, is validly existing and in good standing under the laws of the State of Delaware and has the
corporate power and authority to own its property and to conduct its business as described in the Registration Statement and the Prospectus.
The Company is duly qualified to transact business and is in good standing in the States of California and Colorado. To the knowledge of such
counsel, the Company does not own or control, directly or indirectly, any corporation, association or other entity other than the subsidiaries
listed in Exhibit 21 to the Registration Statement.

      (3) On the date as of which information is given in the Registration Statement, the Pricing Disclosure Package and the Prospectus, the
Company has an authorized capitalization as set forth in the Registration Statement, the Pricing Disclosure Package and the Prospectus under
the heading “Capitalization”. All the outstanding shares of capital stock of the Company (including the Shares to be sold by the Selling
Stockholders) have been duly and validly authorized and issued and are fully paid and non-assessable; and the capital stock of the Company
conforms in all material respects to the description thereof contained in the Registration Statement, the Pricing Disclosure Package and the
Prospectus have been as in the Registration Statement, the Pricing Disclosure Package and the Prospectus.

       (4) The Company has full right, power and authority to execute and deliver the Agreement and to perform its obligations thereunder; and
all action required to be taken for the due and proper authorization, execution and delivery by the Company of the Agreement and the
consummation by the Company of the transactions contemplated thereby or by the Pricing Disclosure Package and the Prospectus has been
duly and validly taken.

     (5) The Underwriting Agreement has been duly authorized, executed and delivered by the Company.

     (6) The Shares to be issued and sold by the Company hereunder have been duly authorized, and when delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable and the issuance of the
Shares is not subject to any preemptive rights pursuant to the Company’s Certificate of

                                                                 Annex A-2-1
Incorporation or Bylaws, pursuant to any agreement or instrument binding on the Company and filed as an exhibit to the Registration Statement
(collectively, the “Material Agreements”).

      (7) The execution, delivery and performance by the Company of the Agreement, the compliance by the Company with the terms thereof,
the issuance and sale of the Shares being delivered on the Closing Date or the Additional Closing Date, as the case may be and the
consummation of the transactions contemplated by the Agreement will not contravene (i) any Material Agreement, (ii) the charter or by-laws or
similar organizational documents of the Company or (iii) any law or statute known to such counsel to be customarily applicable to transactions
of this nature, or any judgment, order or regulation of any court or arbitrator or governmental or regulatory authority known to such counsel
except, in the case of clauses (i) and (iii) above, for such conflict, breach, violation or default that would not, individually or in the aggregate,
have a Material Adverse Effect.

      (8) No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory
authority known to such counsel to be customarily applicable to transactions of this nature is required for the execution, delivery and
performance by the Company of the Agreement, the compliance by the Company with the terms thereof, the issuance and sale of the Shares
being delivered by the Company on the Closing Date or the Additional Closing Date, as the case may be, and the consummation of the
transactions contemplated by the Agreement, except for the registration of the Shares under the Securities Act, registration of the Company’s
common stock under the Exchange Act, and such consents, approvals, authorizations, orders and registrations or qualifications as may be
required under applicable state securities laws, applicable FINRA rules and regulations in connection with the purchase and distribution of the
Shares by the Underwriters or following the closing by the terms of the Agreement.

      (9) The statements in the Preliminary Prospectus and Prospectus under the headings “Material U.S. federal income tax consequences for
non-U.S. holders”, “Description of capital stock” and “Underwriting”, and in the Registration Statement in Items 14 and 15, to the extent that
they constitute summaries of the terms of stock, matters of law or regulation or legal conclusions, fairly summarize the matters described
therein in all material respects.

      (10) After giving effect to the application of the proceeds received by the Company from the offering and sale of the Shares and the
application of the proceeds thereof as described in the Registration Statement, the Pricing Disclosure Package and the Prospectus, will not be
required to register as an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment
Company Act.

       Such counsel shall also state that (i) they have participated in conferences with representatives of the Company and with representatives
of its independent accountants and counsel at which conferences the contents of the Registration Statement, the Pricing Disclosure Package and
the Prospectus and any amendment and supplement thereto and related matters were discussed and, although such counsel assume no
responsibility for the accuracy, completeness or fairness of the Registration Statement, the Pricing Disclosure Package, the Prospectus and any
amendment or supplement thereto (except as expressly provided above), nothing has come to the attention of such counsel to cause such
counsel to believe that the
Registration Statement, at the time of its effective date (including the information, if any, deemed pursuant to Rule 430A, 430B or 430C to be
part of the Registration Statement at the time of effectiveness), contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein not misleading, that the Pricing Disclosure Package as of the
Applicable Time (which such counsel may assume to be the date of the Underwriting Agreement) contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made,
not misleading or that the Prospectus or any amendment or supplement thereto as of its date and the Closing Date contains any untrue statement
of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading (other than the financial statements and related schedules and the financial and statistical data derived from such
financial statements or schedules contained therein, as to which such counsel need express no belief), (ii) based on the foregoing, it confirms
that the Registration Statement, at the time it became effective, and the Prospectus, at the time it was transmitted for filing with the
Commission pursuant to Rule 424(b) of the Rules and Regulations (other than the financial statements and related schedules and the financial
and statistical data derived from such financial statements or schedules, as to which we express no confirmation), appeared on their face to be
appropriately responsive in all material respects to the requirements of the Securities Act and (iii) to the knowledge of such counsel (without
having conducted a docket search in any jurisdiction with respect to any legal or governmental proceedings that may be pending against the
Company or any of its officers or directors), there are no current or pending legal, governmental or regulatory actions, suits or proceedings that
are required under the Securities Act to be described in the Registration Statement or the Prospectus and that are not so described in the
Registration Statement, the Pricing Disclosure Package and the Prospectus.

      In rendering such opinion, such counsel may rely as to matters of fact on certificates of responsible officers of the Company and public
officials that are furnished to the Underwriters.

     The opinion of Wilson Sonsini Goodrich & Rosati Professional Corporation described above shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
                                                                                                                                         Annex A-2

                                                         Form of Opinion of Counsel For
                                                          The U.S. Selling Stockholders

     (1) The Underwriting Agreement has been duly authorized, executed and delivered by or on behalf of each of the Selling Stockholders.

     (2) The Power of Attorney and Custody Agreement of each Selling Stockholder has been duly authorized, executed and delivered by or
on behalf of each Selling Stockholder and constitute valid and binding agreements of each Selling Stockholder in accordance with their terms.

       (3) Upon (a) payment for the Shares to be sold by the Selling Stockholder to the Underwriters as provided in the Underwriting
Agreement, (b) the delivery of such Shares to Cede & Co. (“Cede”) or such other nominee as may be designated by The Depository Trust
Company (“DTC”), to hold securities on its behalf, duly endorsed to Cede or such other nominee or in blank by an effective endorsement,
(c) the registration of the security certificates representing such Shares in the name of Cede or such other nominee on the Company’s share
register and (d) the crediting of such Shares on the records of DTC to security accounts in the name of the Underwriters (assuming that neither
DTC nor the Underwriter has notice of any adverse claim (as such phrase is defined in Section 8-105 of the Uniform Commercial Code as in
effect in the State of New York (the “UCC”)) to such Shares or any security entitlement in respect thereof), (i) DTC shall be a “protected
purchaser” of such Shares within the meaning of Section 8-303 of the UCC, (ii) under Section 8-501 of the UCC, the Underwriters will acquire
a security entitlement in respect of such Shares and (iii) to the extent governed by Article 8 of the UCC, no action based on any “adverse
claim” (as defined in Section 8-102 of the UCC) to such Shares may be asserted against the Underwriters; it being understood that for purposes
of this opinion, such counsel may assume that when such payment, delivery and crediting occur, (x) such Shares will have been registered in
the name of Cede or such other nominee as may be designated by DTC, in each case on the Company’s share registry in accordance with its
certificate of incorporation, by laws and applicable law, (y) DTC will be registered as a “clearing corporation” within the meaning of
Section 8-102 of the UCC and (z) appropriate entries to the securities account or accounts in the name of the Underwriters on the records of
DTC will have been made pursuant to the UCC.

       (4) The sale of the Shares and the execution and delivery by the Selling Stockholder of, and the performance by the Selling Stockholder
of its obligations under, the Underwriting Agreement, and the consummation of the transactions contemplated therein or by the Pricing
Disclosure Package and the Prospectus, (i) have been duly authorized on the part of each of the Selling Stockholders, and (ii) will not conflict
with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument, known to such counsel and to which any Selling Stockholder is a party or by which any
Selling Stockholder is bound or to which any of the property or assets of any Selling Stockholder is subject, (iii) will not result in any violation
of the provisions of the charter or by-laws or similar organizational documents of any Selling

                                                                    Annex B-1
Stockholder, where applicable, or any applicable law or statute known to such counsel to be customarily applicable to transactions of this
nature or any order, rule or regulation of any court or governmental agency or body known to such counsel to have jurisdiction over such
Selling Stockholder or any of its properties and (iv) will not require any consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body known to such counsel to be customarily applicable to transactions of this nature for the
sale of the Shares or the consummation by the Selling Stockholders of the transactions contemplated by the Underwriting Agreement or by the
Pricing Disclosure Package and the Prospectus, except such consents, approvals, authorizations, registrations or qualifications as have been
obtained under the Securities Act and Exchange Act and as may be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters (as to which such counsel expresses no opinion).

