ONCE YOU GO FLASH YOU CAN T GO BACK Takeaways from the Flash Memory Summit

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1 ONCE YOU GO FLASH YOU CAN T GO BACK Takeaways from the Flash Memory Summit August 21, 2013 ABOUT US: The Spartan Group LLC (TSG) is a premier investment banking firm dedicated to delivering creative advice and superior results to growth and middle market companies. TSG is headquartered in Los Angeles with offices in San Francisco and Silicon Valley. ADDITIONAL INFORMATION: Please contact us if you would like to learn more about the storage industry or discuss capital markets and strategic issues. CONTACT: Michael A. Mitgang, CFA Managing Director Head of Technology Banking 2225 E. Bayshore Rd., Ste., 237 Palo Alto, CA (650) Direct mmitgang@spartantsg.com HEADQUARTERS: The Spartan Group LLC 39 E. Union Street Pasadena, CA (626) Main (626) Fax VISIT US: Last week we attended the Flash Memory Summit (FMS) in Santa Clara which showcased a number of innovative products and some very exciting announcements. FMS was well attended this year, up over 30% compared to last year, with attendance rumored at over 4,000. The following are some of our key observations from FMS. In addition, we have included a summary of comparable companies as well as recent selected private equity financings and M&A transactions for your reference. Samsung s Announcement of 3D V-NAND. The star of FMS was Samsung s 3D V-NAND. This technology, to be used both for consumer and enterprise applications, offers the ability to have 128 GB densities in a single chip by effectively layering the NAND in a 3D array which can be stacked in as many as 24 vertical layers. Samsung anticipates scaling this to 1 TB by Samsung further indicated that it has started mass producing the chips and intends to ramp production into a new Fab in China. According to Samsung, these chips appear to have solved the problem of scaling beyond the 10 nm class by increasing capacity vertically rather than horizontally thereby requiring less real estate and power yet providing increased performance when compared to planar NAND. Samsung forecasts that SSD adoption will double to triple from current estimates by 2020 with the advent 3D V-NAND. SMART Storage SSD Residing on Memory Cards. SMART Storage, showcased its ULLtraDIMM SSD, which allows SSD to reside on memory cards like DRAM, utilizing Ottawa-based Diablo Technologies Memory Channel Storage (a new storage and system memory architecture that directly attaches persistent memory to host processors of a server or storage array using industry standard DIMM form factors). This technology uses SSD as a drop-in replacement for standard RDIMMs and substantially reduces latency. We have been calling for flash to effectively be connected to the motherboard for some time and this is the closest we have seen as it connects directly to a processor's memory controller. ULLtraDIMM is likely a key reason SanDisk acquired SMART Storage. Testing Needs to Keep up with Evolving Technologies, Form Factors and Interfaces. Companies that test SSD and flash need to continue to innovate and evolve their interface technologies beyond PCIe in order to test these new and evolving offerings and those with the combined skills and expertise in HDD and SSD test have a competitive advantage. Also, the ability to offer storage system test and early warning failure indicators/predictors are valuable tools for enterprises and broaden markets beyond testing solutions for OEMs. Violin Memory Predicts All Silicon Storage in Data Centers. While enterprises are still evaluating their strategies around flash utilization and the rate at which they expect to deploy flash, Violin Memory expects that all data centers will only use silicon based storage by 2020 except for archiving purposes. Page 1 of 5

2 SSD and HDD Need to Work in Peaceful Harmony. Seagate highlighted an interesting slide in their keynote presentation that demand for storage is outpacing storage production creating a storage gap. Source: Seagate s Flash Memory Summit Presentation (8/2013) Of course, we will see how this storage gap unfolds with new technologies such as 3D V-NAND coming to market. However, as a result, Seagate believes that flash needs to work with HDD in order to meet future demand and explains why it developed partnerships and/or investments in companies like Samsung, Toshiba and Virident. Innovative Hybrid Drive Solutions Moving to Software. Hybrid drives/systems continue to be viable solutions that optimize IOPS and $/GB. Deduplication and tiering software imbedded in the hybrid architecture is critical to driving this outcome, and companies like Tegile Systems and Enmotus are developing compelling solutions. NAND Manufacturers will Control which Flash & SSD Players Win or Lose. Strategic alliances with NAND producers will be critical to ensure ongoing access to flash memory. NAND allocations will drive the success of storage providers and those with strategic partnerships/investments are arguably best positioned to ensure ongoing release of flash based storage solutions. There is Value in Poor Performance Flash. Facebook introduced a new perspective regarding the need for cheap, high density, low-endurance, and poor performance rather than high performance, flash storage. Facebook s argument is that this alternative would make Write Once - Read Many (WORM) a viable low cost option for cold storage rather than HDD which tends to consume too much power at higher failure rates. Of course, this may only be relevant for Facebook-like enterprises where data (i.e. photos, videos) is written once but accessed frequently and is not continuously modified. Lastly, increasing M&A and Private Equity Activity. As summarized in the attached pages, we have seen increased M&A activity in 1H13 with acquisitions announced by companies which include EMC (ScaleIO), SanDisk (SMART Storage) and HGST (STEC) as well as increased private equity financing activity with companies such as Tegile Systems and SolidFire each raising over $30 million in July. In addition, according to a recent article by CB Insights, nearly half of the $1.9 billion invested into approximately 50 flash storage-related startups since 2007 was invested into just 10 companies including Violin Memory and Nimble Storage. Page 2 of 5