      The opinion of counsel described above shall be rendered to the Underwriters at the request of the Selling Stockholders and shall so state
therein.
                                                                                                      Annex B

a. Pricing Disclosure Package
     [List of each Issuer Free Writing Prospectus to be included in the Pricing Disclosure Package]

[b. Pricing Information Provided Orally by Underwriters ]

                                                                 Annex C-1
                       Annex C

[Pricing Term Sheet]
                              Exhibit A

[FORM OF LOCK-UP AGREEMENT]
                                                                                                                                         Exhibit B

                                                          Form of Waiver of Lock-up

                                                    J.P. MORGAN SECURITIES LLC
                                                 CREDIT SUISSE SECURITIES (USA) LLC
                                                  DEUTSCHE BANK SECURITIES INC.

                                                                   Corporation
                                                        Public Offering of Common Stock

                                                                                                                                             , 20

[Name and Address of
Officer or Director
Requesting Waiver]

Dear Mr./Ms. [Name]:

            This letter is being delivered to you in connection with the offering by Audience, Inc. (the “Company”) of        shares of common
stock, $ par value (the “Common Stock”), of the Company and the lock-up letter dated             , 201 (the “Lock-up Letter”), executed by you
in connection with such offering, and your request for a [waiver] [release] dated         , 20 , with respect to       shares of Common Stock
(the “Shares”).

      J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank Securities Inc., by and on behalf of the
Representatives, hereby agree to [waive] [release] the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares,
effective , 201 ; provided , however , that such [waiver] [release] is conditioned on the Company announcing the impending [waiver] [release]
by press release through a major news service at least two business days before effectiveness of such [waiver] [release]. This letter will serve as
notice to the Company of the impending [waiver] [release].

     Except as expressly [waived] [released] hereby, the Lock-up Letter shall remain in full force and effect.

                                                                    Yours very truly,

                                             [Signature of J.P. Morgan Securities LLC Representative]

                                                                         2
              [Name of J.P. Morgan Securities LLC Representative]

              [Signature of Credit Suisse Securities (USA) LLC Representative]

              [Name of Credit Suisse Securities (USA) LLC Representative]

              [Signature of Deutsche Bank Securities Inc. Representative]

              [Name of J Deutsche Bank Securities Inc. Representative]

cc: Company

                             3
                                                                                                                                       Exhibit C

                                                           [Form of Press Release]

Audience, Inc.
[Date]

Audience, Inc. (the “Company”) announced today that J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC and Deutsche Bank
Securities Inc., lead book-running managers in the Company’s recent public sale of       shares of common stock, are [waiving] [releasing] a
lock-up restriction with respect to shares of the Company’s common stock held by [certain officers or directors] [an officer or director] of the
Company. The [waiver] [release] will take effect on ,       20 , and the shares may be sold on or after such date.

This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is
prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration
under the United States Securities Act of 1933, as amended.

                                                                        4
                                                                                                              Exhibit 10.14

                                                   AUDIENCE INC.
                               EXECUTIVE INCENTIVE COMPENSATION PLAN
                                               (Adopted March 30, 2012)
     1. Purposes of the Plan . The Plan is intended to increase shareholder value and the success of the Company by
motivating Employees to (a) perform to the best of their abilities, and (b) achieve the Company’s objectives.
      2.   Definitions .
            (a) “ Affiliate ” means any corporation or other entity (including, but not limited to, partnerships and joint
ventures) controlled by the Company.
             (b) “ Actual Award ” means as to any Performance Period, the actual award (if any) payable to a
Participant for the Performance Period, subject to the Committee’s authority under Section 3(d) to modify the award.
            (c) “ Board ” means the Board of Directors of the Company.
             (d) “ Bonus Pool ” means the pool of funds available for distribution to Participants. Subject to the terms
of the Plan, the Committee establishes the Bonus Pool for each Performance Period.
            (e) “ Code ” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the
Code or regulation thereunder will include such section or regulation, any valid regulation promulgated thereunder, and
any comparable provision of any future legislation or regulation amending, supplementing or superseding such section
or regulation.
           (f) “ Committee ” means the committee appointed by the Board (pursuant to Section 5) to administer the
Plan. Unless and until the Board otherwise determines, the Board’s Compensation Committee will administer the Plan.
            (g) “ Company ” means Audience Inc., a Delaware corporation, or any successor thereto.
           (h) “ Disability ” means a permanent and total disability determined in accordance with uniform and
nondiscriminatory standards adopted by the Committee from time to time.
            (i) “ Employee ” means any executive, officer, or key employee of the Company or of an Affiliate,
whether such individual is so employed at the time the Plan is adopted or becomes so employed subsequent to the
adoption of the Plan.
          (j) “ Participant ” means as to any Performance Period, an Employee who has been selected by the
Committee for participation in the Plan for that Performance Period.
           (k) “ Performance Period ” means the period of time for the measurement of the performance criteria that
must be met to receive an Actual Award, as determined by the Committee in its sole discretion. A Performance Period
may be divided into one or more shorter periods if, for example, but not by way of limitation, the Committee desires to
measure some performance criteria over 12 months and other criteria over 3 months.
            (l) “ Plan ” means this Executive Incentive Compensation Plan, as set forth in this instrument and as
hereafter amended from time to time.
             (m) “ Target Award ” means the target award, at 100% performance achievement, payable under the Plan
to a Participant for the Performance Period, as determined by the Committee in accordance with Section 3(b).
            (n) “ Termination of Service ” means a cessation of the employee-employer relationship between an
Employee and the Company or an Affiliate for any reason, including, but not by way of limitation, a termination by
resignation, discharge, death, Disability, retirement, or the disaffiliation of an Affiliate, but excluding any such
termination where there is a simultaneous reemployment by the Company or an Affiliate.
      3.   Selection of Participants and Determination of Awards .
            (a) Selection of Participants . The Committee, in its sole discretion, will select the Employees who will
be Participants for any Performance Period. Participation in the Plan is in the sole discretion of the Committee, on a
Performance Period by Performance Period basis. Accordingly, an Employee who is a Participant for a given
Performance Period in no way is guaranteed or assured of being selected for participation in any subsequent
Performance Period or Periods.
           (b) Determination of Target Awards . The Committee, in its sole discretion, will establish a Target
Award for each Participant, which generally will be a percentage of a Participant’s average annual base salary for the
Performance Period.
            (c) Bonus Pool . Each Performance Period, the Committee, in its sole discretion, will establish a Bonus
Pool, which pool may be established before, during or after the applicable Performance Period. Actual Awards will be
paid from the Bonus Pool.
             (d) Discretion to Modify Awards . Notwithstanding any contrary provision of the Plan, the Committee
may, in its sole discretion and at any time, (i) increase, reduce or eliminate a Participant’s Actual Award, and/or
(ii) increase, reduce or eliminate the amount allocated to the Bonus Pool. The Actual Award may be below, at or above
the Target Award, in the Committee’s discretion. The Committee may determine the amount of any reduction on the
basis of such factors as it deems relevant, and will not be required to establish any allocation or weighting with respect
to the factors it considers.
              (e) Discretion to Determine Criteria . Notwithstanding any contrary provision of the Plan, the Committee
will, in its sole discretion, determine the performance goals applicable to any Target Award which requirement may
include, without limitation, (i) attainment of research and
                                                           -2-
development milestones, (ii) sales bookings, (iii) business divestitures and acquisitions, (iv) cash flow, (v) cash
position, (vi) contract awards or backlog, (vii) customer renewals, (viii) customer retention rates from an acquired
company, business unit or division, (ix) earnings (which may include earnings before interest and taxes, earnings
before taxes and net earnings), (x) earnings per share, (xi) expenses, (xii) gross margin, (xiii) growth in stockholder
value relative to the moving average of the S&P 500 Index or another index, (xiv) internal rate of return, (xv) inventory
turns, (xvi) inventory levels, market share, (xvii) net income, (xviii) net profit, (xix) net sales, (xx) new product
development, (xxi) new product invention or innovation, (xxii) number of customers, (xxiii) operating cash flow,
(xxiv) operating expenses, (xxv) operating income, (xxvi) operating margin, (xxvii) overhead or other expense
reduction, (xxviii) product defect measures, (xxix) product release timelines, (xxx) productivity, (xxxi) profit,
(xxxii) return on assets, (xxxiii) return on capital, (xxxiv) return on equity, (xxxv) return on investment, (xxxvi) return
on sales, (xxxvii) revenue, (xxxviii) revenue growth, (xxxix) sales results, (xl) sales growth, (xli) stock price, (xlii) time
to market, (xliii) total stockholder return, (xliv) working capital, and individual objectives such as peer reviews or other
subjective or objective criteria. As determined by the Committee, the performance goals may be based on GAAP or
Non-GAAP results and any actual results may be adjusted by the Committee for one-time items or unbudgeted or
unexpected items when determining whether the performance goals have been met. The goals may be on the basis of
any factors the Committee determines relevant, and may be on an individual, divisional, business unit or
Company-wide basis. The performance goals may differ from Participant to Participant and from award to award.
Failure to meet the goals will result in a failure to earn the Target Award, except as provided in Section 3(d).
      4.   Payment of Awards .
            (a) Right to Receive Payment . Each Actual Award will be paid solely from the general assets of the
Company. Nothing in this Plan will be construed to create a trust or to establish or evidence any Participant’s claim of
any right other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.
            (b) Timing of Payment . Payment of each Actual Award shall be made as soon as practicable after the
end of the Performance Period during which the Actual Award was earned and after the Actual Award is approved by
the Committee, but in no event later than the fifteenth (15th) day of the third (3rd) month of the Fiscal Year following
the date the Participant’s Actual Award has been earned and is no longer subject to a substantial risk of forfeiture.
Unless otherwise determined by the Committee, to earn an Actual Award a Participant must be employed by the
Company or any Affiliate on the date the Actual Award is paid.
                  It is the intent that this Plan comply with the requirements of Code Section 409A so that none of the
payments to be provided hereunder will be subject to the additional tax imposed under Code Section 409A, and any
ambiguities herein will be interpreted to so comply.
            (c)    Form of Payment . Each Actual Award will be paid in cash (or its equivalent) in a single lump sum.
                                                             -3-
             (d) Payment in the Event of Death or Disability . If a Participant dies or becomes Disabled prior to the
payment of an Actual Award earned by him or her prior to death or Disability for a prior Performance Period, the
Actual Award will be paid to his or her estate or to the Participant, as the case may be, subject to the Committee’s
discretion to reduce or eliminate any Actual Award otherwise payable.
      5.   Plan Administration .
             (a) Committee is the Administrator . The Plan will be administered by the Committee. The Committee
will consist of not less than two (2) members of the Board. The members of the Committee will be appointed from time
to time by, and serve at the pleasure of, the Board.
             (b) Committee Authority . It will be the duty of the Committee to administer the Plan in accordance with
the Plan’s provisions. The Committee will have all powers and discretion necessary or appropriate to administer the
Plan and to control its operation, including, but not limited to, the power to (i) determine which Employees will be
granted awards, (ii) prescribe the terms and conditions of awards, (iii) interpret the Plan and the awards, (iv) adopt such
procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees who are
foreign nationals or employed outside of the United States, (v) adopt rules for the administration, interpretation and
application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules. Notwithstanding
any delegation of authority to the Compensation Committee or any other delegate, the Board will retain the authority
and ability to take actions under the Plan with respect to any Participant, including, without limitation, the Company’s
Chief Executive Officer.
            (c) Decisions Binding . All determinations and decisions made by the Committee, the Board, and any
delegate of the Committee pursuant to the provisions of the Plan will be final, conclusive, and binding on all persons,
and will be given the maximum deference permitted by law.
             (d) Delegation by Committee . The Committee, in its sole discretion and on such terms and conditions as
it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or
officers of the Company.
             (e)   Indemnification . Each person who is or will have been a member of the Committee will be
indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or
failure to act under the Plan or any award, and (ii) from any and all amounts paid by him or her in settlement thereof,
with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or
proceeding against him or her, provided he or she will give the Company an opportunity, at its own expense, to handle
and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification will not be exclusive of any other rights of indemnification to which such persons may be entitled
under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any
power that the Company may have to indemnify them or hold them harmless.
                                                            -4-
      6.   General Provisions .
            (a)   Tax Withholding . The Company will withhold all applicable taxes from any Actual Award,
including any federal, state and local taxes (including, but not limited to, the Participant’s FICA and SDI obligations).
             (b) No Effect on Employment or Service . Nothing in the Plan will interfere with or limit in any way the
right of the Company to terminate any Participant’s employment or service at any time, with or without cause. For
purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Affiliates (or
between Affiliates) will not be deemed a Termination of Service. Employment with the Company and its Affiliates is
on an at-will basis only. The Company expressly reserves the right, which may be exercised at any time and without
regard to when during a Performance Period such exercise occurs, to terminate any individual’s employment with or
without cause, and to treat him or her without regard to the effect that such treatment might have upon him or her as a
Participant.
           (c) Participation . No Employee will have the right to be selected to receive an award under this Plan, or,
having been so selected, to be selected to receive a future award.
             (d)    Successors . All obligations of the Company under the Plan, with respect to awards granted
hereunder, will be binding on any successor to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the
Company.
             (e) Beneficiary Designations . If permitted by the Committee, a Participant under the Plan may name a
beneficiary or beneficiaries to whom any vested but unpaid award will be paid in the event of the Participant’s death.
Each such designation will revoke all prior designations by the Participant and will be effective only if given in a form
and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid
at the Participant’s death will be paid to the Participant’s estate.
            (f) Nontransferability of Awards . No award granted under the Plan may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, or to the
limited extent provided in Section 6(e). All rights with respect to an award granted to a Participant will be available
during his or her lifetime only to the Participant.
      7.   Amendment, Termination, and Duration .
             (a) Amendment, Suspension, or Termination . The Board, in its sole discretion, may amend or terminate
the Plan, or any part thereof, at any time and for any reason. The amendment, suspension or termination of the Plan will
not, without the consent of the Participant, alter or impair any rights or obligations under any Actual Award theretofore
earned by such Participant. No award may be granted during any period of suspension or after termination of the Plan.
                                                             -5-
            (b) Duration of Plan . The Plan will commence on the date specified herein, and subject to Section 7(a)
(regarding the Board’s right to amend or terminate the Plan), will remain in effect thereafter.
      8.   Legal Construction .
            (a) Gender and Number . Except where otherwise indicated by the context, any masculine term used
herein also will include the feminine; the plural will include the singular and the singular will include the plural.
             (b) Severability . In the event any provision of the Plan will be held illegal or invalid for any reason, the
illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if
the illegal or invalid provision had not been included.
            (c) Requirements of Law . The granting of awards under the Plan will be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be
required.
            (d) Governing Law . The Plan and all awards will be construed in accordance with and governed by the
laws of the State of Texas, but without regard to its conflict of law provisions.
           (e) Bonus Plan . The Plan is intended to be a “bonus program” as defined under U.S. Department of
Labor regulation 2510.3-2(c) and will be construed and administered in accordance with such intention.
             (f) Captions . Captions are provided herein for convenience only, and will not serve as a basis for
interpretation or construction of the Plan.
                                                            -6-
                                                                                                                                    Exhibit 10.15

                                                                  SUBLEASE

     THIS SUBLEASE (this “ Sublease ”) is dated as of March 16, 2012, by and between ZYNGA INC., a Delaware corporation (“
Sublandlord ”), and AUDIENCE, INC., a Delaware corporation (“ Subtenant ”).


                                                                RECITALS

      A. Sublandlord is the Tenant under that certain Lease Agreement dated as of October 19, 2011 (the “ Original Lease ”), by and between
Sublandlord and Middlefield Circle, LLC (successor in interest to PR III Middlefield Road, LLC) (“ Master Landlord ”), pursuant to which
Sublandlord is leasing from Master Landlord certain office space consisting of approximately fifty-eight thousand, five hundred eighty-four
(58,584) rentable square feet and comprising all of the rentable square footage contained in the building located at 675 East Middlefield Road,
Mountain View, California (the “ Building ”). The Building, together with the land described on Exhibit A of the Original Lease and all
improvements thereon and appurtenances thereto, including, without limitation, that certain building located at 685 East Middlefield Road,
Mountain View, California, the parking areas, access roadways, and other related areas, are collectively referred to herein as the “ Project .”
The Project contains approximately one hundred seventy-five thousand six hundred ninety-seven (175,697) rentable square feet. The Original
Lease, as the same may be amended from time to time, shall be referred to herein as the (“ Lease ”). A copy of the Lease is attached as Exhibit
A to this Sublease and made a part hereof.

      B. Subtenant desires to sublease from Sublandlord certain office space consisting of approximately twenty-eight thousand five hundred
sixty-one (28,561) rentable square feet located on the second (2 nd ) floor of the Building (the “ Premises ”), as such Premises are shown on the
space plan attached hereto as Exhibit B (that portion of the existing server room – denoted on such Exhibit B by the bold, black dashed line –
which shall be demised by a certain fence to be constructed by Sublandlord within the existing server room is shown in further detail on Exhibit
B-1 attached hereto), upon and subject to the terms and conditions set forth below.

     C. Sublandlord is willing to sublease the Premises to Subtenant, subject to Master Landlord’s approval, if required under the Lease, upon
and subject to the terms and conditions set forth below.

      NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, Sublandlord and Subtenant
agree as set forth below.

     1. Capitalized Terms . All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease, unless
expressly superseded by the terms of this Sublease.

      2. Sublease Agreement . Sublandlord hereby subleases the Premises to Subtenant, and Subtenant hereby subleases the Premises from
Sublandlord, on the terms and conditions set forth in this Sublease. Notwithstanding anything to the contrary in this Sublease, the recitals of the
rentable square footage herein above set forth are for descriptive purposes only. Subtenant shall have no right to terminate this Sublease or
receive any adjustment or rebate of any Base

                                                                       -1-
Sublease Rent or Additional Rent (as both terms are hereinafter defined) payable hereunder if said recitals are incorrect. Subtenant has
inspected the Premises and is fully familiar with the scope and size thereof and agrees to pay the full Base Sublease Rent and Additional Rent
set forth herein in consideration for the use and occupancy of said space, regardless of the actual number of rentable square feet contained
therein.

     3. Term of Sublease; Early Occupancy .
             3.1 Term of Sublease . Subject to the terms and conditions set forth in Section 15 below (conditioning the effectiveness of this
Sublease upon the receipt of the Master Landlord’s Consent (as defined below)), the term of this Sublease (the “ Sublease Term ”), shall
commence on the date on which Sublandlord tenders possession of the Premises to Subtenant (the “ Sublease Commencement Date ”), which
is anticipated to be on or about April 1, 2012 and, unless sooner terminated pursuant to the provisions of this Sublease, shall expire on the date
that is the last day of the twenty-fourth (24 th ) full calendar month following the Sublease Commencement Date (the “ Sublease Expiration
Date ”). Notwithstanding anything herein or in the Lease to the contrary, Subtenant shall have no rights to extend the term of this Sublease. At
the request of either party, promptly following the Sublease Commencement Date, the parties shall enter into a written agreement fixing the
exact date on which the Sublease Commencement Date occurred in the form attached hereto as Exhibit C .

             3.2 Early Occupancy . Subject to the terms and conditions set forth in Section 15 below (conditioning the effectiveness of this
Sublease upon the receipt of the Master Landlord’s Consent (as defined below)), so long as no event which constitutes a default under this
Sublease has occurred, Subtenant shall be permitted to enter the Premises upon the full execution and delivery of this Lease and prior to the
Sublease Commencement Date (the “ Early Occupancy Period ”) for the sole purpose of designing and installing in the Premises Subtenant’s
furniture, fixtures and equipment; provided , however , that (a) Subtenant shall provide Sublandlord and Master Landlord with copies of
certificates of insurance, complying in all respects with the terms of Section 5.5 of this Sublease for all insurance required to be provided by
Subtenant hereunder prior to entering the Premises, (b) Subtenant shall have obtained any and all governmental approvals required for its
occupancy of the Premises during the Early Occupancy Period, (c) the Early Occupancy Period shall not advance the Sublease Expiration Date,
(d) Subtenant shall schedule such entry during the Early Occupancy Period with Sublandlord or Sublandlord’s property manager and shall not
interfere with Sublandlord’s contractors performing work in or around the Premises or with the use and occupancy of the Project by
Sublandlord or other tenants and occupants of the Premises or Project, (e) Sublandlord may impose any restrictions and conditions on the Early
Occupancy Period which Sublandlord deems reasonably necessary and which do not unreasonably interfere with Subtenant’s installation of
Subtenant’s furniture, fixtures and equipment in accordance with this Sublease, (f) Subtenant may not conduct business in the Premises during
the Early Occupancy Period, and (g) the Early Occupancy Period shall be subject to all of the terms and conditions of this Sublease except that
Subtenant will not be obligated to pay Base Sublease Rent or Additional Rent during the Early Occupancy Period (so long as Subtenant does
not conduct business in the Premises). If Tenant violates the terms of this Section 2.3 and fails to cure such violation within five (5) days after
receipt of written notice from Sublandlord regarding the same, Sublandlord may suspend Subtenant’s rights under this Section 2.3 (without
affecting Subtenant’s obligations under this Sublease). During the Early Occupancy Period, Subtenant agrees to take all necessary action to

                                                                        -2-
protect the safety of Subtenant and Subtenant’s partners, members, officers, directors, shareholders, contractors, employees, representatives,
agents and invitees (collectively, the “ Subtenant Parties ” ) . Subtenant hereby releases and discharges Sublandlord and Sublandlord’s
partners, members, officers, directors, shareholders, contractors, employees, representatives, agents and invitees (collectively, the “
Sublandlord Parties ” ) from and against any and all claims by Subtenant and the Subtenant Parties of loss, damage or injury to persons or
property, including without limitation any product inventory, which is alleged to have occurred in the Premises or the Project during the Early
Occupancy Period, except to the extent arising from the gross negligence or willful misconduct of Sublandlord or the Sublandlord Parties.

     4. Sublease Rent; Security Deposit .
              4.1 Base Sublease Rent . Commencing on the Sublease Commencement Date and continuing on the first day of each month
thereafter through the end of the Sublease Term, Subtenant shall pay to Sublandlord, in advance, without notice or demand, and without any
set-off, counterclaim, abatement or deduction whatsoever, except as may be expressly set forth in this Sublease, in lawful money of the United
States, by wire transfer of funds or by check payable to Zynga Inc., 699 Eighth Street, San Francisco, California 94103 (until and unless a
different address is provided by Sublandlord), base sublease rental (“ Base Sublease Rent ”) of Eighty-five Thousand Six Hundred
Eighty-three and 00/100 Dollars ($85,683.00) per month throughout the duration of the Sublease Term. Subtenant shall pay to Sublandlord
Eighty-five Thousand Six Hundred Eighty-three and 00/100 Dollars ($85,683.00) upon execution of this Sublease as Base Sublease Rent for
the first full month of the Sublease Term following the Sublease Commencement Date. If the Sublease Term begins or ends on a day other than
the first or last day of a month, the Base Sublease Rent for the partial month shall be prorated on the basis of a thirty (30) day month.

            4.2 Additional Rent . Commencing on the Sublease Commencement Date and continuing throughout the duration of the Sublease
Term, Subtenant shall pay to Sublandlord, as Additional Rent (defined below), both: (1) Subtenant’s Percentage – Project (defined below) of
all expenses due under the Lease, including without limitation, all Operating Expenses (as defined in Section 5.1.1 of the Original Lease), and
such amounts shall be payable as and when payable by Sublandlord to Master Landlord; and (2) Subtenant’s Percentage – Building (defined
below) of all expenses, costs, and disbursements which Sublandlord shall actually pay or incur in connection with the Lease and/or the
operation, repair, maintenance and/or replacement of the Building and calculated assuming the Building is one hundred percent
(100%) occupied, including without limitation, all common area maintenance and elevator maintenance charges and fees, and such amounts
shall be payable as and when paid or incurred by Sublandlord. “ Subtenant’s Percentage – Project ” shall mean Subtenant’s percentage of the
entire Project as determined by dividing the rentable square footage of the Premises by the total rentable square footage of the Project (i.e.,
approximately 16.2558%). “ Subtenant’s Percentage – Building ” shall mean Subtenant’s percentage of the entire Building as determined by
dividing the rentable square footage of the Premises by the total rentable square footage of the Building (i.e., approximately 48.7522%). “
Additional Rent ” shall mean all sums other than Base Sublease Rent payable by Subtenant to Sublandlord under this Sublease, including
without limitation: Operating Expenses; common area maintenance and elevator maintenance charges and fees; late charges; overtime or
excess service charges; damages; interest and other costs and expenses related to Subtenant’s failure to perform any of its obligations under this
Sublease. Subtenant

                                                                       -3-
shall not request or utilize overtime or excess services without Sublandlord’s prior consent. If Sublandlord consents to such overtime or excess
services, Subtenant shall be solely responsible for the cost thereof. Because the Lease provides for the payment by Sublandlord of Operating
Expenses on the basis of an estimate thereof, as and when adjustments between estimated and actual Common Area Operating Expenses are
made under the Lease, the obligations of Sublandlord and Subtenant hereunder shall be adjusted in a like manner; and if any such adjustment
shall occur after the expiration or earlier termination of the Sublease Term, then the obligations of Sublandlord and Subtenant under this
Section 4.2 shall survive such expiration or termination.

           4.3 Utilities; Building Services and Maintenance .
                    4.3.1 Utilities . Sublandlord shall use commercially reasonable efforts to (i) cause the applicable utilities providers to furnish
electricity, water and gas (“ Building Utilities ”) to the Premises and (ii) provide heating, ventilating and air conditioning (“ HVAC ”) to the
Premises as further defined below. Provided that Subtenant’s usage of HVAC and Building Utilities is typical for standard office use in
Sublandlord’s reasonable judgment, Sublandlord will invoice Subtenant for Subtenant’s Percentage – Building of any and all costs, fees and
charges paid or incurred by Sublandlord in connection with HVAC and Building Utilities, and Subtenant shall pay such invoices within thirty
(30) days of its receipt of the same. Sublandlord shall use commercially reasonable efforts to provide HVAC to the Premises during the hours
of 8:00 a.m. – 6:00 p.m. Monday through Friday and 8:00 a.m. – 12:00 p.m. Saturday (“ Building Hours ”). Furthermore, HVAC shall be
available to Subtenant at any time other than Building Hours, and at any time on Zynga Holidays (defined below) (collectively, “ After Hours
HVAC ”). The availability of After Hours HVAC will be provided to Subtenant by way of Subtenant’s use of the Building HVAC control
system which will monitor and record the hours of Subtenant’s After Hours HVAC usage. Should Subtenant’s usage of After Hours HVAC at
any time exceed that of Sublandlord’s usage of the same by more than ten (10) hours per month (“ Excess Usage ”), Subtenant shall pay for
any such Excess Usage at the rate of Fifty and 00/100 Dollars ($50) per hour (or fractional portion thereof), and Subtenant shall pay such costs
to Sublandlord as Additional Rent (such amounts being payable by Subtenant within thirty (30) days of its receipt of any invoice for the same).
For all purposes of this Sublease, “ Zynga Holidays ” shall mean the following nationally recognized holidays and/or other holidays
recognized and observed by Sublandlord: (i) Martin Luther King, Jr. Day; (ii) Presidents’ Day; (iii) Memorial Day; (iv) Independence Day;
(v) Labor Day; (vi) Veterans’ Day (observed on November 12, 2012 and November 11, 2013 during the Sublease Term); (vii) Thanksgiving
Day; (viii) the day after Thanksgiving Day (observed on November 23, 2012 and November 29, 2013 during the Sublease Term);
(ix) Christmas Eve; (x) Christmas Day; (xi) New Year’s Eve; and (xii) New Year’s Day. Subtenant shall be solely and separately responsible
for the cost of and shall pay the cost of and shall separately arrange for (and, at Subtenant’s expense, cause the same to be billed to Subtenant)
telephone, cable television, janitorial service and any other utilities (aside from the Building Utilities) or services consumed by Subtenant in or
with respect to the Premises. Without limitation upon Section 6.2 of the Original Lease, the failure of Subtenant to obtain or to continue to
receive such services and utilities for any reason whatsoever shall not relieve Subtenant of any of its obligations under this Sublease. Any
contractor employed by Subtenant to perform services in the Premises shall be subject to Sublandlord’s prior written approval, which approval
shall not be unreasonably withheld, conditioned or delayed.

                                                                         -4-
                   4.3.2 Building Services and Maintenance . Sublandlord will be responsible for Building maintenance (including Building
systems) and common area maintenance, the costs of which maintenance shall be included as operating expenses associated with Building.
Subtenant will be responsible for maintenance of the interior of the Sublease Premises, including without limitation its own janitorial service,
and will pay for those services directly.

             4.4 Security Deposit . Upon Subtenant’s execution and delivery of this Sublease, Subtenant shall pay to Sublandlord the sum of
Two Hundred Fifty-seven Thousand Forty-nine and 00/100 ($257,049.00) in cash (the “ Security Deposit ”), to be held by Sublandlord as
security for the faithful performance and observance by Subtenant of all the terms, covenants and conditions of this Sublease, it being expressly
understood that the Security Deposit shall not be considered an advance payment of rental or measure of Sublandlord’s damages in case of
default by Subtenant. Upon default by Subtenant, Sublandlord, from time to time, without prejudice to any other remedy, may (but shall not be
required to) apply the Security Deposit against any arrearages of Base Sublease Rent, Additional Rent, or any other damage, injury, loss, cost,
expense or liability caused or likely to be caused to Sublandlord by such default on the part of Subtenant. Should all or any part of the Security
Deposit be used for the purposes described above during the Sublease Term, then Subtenant shall remit to Sublandlord immediately (and in all
events within not more than five (5) business days) after Sublandlord’s request therefor, the amount necessary to restore the Security Deposit to
its original balance. Subtenant’s failure to restore the Security Deposit upon written notice from Sublandlord shall be a material breach of this
Sublease. Upon any termination of Sublandlord’s interest in the Premises, Sublandlord shall have no further obligation to Subtenant with
respect to the Security Deposit or any other sums due hereunder and prepaid by Subtenant upon transfer of the Security Deposit and any other
such sums to Sublandlord’s successor in interest. No interest shall be payable on the Security Deposit and Sublandlord shall have no obligation
to keep the Security Deposit separate from its general funds unless otherwise required by applicable law. Within thirty (30) days of the later of
the termination of this Sublease or Subtenant’s surrender of the Premises in the condition required by this Sublease, Sublandlord shall return to
Subtenant that portion of the Security Deposit not used or applied by Sublandlord. Subtenant hereby waives all provisions of law, now or
hereafter enforced, which limit the recovery a Sublandlord may claim from a Security Deposit, it being agreed that Sublandlord may claim
those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by Subtenant, to clean the Premises or to
compensate Sublandlord from any loss or damage, foreseeable or unforeseeable, caused by the act or omission of Subtenant or any of the
Subtenant Parties. Subtenant hereby waives the provisions of California Civil Code § 1950.7, or any similar or successor laws now or
hereinafter in effect.

           4.5 Subtenant Surcharges . During the Sublease Term, Subtenant shall pay to Sublandlord, as Additional Rent, any amounts payable
to Sublandlord or the Master Landlord (as the case may be) for Subtenant Surcharges (as defined below). The term “ Subtenant Surcharges ”
shall mean (i) any and all amounts other than Base Sublease Rent, Operating Expenses and Building common area maintenance fees which
become due and payable by Subtenant to Sublandlord hereunder, and (ii) any and all amounts which become due and payable by Sublandlord
to Master Landlord under the Lease as additional charges which would not have become due and payable but for the acts and/or failures to act
of Subtenant under this Sublease including, but not limited to, any additional charges under the Lease payable by Sublandlord on

                                                                       -5-
account of (1) Subtenant’s use of any building services in excess of those provided at no additional charge pursuant to the Lease, (2) late
charges and/or default interest as set forth in the Lease, (3) the use by Subtenant of the Building or the Premises or any services or additional
services, or (4) parking and signage charges or fees. Subtenant shall pay the Subtenant Surcharges set forth above within ten (10) days after the
presentation of statements therefor by Master Landlord or Sublandlord to Subtenant.

     5. Application of Lease.
           5.1 Sublease Subordinate to Lease . This Sublease is and shall be at all times subject and subordinate to the Lease.

             5.2 Incorporation of Obligations Set Forth in Lease . In addition to the obligations of Subtenant under the terms of this Sublease as
set forth in the other paragraphs of this Sublease (and except as otherwise expressly provided to the contrary in this Sublease), Subtenant shall
also have and perform for the benefit of Sublandlord all obligations of the “Tenant” as are set forth in the Lease, which are hereby incorporated
into this Sublease as though set forth herein in full, substituting “Subtenant” wherever the term “Tenant” appears, and “Sublandlord” wherever
the term “Landlord” appears; provided, however, that Subtenant’s obligations under the Lease shall be limited to the duration of the Sublease
Term. A copy of the Lease is attached hereto as Exhibit A . Subtenant confirms that it has read the Lease and is familiar with the terms and
provisions thereof. Except as otherwise expressly provided herein, the covenants, agreements, terms, provisions and conditions of the Lease
insofar as they are not inconsistent with the terms of this Sublease are made a part of and incorporated into this Sublease as if recited herein in
full, and the rights and obligations of Landlord and Tenant under the Lease shall be deemed the rights and obligations of Sublandlord and
Subtenant respectively hereunder and shall be binding upon and inure to the benefit of Sublandlord and Subtenant respectively. Subtenant
recognizes that Sublandlord is not in a position to render any of the services or to perform any of the obligations required of Master Landlord
pursuant to the terms of the Lease. Therefore, notwithstanding anything to the contrary contained in this Sublease, Subtenant agrees that
performance by Sublandlord of its obligations hereunder are conditional upon due performance by Master Landlord of its corresponding
obligations under the Lease, and Sublandlord shall not be liable to Subtenant for any default of Master Landlord under the Lease. Subtenant
shall not have any claim against Sublandlord by reason of Master Landlord’s failure or refusal to comply with any of the provisions of the
Lease, unless such failure or refusal is a result of Sublandlord’s act or failure to act (on that which is not Subtenant’s obligation hereunder), and
Subtenant shall pay Base Sublease Rent and Additional Rent and all other charges provided for herein without any abatement, deduction or
set-off whatsoever. Furthermore, Subtenant further covenants not to take any action or do or perform any act or fail to perform any act which
would result in the failure or breach of any of the covenants, agreements, terms, provisions or conditions of the Lease on the part of the
“Tenant” thereunder. Whenever the consent of Master Landlord shall be required by, or Master Landlord shall fail to perform its obligations
under, the Lease, Sublandlord agrees to use commercially reasonable efforts to obtain such consent (as more specifically provided in
Section 5.4 , below) and/or performance on behalf of Subtenant. The following provisions of the Lease shall not apply to this Sublease:
Sections 1.1, 1.3, 2.1, 2.2, 2.3, 4.1, 4.3, 6.1, 12.1, 18.1, 18.2, 18.3, 18.4, 18.5, 18.6, 18.7, 18.8, 18.9, 24.1, 24.2, 24.3, 24.4, 24.5, 24.6, 24.7,
24.8, 24.9, 31.1, 32.1, 36.1, 36.2, 38.1, 38.2, 42.1, 47.1, 47.2, 47.3, 48.1, 51.1, 51.4, 51.5, 51.6, 51.7, 51.8, 51.9, 51.10 , 51.11, Exhibit B, and
Exhibit C of the Original

                                                                         -6-
Lease. In addition, whenever any period for notice from “Tenant” to “Landlord” is specified under the Lease, or any period within which
“Tenant” is required to do anything under the Lease, the period applicable to Subtenant’s obligation to give such notice to Sublandlord or to
perform under this Sublease shall be two (2) business days shorter than the corresponding period applicable to “Tenant” under the Lease (so
that Sublandlord shall always have at least two (2) business days within which to give its own notice or performance to Master Landlord);
further, wherever any period for notice from “Landlord” to “Tenant” is specified under the Lease, Sublandlord shall similarly have an
additional period of at least two (2) business days within which to give notice to Subtenant under this Sublease. As between the parties hereto
only, in the event of a conflict between the terms of the Lease and the terms of this Sublease, the terms of this Sublease shall control only to the
extent they are inconsistent with the terms of the Lease and their respective counterpart provisions in the Lease shall be excluded only to such
extent.

            5.3 Preservation of Lease . So long as Subtenant is performing all of Subtenant’s obligations as provided in this Sublease,
Sublandlord shall not enter into any agreement that will cause either the Lease to be terminated or the Premises to be surrendered prior to the
expiration of the Sublease Term (except: (1) in the event of damage or destruction or condemnation and in accordance with Sublandlord’s
rights under the Lease; or (2) in any other manner in which Subtenant’s rights hereunder are preserved) or cause any breach or default by
Sublandlord under the Lease (not caused by Subtenant) that will result in any such termination or surrender, which breach or default remains
uncured beyond applicable cure periods. In the event Subtenant makes a request that Subtenant is entitled to make under this Sublease, which
request requires the approval of Master Landlord, Sublandlord shall use commercially reasonable efforts to obtain such approval (but
Sublandlord shall not be required to incur any cost or expense in order to do so). If Sublandlord fails, after using reasonable efforts, to cause
Master Landlord under the Lease to observe and/or perform its obligations under the Lease, upon prior written notice to Sublandlord,
Sublandlord shall non-exclusively assign to Subtenant Sublandlord’s right under the Lease to enforce such provisions of the Lease and
Sublandlord, upon Subtenant’s reasonable request and at Subtenant’s sole cost and expense, shall reasonably cooperate with Subtenant in this
regard. Subtenant shall defend, protect, indemnify and hold Sublandlord harmless from all claims, costs and liabilities, including reasonable
attorneys’ fees and costs, arising out of or in connection with any such action by Subtenant. Subtenant agrees that except as otherwise expressly
provided herein, Sublandlord shall not be required to dispute any determinations or other assertions or claims of Master Landlord regarding the
rights or obligations of Sublandlord under the Lease for which Subtenant is or may be responsible under this Sublease or by which Subtenant
may be bound.

            5.4 Consents . All references in this Sublease to the consent or approval of Master Landlord and/or Sublandlord shall be deemed to
mean the written consent or approval of Master Landlord and Sublandlord, and no consent or approval of Master Landlord and/or Sublandlord,
as the case may be, shall be effective for any purpose unless such consent or approval is set forth in a written instrument executed by Master
Landlord and/or Sublandlord, as the case may be. In all provisions requiring the approval or consent of Sublandlord (whether pursuant to the
express terms of this Sublease or the terms of the Lease incorporated herein), Subtenant shall be required to obtain the approval or consent of
Master Landlord and then to obtain like approval or consent of Sublandlord; provided, however, that: (a) application for Sublandlord’s
approval or consent may be submitted by Subtenant prior to receipt of Master Landlord’s approval or consent; (b) Sublandlord shall respond to
such application for approval or

                                                                        -7-
consent within a reasonable time after receipt thereof but need not respond prior to receipt from Master Landlord of its consent; and
(c) Sublandlord may condition its approval or consent upon the subsequent receipt by Subtenant of Master Landlord’s unconditional approval
or consent to such application. If Sublandlord is required or has determined to give its consent or approval, Sublandlord shall cooperate
reasonably with Subtenant in endeavoring to obtain Master Landlord’s consent or approval upon and subject to the following terms and
conditions: (i) Subtenant shall reimburse Sublandlord for any out-of-pocket costs incurred by Sublandlord in connection with seeking such
consent or approval; (ii) Sublandlord shall not be required to make any payments to Master Landlord or to enter into any agreements or to
modify the Lease or this Sublease in order to obtain any such consent or approval; and (iii) if Subtenant agrees or is otherwise obligated to
make any payments to Sublandlord or Master Landlord in connection with such request for such consent or approval, Subtenant shall have
made arrangements for such payments which are reasonably satisfactory to Sublandlord. If Subtenant asks Sublandlord in writing to request
Master Landlord to give Master Landlord’s consent or approval in any situation where such consent or approval is required hereunder or under
the Lease, if such request contains the form and substance of the request prepared for Sublandlord’s signature and is reasonably acceptable to
Sublandlord, Sublandlord shall promptly request such consent or approval from Master Landlord. Nothing contained in this Section 5.4 shall be
deemed to require Sublandlord to give any consent or approval because Master Landlord has given such consent or approval. Whenever either
party to this Sublease expressly agrees herein not to unreasonably withhold its consent, such consent shall also not be unreasonably delayed or
conditioned.

            5.5 Subtenant’s Insurance . Subtenant shall keep in force at all times throughout the Sublease Term, at Subtenant’s expense, for the
benefit of Sublandlord and Master Landlord, insurance as required under the Lease, with Sublandlord, Master Landlord and any other parties
designated by Sublandlord as additional insureds. Notwithstanding anything contained in the Lease to the contrary, as between Sublandlord and
Subtenant only, all insurance proceeds (other than those proceeds paid out on insurance obtained by Subtenant) or condemnation awards
received by Sublandlord under the Lease shall be deemed to be the property of Sublandlord.

            5.6 Default by Subtenant; Indemnification . Upon the failure of Subtenant to pay rent or comply with any other provisions of this
Sublease or the occurrence of any other event which constitutes a default under this Sublease beyond any applicable notice and cure period,
Sublandlord shall be entitled to all the same rights and remedies against Subtenant on account of such default by Subtenant under this Sublease
as are granted in the Lease to Master Landlord against Tenant on account of a default by Tenant under the Lease. Subtenant, on behalf of itself
and the Subtenant Parties, hereby agrees to indemnify, protect, defend and hold Sublandlord and the Sublandlord Parties harmless from and
against any and all claims, losses and damages including, without limitation, reasonable attorneys’ fees and disbursements: (a) which may at
any time be asserted against Sublandlord or the Sublandlord Parties by (i) Master Landlord for failure of Subtenant to perform any of the
covenants, agreements, terms, provisions or conditions contained in the Lease which, by reason of the provisions of this Sublease, Subtenant is
obligated to perform, or (ii) any person by reason of Subtenant or the Subtenant Parties’s use and/or occupancy of the Premises; and
(b) resulting from any failure by Subtenant to comply with the terms of this Sublease and the Lease, except to the extent any of the foregoing is
caused by the gross negligence or willful misconduct of Sublandlord or the

                                                                       -8-
Sublandlord Parties. The provisions of this Section 5.6 shall survive the expiration or earlier termination of the Lease and/or this Sublease.
Notwithstanding anything to the contrary herein or in the Lease, the Sublandlord Parties shall not be liable to Subtenant or the Subtenant
Parties under any circumstance. Subtenant, on behalf of itself and the Subtenant Parties, waives all claims against Sublandlord and the
Sublandlord Parties for any injury or damage to any person or property in or about the Premises, except injury or damage caused by the gross
negligence or intentional misconduct of Sublandlord or the Sublandlord Parties.

           5.7 Sublandlord Representations and Warranties . As of the date of this Sublease, Sublandlord makes the following representations
and warranties to Subtenant:
                   (i)     The Lease attached as Exhibit A is the full and complete Lease, and there are no amendments or modifications thereto
                           except as provided on Exhibit A ;
                   (ii)    The Lease is in full force and effect; and
                   (iii)    To Sublandlord’s actual knowledge, neither Master Landlord nor Sublandlord is in default under the Lease.

      6. Condition of Premises . Sublandlord will deliver the Premises to Subtenant on the Sublease Commencement Date in its “ AS IS ”
condition, except that Sublandlord shall, at its sole cost and expense: (A) clean the Premises, including the carpets and any units of furniture,
personal property and equipment located in the Premises; and (B) divide the Zynga Server Room located on the second (2 nd ) floor of the
Building (as such Zynga Server Room is shown on the space plan attached hereto as Exhibit B ) into two (2) non-equal spaces by installing a
secured cage therein, which division shall be implemented substantially as shown on the space plan attached hereto as Exhibit B and shall
provide for each of Sublandlord’s and Subtenant’s exclusive use of their remaining, respective portions of the Zynga Server Room (with
Sublandlord retaining exclusive access to the remaining larger portion of the Zynga Server Room and Subtenant retaining exclusive access to
the remaining smaller portion of the Zynga Server Room). Subtenant has thoroughly inspected and examined the Premises, has elected to
sublease the Premises from Sublandlord under the terms of this Sublease on a strictly “ AS IS ” and “with all faults” basis, and acknowledges
that Sublandlord has no obligation to make any improvements or provide any furnishings or equipment to Subtenant in connection therewith,
except as specifically provided herein (including, without limitation, as provided in Section 7 below). Except as expressly set forth herein, no
representations or warranties of any kind have been made to Subtenant concerning the condition of the Premises, nor have any promises to alter
or improve the Premises been made by Sublandlord or any party on behalf of Sublandlord. Subtenant is subleasing the Premises from
Sublandlord after having had an opportunity to fully inspect the Premises and the right not to execute this Sublease if the results of said
inspection were unacceptable. Therefore, Subtenant hereby agrees that the term “ AS IS ” means that upon having approved said inspection, it
will sublease the Premises, without warranty or representation, either oral or written, or expressed or implied, as to the physical condition of the
Premises and/or the compliance of same with building, fire, health and zoning codes and other applicable laws, ordinances and regulations.
Sublandlord hereby expressly disclaims any and all warranties or representations made to Subtenant, whether the same were made by any
partner, officer, director or employee of Sublandlord or any other agent of same, such as a broker. At the

                                                                        -9-
termination of this Sublease, Subtenant shall surrender the Premises to Sublandlord in the condition received, reasonable wear and tear
excepted and all improvements and/or modifications installed by Subtenant in the Premises (excluding only trade fixtures and equipment,
furniture, furnishings and other moveable items) shall remain and be the property of Sublandlord, unless Sublandlord and/or Master Landlord
otherwise notifies Subtenant to remove the same pursuant to the terms of the Lease as incorporated herein, and repair all damage caused by
such removal. For purposes hereof, the “rentable square feet” of the Premises set forth in Recital A above are hereby agreed to by Sublandlord
and Subtenant and shall not be subject to revision. By taking possession of the Premises, Subtenant acknowledges that the Premises are in a
tenantable and good condition. Subtenant shall not make any alterations, additions or improvements to the Premises without first obtaining the
written consent of Sublandlord and, if required by the Lease, of Master Landlord. Any approved alterations, additions or improvements to the
Premises shall be made by Subtenant at Subtenant’s sole cost and expense, and otherwise upon all applicable terms and conditions of the Lease
(including any removal and restoration obligations) and this Sublease.

      7. Furniture . Effective upon the Sublease Commencement Date and continuing throughout the duration of the Sublease Term, all the
units of furniture, personal property and equipment located in the Premises shall become the leased property of Subtenant in their “as-is”,
“where-is” condition without any representation or warranty, express or implied of any kind by Sublandlord, its employees or agents (including
without limitation, any warranty of liability or fitness for a particular use), and all such items shall remain and be the property of Sublandlord
upon the expiration of the Sublease Term.

      8. Assignment and Subletting .
            8.1 Subtenant shall not directly or indirectly (by sale or transfer of a controlling interest in Subtenant’s capital stock or other form of
proprietary interests, merger, consolidation, combination, reorganization recapitalization or otherwise, except for issuance of additional capital
stock of Subtenant in connection with venture capital financing), voluntarily or by operation of law or otherwise, transfer, assign, mortgage or
hypothecate this Sublease, or any part thereof or interest therein, or permit the use of all or any portion of the Premises by any person or
persons (including concessionaires and licensees) other than Subtenant, or sublet the Premises, or any part thereof, without the prior written
consent of (i) Sublandlord (which may be withheld or conditioned by Sublandlord for any reason in its sole discretion) and (ii) the Master
Landlord (which may be withheld or conditioned by the Master Landlord for any reason in its sole discretion). Except as otherwise expressly
provided herein, any such transfer, sub-sublease or use described in the preceding sentence (a “ Transfer ”) occurring without the consent of
both Sublandlord and Master Landlord shall be void, shall constitute a material default hereunder and shall give Sublandlord the right, at its
option, to exercise any of its remedies under this Sublease. Consent to any assignment or subletting shall not operate as a waiver of the
necessity for a consent to any subsequent assignment or subletting, and the terms of such consent shall be binding upon any person holding by,
under or through Subtenant. If the rental or other consideration payable to Subtenant in respect of such subletting or assignment exceeds the
rent payable by Subtenant under this Sublease, then sixty percent (60%) of all such excess rent and other consideration shall be deemed
additional rent owed by Subtenant to Sublandlord to be paid to Master Landlord pursuant to the terms of the Lease, and forty percent (40%) of
such excess rent shall be shared equally by Sublandlord and Subtenant, and shall be payable monthly to

                                                                         -10-
Sublandlord by Subtenant in the same manner and on the same terms as installments of Base Sublease Rent are payable by Subtenant under this
Sublease (or upon Subtenant’s receipt thereof, whichever is earlier), except that Subtenant may recapture, on an amortized basis over the term
of the sublease or assignment, any brokerage commission paid by Subtenant in connection with the subletting or assignment (not to exceed
commissions typically paid in the market at the time of such subletting or assignment) and reasonable legal fees incurred by Subtenant in
connection with the subletting or assignment (collectively, the “ Sub-subletting Costs ” ) . Notwithstanding any assignment, subletting or
other transfer by Subtenant or consent thereto by Sublandlord, Subtenant shall remain fully liable on this Sublease and shall not be released
from performing any of the terms, covenants and conditions of this Sublease. As a condition to Subtenant recapturing the Sub-subletting Costs,
Subtenant shall provide to Sublandlord, within ninety (90) days of Sublandlord’s execution of Sublandlord’s consent to the assignment or
sub-subletting, a detailed accounting of the Sub-subletting Costs and supporting documents, such as receipts and construction invoices.

            8.2 Notwithstanding the provisions of Section 8.1 above to the contrary, so long as no event which constitutes a default under this
Sublease has occurred, Subtenant may assign this Sublease or sub-sublet the Premises or any portion thereof, without Sublandlord’s consent, to
any entity which controls, is controlled by or is under common control with Subtenant (an “ Affiliate ”), or to any entity resulting from a
merger or consolidation with Subtenant or to any entity which acquires substantially all of the assets or equity interests of or in Subtenant;
provided that: (a) at least ten (10) days prior to such assignment or sub-sublease Subtenant supplies Sublandlord with the identification of the
Permitted Transferee and with documents or information reasonably sufficient for purposes of confirming that the subject transaction satisfies
the conditions set forth above in this Section 8.2 ; (b) if an assignment, the assignee assumes, in full, the obligations of Subtenant under this
Sublease (or if a sub-sublease, the sub-sublessee of a portion of the Premises or Sublease Term assumes, in full, the obligations of Subtenant
with respect to such portion); (c) the financial net worth of the assignee or sub-sublessee equals or exceeds that of Subtenant as of the date of
execution of this Sublease; (d) Subtenant remains fully liable under this Sublease; and (e) such transaction is not entered into as a subterfuge to
avoid the restrictions and provisions of this Sublease. Any such entity to whom Subtenant assigns this Sublease or sub-sublets the Premises in
accordance with this Section 8.2 is referred to herein as a “ Permitted Transferee. ” Notwithstanding anything to the contrary contained
herein, an entity which was an Affiliate but ceases to be an Affiliate shall cease to be a Permitted Transferee and upon such cessation a Transfer
shall be deemed to have occurred. Sublandlord acknowledges and agrees that the Premises may be occupied by one or more Affiliates of
Subtenant pursuant to occupancy agreement(s) or license agreements entered into by Subtenant and such Affiliate(s), and that occupancy by
such Affiliate(s) shall be deemed occupancy by Subtenant for purposes hereof.

      9. Use; Access . Subtenant’s authorized employees shall have access to the Building and Premises twenty-four (24) hours per day, seven
(7) days per week. The Premises shall be used for general office use consistent with the operation of a first-class building and shall not be used
or permitted to be used for any other purpose without the prior written consent of Sublandlord and Master Landlord, which consent may be
withheld in Sublandlord’s or Master Landlord’s sole discretion, as the case may be. All provisions of the Lease regarding use of and access to
the Premises shall apply to the Subtenant; provided, however, that except in the case of emergency, Sublandlord shall provide Subtenant with
not less than twenty-four (24) hours’

                                                                       -11-
written notice prior to any entry or access to the Premises by Sublandlord or any Sublandlord Parties. Without limiting the foregoing, in the
event that Subtenant elects in writing to secure the Premises from the remainder of the Building via Sublandlord’s security access card reader
system, Subtenant hereby agrees to both: (A) pay Sublandlord Ten and 00/100 Dollars ($10.00) for each access card Subtenant requires (unless
Subtenant uses its own access cards which interface with Sublandlord’s security access card reader system); and (B) without limiting the
provisions contained in Section 5.6 of this Sublease, Subtenant, on behalf of itself and the Subtenant Parties, hereby agrees to indemnify,
protect, defend and hold Sublandlord and the Sublandlord Parties harmless from and against any and all claims, losses and damages including,
without limitation, reasonable attorneys’ fees and disbursements, which may arise from or relate to Subtenant’s use of Sublandlord’s security
access card reader system.

       10. Holding Over . If Subtenant (directly or through any transferee or other successor-in-interest of Subtenant) remains in possession of
all or any part of the Premises after the expiration of the Sublease Term or earlier termination of this Sublease, such holding over, in the
absence of an express written agreement to the contrary, shall be on the basis of a tenancy at the sufferance of Sublandlord. In such event,
Subtenant shall continue to comply with all of the terms, conditions and covenants of this Sublease as though the Sublease Term had continued,
except that such tenancy at sufferance shall be terminable by Sublandlord at any time, and rent shall be paid for each month (or portion thereof)
during which Subtenant holds over in the Premises after the expiration or earlier termination of this Sublease, in an amount equal to the greater
of (a) the amount which Master Landlord requires Sublandlord to pay with respect to the Premises during such tenancy pursuant to the Lease,
or (b) two hundred percent (200%) of the Base Sublease Rent applicable under this Sublease during the last period of the Sublease Term, plus
all other amounts that would otherwise have been payable as Additional Rent had the Sublease Term continued through the period of such
holding over. If Subtenant fails to surrender the Premises on the expiration of this Sublease in accordance with the terms and provisions of this
Sublease and the Lease (including, without limitation, Section 8.3 of the Original Lease), as the case may be, in addition to any other liabilities
to Sublandlord accruing therefrom, Subtenant shall indemnify and hold Sublandlord and the Sublandlord Parties harmless from all loss or
liability resulting from such failure, including without limitation (i) any claims of Master Landlord against Sublandlord or the Sublandlord
Parties for failure to surrender the Premises at the time and in the manner required under the Lease or for violating any term of the Lease, and
(ii) any claims made by any succeeding subtenant, tenant or other party based upon such failure, including without limiting the generality of the
foregoing, any claims made by any succeeding tenant founded upon such failure to surrender, and any losses suffered by Sublandlord, the
Sublandlord Parties and/or Master Landlord. This indemnification obligation shall survive the expiration or earlier termination of this Sublease.
The provisions of this paragraph are in addition to and do not limit Sublandlord’s rights or Subtenant’s obligations under this Sublease.

    11. Waiver of Right to Jury Trial . TO THE EXTENT ALLOWED UNDER APPLICABLE LAW, SUBLANDLORD AND
SUBTENANT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS SUBLEASE OR
ANY DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALINGS, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF EITHER PARTY ARISING OUT OF
OR RELATED IN ANY MANNER WITH

                                                                       -12-
THE PREMISES (INCLUDING, WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS SUBLEASE OR ANY
CLAIMS OR DEFENSES ASSERTING THAT THIS SUBLEASE WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR
VOIDABLE). Sublandlord and Subtenant agree and intend that this paragraph constitutes a written consent to waiver of trial by jury within the
meaning of California Code of Civil Procedure Section 631(a)(2) to the extent allowed under applicable law. Each party hereby authorizes and
empowers the other to file this paragraph and this Sublease with the clerk or judge of any court of competent jurisdiction as a written consent to
waiver of jury trial.

      12. Parking . Subject to Subtenant’s compliance with the terms and conditions set forth in the Lease (including, without limitation,
Section 49.1 of the Original Lease), Subtenant shall be entitled to use, commencing on the Sublease Commencement Date and continuing
throughout the duration of the Sublease Term, no more than ninety-eight (98) non-reserved parking spaces at the Project (based upon 3.33
parking passes per 1,000 rentable square feet in the Premises) at any one time.

      13. Signage . Subject to Master Landlord’s approval in its sole discretion, Subtenant shall be permitted to: (a) install directional signage
in the ground floor lobby of the Building (directing visitors to the Premises’ lobby located on the second (2 nd ) floor of the Building); (b) install
lobby signage of its choice within the Premises’ lobby located on the second (2 nd ) floor of the Building; and (c) install small signage on the
exterior glass of the Building next to the Building’s front entrance; provided, however, that in each case Subtenant shall be responsible for all
costs and expenses incurred in having such signage fabricated, installed, changed and/or removed.

     14. Miscellaneous .
            14.1 Attorneys’ Fees . In the event it becomes necessary for either party hereto to file suit to enforce this Sublease or any provision
contained herein, the party prevailing in such suit shall be entitled to recover, in addition to all other remedies or damages, as provided herein
or in the Lease, as the case may be, reasonable attorneys’ fees and expenses incurred in connection with such suit. The prevailing party is that
party which receives substantially the relief sought in the litigation.

           14.2 Accord and Satisfaction . No payment by Subtenant or receipt by Sublandlord of a lesser amount than the rent and other
charges herein stipulated shall be deemed to be other than on account of the earliest stipulated rent or other charge, nor shall any endorsement
or statement on any check or any letter accompanying a check or payment as rent or other charges be deemed an accord or satisfaction.
Sublandlord may accept such check or payment without charge or pursue any other remedy in this Sublease.

            14.3 Entire Agreement . This Sublease sets forth the entire understanding between Sublandlord and Subtenant concerning the
Premises and supersedes any and all prior negotiations and understandings. The parties hereto agree that there are no covenants, promises,
agreements, conditions or understandings, either oral or written, between the parties hereto with respect to any subject covered by this Sublease
other than those set forth herein. No amendment, change or addition to this Sublease shall be binding upon Sublandlord or Subtenant unless in
writing and signed by the party to be charged.

                                                                        -13-
            14.4 No Partnership . Nothing contained in this Sublease shall be deemed or construed by the parties hereto or by any third person
to create the relationship of principal and agent or of partnership or of joint venture, and neither the method of computation of rent nor any
other provision contained in this Sublease nor any act of the parties hereto shall be deemed to create any relationship between Sublandlord and
Subtenant other than the relationship of Sublandlord and Subtenant.

            14.5 Notices . Any and all notices, approvals or demands required or permitted under this Sublease shall be in writing, shall be
served either personally, by United States certified mail, postage prepaid, return receipt requested or by reputable overnight carrier and, shall be
deemed to have been given or made on the day on which it was received and shall be addressed to the parties at the addresses set forth below.
Any party may, from time to time, by like notice, give notice of any change of address, and in such event, the address of such party shall be
deemed to have been changed accordingly. The address for each party is:

If to Sublandlord:                         Zynga Inc.
                                           699 Eighth Street
                                           San Francisco, California 94103
                                           Attn: VP, Workplace

with a copy to:                            Zynga Inc.
                                           699 Eighth Street
                                           San Francisco, California 94103
                                           Attn: General Counsel

If to Subtenant:                           Audience, Inc.
                                           440 Clyde Avenue
                                           Mountain View, California 94043
                                           Attn: Andy Micallef

            14.6 Captions and Paragraph Numbers . The captions and paragraph numbers appearing in this Sublease are inserted only as a
matter of convenience. They do not define, limit, construe or describe the scope or intent of the provisions of the Sublease.

            14.7 Brokers’ Commissions . Each party represents and warrants to the other that it has dealt only with Colliers International (the “
Sublandlord’s Broker ” ) and Kidder Matthews (the “ Subtenant’s Broker ” ), respectively, in the procurement, negotiation and
consummation of this Sublease. If this Sublease is fully executed and delivered and the transaction contemplated by this Sublease is
consummated, Sublandlord shall make payment of the brokerage fee due the Subtenant’s Broker as follows: (a) Thirty-five Thousand Seven
Hundred One and 25/100 Dollars ($35,701.25) upon the full execution and delivery of this Sublease, and (b) Thirty-five Thousand Seven
Hundred One and 25/100 Dollars ($35,701.25) upon the Sublease Commencement Date (assuming this Sublease is in full force and effect on
the Sublease Commencement Date). Sublandlord shall pay a separate commission or fee to Sublandlord’s Broker. Each party hereby agrees to
indemnify and hold the other harmless of and from any and all damages, losses, costs, or expenses (including, without limitation, all attorneys’
fees and disbursements) by reason of any claim of or liability to any other broker or other person

                                                                       -14-
claiming through such indemnifying party and arising out of or in connection with the negotiation, execution, and delivery of this Sublease.
The provisions of this Section 14.7 shall survive the expiration of the Sublease Term and the termination of this Sublease.

           14.8 Partial Invalidity . If any term, covenant or condition of this Sublease or the application thereof to any person or circumstances
shall be invalid or unenforceable, the remainder of this Sublease, or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid, shall both be unaffected thereby, and each term, covenant or condition of this
Sublease shall be valid and be enforced to the fullest extent permitted by law.

           14.9 Exhibits . All Exhibits attached to this Sublease are hereby incorporated herein.

             14.10 Authority . Subtenant hereby represents and warrants that (i) Subtenant is duly organized, validly existing and in good
standing and has all required power and authority to own, sublease, hold and operate properties and conduct business in the State of California
and (ii) the individuals signing this Sublease on behalf of Subtenant have the authority to bind Subtenant to this Sublease. Sublandlord hereby
represent and warrant that (i) Sublandlord is duly organized, validly existing and in good standing and has all required power and authority to
own, sublease, hold and operate properties and conduct business in the State of California and (ii) the individuals signing this Sublease on
behalf of Sublandlord have the authority to bind Sublandlord to this Sublease.

            14.11 Execution of Sublease; Counterparts . The submission of this Sublease to Subtenant for examination or execution does not
constitute a reservation of or option on the Premises or an offer of Sublandlord to sublease the Premises. This Sublease shall become effective
as a Sublease, and Sublandlord shall become obligated hereunder, only upon the execution and delivery of this Sublease (theretofore executed
by Subtenant) by Sublandlord to Subtenant. This Sublease may be executed in counterparts, each of which shall be deemed an original as
against the party whose signature is affixed thereto, and which together shall constitute but one and the same agreement.

           14.12 Further Assurances . The parties hereto agree that each of them, upon the request of the other party, shall execute and deliver,
in recordable form if necessary, such further documents, instruments or agreements and shall take such further action that may be necessary or
appropriate to effectuate the purposes of this Sublease.

           14.13 Choice of Law . This Sublease shall be governed by and construed in accordance with the laws of the State of California
without regard to choice of law principles.

      15. Contingent Nature of Sublease . This Sublease shall not be effective until Master Landlord has signed and delivered to Sublandlord
and Subtenant its written consent to this Sublease (the “ Consent ”). Promptly following execution and delivery hereof, Sublandlord will
submit this Sublease to Master Landlord for such Consent. Subtenant agrees that it shall cooperate in good faith with Sublandlord and shall
comply with any reasonable request made of Subtenant by Sublandlord or Master Landlord in connection with the procurement of the Consent.
In the event, for any reason whatsoever, the Consent is not delivered to Sublandlord

                                                                      -15-
within thirty (30) days after Sublandlord’s request therefor from Master Landlord, Sublandlord may, in its sole discretion, cancel this Sublease
by giving written notice to Subtenant before the Consent is actually delivered to Sublandlord.

     IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the date first above written.

SUBLANDLORD:                                                                  SUBTENANT:

ZYNGA INC.,                                                                   AUDIENCE, INC.,
a Delaware corporation                                                        a Delaware

By:        /s/ James L. Morgensen                                             By:      /s/ Peter Santos
Name:      James L. Morgensen                                                 Name:    Peter Santos
Title:     Vice President                                                     Title:   President & CEO
                                                           3/14/2012



                                                                       -16-
     EXHIBIT A

        LEASE

[ Lease attached hereto ]
        EXHIBIT B

PREMISES SPACE PLAN

[ Space Plan attached hereto ]
          EXHIBIT B-1

    PREMISES SPACE PLAN
SEVER ROOM DEMISING DIAGRAM

    [ Diagram attached hereto ]
                                                                EXHIBIT C

                                            SUBLEASE DATE CONFIRMATION NOTICE

     In accordance with and pursuant to Section 3 of that certain Sublease by and between AUDIENCE, INC., a Delaware corporation, and
ZYNGA INC., a Delaware corporation, the parties hereby confirm the following with respect to certain dates described in the Sublease: (a) the
Sublease Commencement Date is            , 201 ; and (b) the Sublease Expiration Date is           , 201 , unless the Sublease is sooner
terminated in accordance with its terms.

DATE:          , 20

                                                                                    “SUBTENANT”:

                                                                                    AUDIENCE, INC.,
                                                                                    a Delaware corporation

                                                                                    By:
                                                                                    Name:
                                                                                    Its:

                                                                                    “SUBLANDLORD”:

                                                                                    ZYNGA INC.,
                                                                                    a Delaware corporation

                                                                                    By:
                                                                                    Name:
                                                                                    Its:
                                                                                          Exhibit 21.1

                                                         Subsidiaries of Audience, Inc.

Subsidiary of Audience, Inc.:

Audience International, Inc. (Cayman Islands)

         Subsidiaries of Audience International, Inc.:

         Audience Manufacturing Services, Inc. (Cayman Islands)

         Audience Sales and Support, Inc. (Cayman Islands)

         Audience Singapore PTE LTD (Singapore)

                 Subsidiaries of Audience Singapore PTE LTD

                 Audience Korea Yuhan Hoesa (South Korea)
                                                                                                                                   Exhibit 23.1

                                         Consent of independent registered public accounting firm

We hereby consent to the use in this Amendment No. 3 to the Registration Statement on Form S-1 of Audience, Inc. of our report dated April
20, 2012 relating to the financial statements of Audience, Inc., which appears in such Registration Statement. We also consent to the reference
to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

San Jose, California
April 20, 2012