3 Select Public Company Summary Data ($ in millions except per share data) Market Data LTM Operating Data Forward Estimates Price at % of 52 Equity Enterprise Debt / Total LTM LTM CY 2013 CY 2013 Company Name Ticker LTM Date 08/20/13 Week High Value ($M) Value ($M) Total Cap. Assets Revenue EBITDA Revenue EBITDA Large Cap. Companies EMC NYSE:EMC 6/30/2013 $ % $ 53,540 $ 50, % $ 44,398 $ 22,309 $ 5,328 $ 23,454 $ 7,528 Fusion-io NYSE:FIO 6/30/ % 1, NA (13) 392 (84) Intel NasdaqGS:INTC 6/29/ % 110, , % 85,661 52,325 20,187 52,969 20,083 IBM NYSE:IBM 6/30/ % 201, , % 115, ,383 26, ,388 27,494 LSI NasdaqGS:LSI 6/30/ % 4,026 3,353 NA 2,235 2, , Micron Technology NasdaqGS:MU 5/30/ % 14,331 16, % 14,055 8,193 1,792 10,742 3,142 NetApp NasdaqGS:NTAP 7/26/ % 15,127 11, % 9,018 6, ,558 1,435 Samsung Electronics KOSE:A /30/2013 1, % 148, , % 177, ,872 44, ,184 49,675 SanDisk NasdaqGS:SNDK 6/30/ % 13,270 11, % 9,619 5,632 1,559 6,053 1,991 Seagate Technology NasdaqGS:STX 6/28/ % 13,834 14, % 9,243 14,351 2,963 14,135 3,019 Toshiba TSE:6502 6/30/ % 17,282 36, % 61,593 59,671 4,263 63,705 5,173 Mean 81.2% 53,996 54, % 48,139 42,269 9,794 44,726 10,909 Median 85.5% 15,127 16, % 14,055 14,351 2,963 14,135 3,142 Small Cap. Companies Maxwell Technologies NasdaqGS:MXWL 6/30/2013 $ % $ 259 $ % $ 189 $ 191 $ 22 $ 191 $ 19 OCZ Technology NasdaqCM:OCZ 5/31/ % NA (17) 253 (38) Qlogic NasdaqGS:QLGC 6/30/ % NA STEC NasdaqGS:STEC 6/30/ % NA (86) 103 (75) Xyratex NasdaqGS:XRTX 5/31/ % NA Mean 72.6% % Median 83.7% % Select Public Company Operating and Valuation Metrics LTM Operating Statistics Total Enterprise Value (TEV) / Return On Return On Return On Revenue EBITDA EBITDA LTM CY 2013 LTM CY 2013 Company Name Ticker LTM Date Assets Equity Capital Growth Growth Margin Revenue Revenue EBITDA EBITDA Large Cap. Companies EMC NYSE:EMC 6/30/ % 12.8% 9.4% 1.4% 1.7% 23.9% 2.3x 2.3x 10.1x 10.3x Fusion-io NYSE:FIO 6/30/ % -8.0% -3.9% -0.1% % -3.0% 1.9x 1.8x NM 33.6x Intel NasdaqGS:INTC 6/29/ % 18.5% 12.4% -1.3% -4.5% 38.6% 2.0x 2.0x 5.3x 4.8x IBM NYSE:IBM 6/30/ % 82.8% 25.7% -0.8% -0.6% 25.6% 2.2x 2.2x 8.6x 8.4x LSI NasdaqGS:LSI 6/30/ % 9.1% 8.8% -2.9% -7.0% 14.3% 1.4x 1.3x 9.8x 9.1x Micron Technology NasdaqGS:MU 5/30/ % -9.2% -0.2% 1.8% 18.8% 21.9% 2.0x 2.0x 9.8x 14.4x NetApp NasdaqGS:NTAP 7/26/ % 12.5% 8.0% 1.1% 8.4% 13.9% 1.7x 1.7x 12.4x 12.9x Samsung Electronics KOSE:A /30/ % 22.9% 15.8% 1.8% 2.7% 23.2% 0.6x 0.7x 2.6x 2.9x SanDisk NasdaqGS:SNDK 6/30/ % 10.0% 8.3% 8.6% 30.7% 27.7% 2.0x 2.3x 7.4x 10.4x Seagate Technology NasdaqGS:STX 6/28/ % 52.5% 20.7% -6.9% -17.5% 20.6% 1.0x 0.9x 4.9x 3.3x Toshiba TSE:6502 6/30/ % 8.9% 4.8% -0.9% 28.6% 9.2% 0.6x 0.6x 6.3x 7.6x Mean 6.2% 19.3% 10.0% 0.2% -15.3% 19.6% 1.6x 1.6x 7.7x 10.7x Median 6.5% 12.5% 8.8% -0.1% 1.7% 21.9% 1.9x 1.8x 8.0x 9.1x Small Cap. Companies Maxwell Technologies NasdaqGS:MXWL 6/30/ % 9.1% 6.6% 11.3% 20.9% 11.7% 1.2x 1.5x 10.5x 13.6x OCZ Technology NasdaqCM:OCZ 5/31/ % -7.8% -6.3% 10.9% % -4.1% 0.1x 0.2x NM 14.8x Qlogic NasdaqGS:QLGC 6/30/ % 7.2% 4.1% -3.6% -11.4% 16.4% 1.2x 1.1x 7.2x 5.3x STEC NasdaqGS:STEC 6/30/ % -45.2% -28.6% -12.3% % -70.3% 1.7x 1.2x NM NM Xyratex NasdaqGS:XRTX 5/31/ % -0.7% 0.1% -10.0% -17.7% 2.1% 0.2x 0.2x 9.4x 4.6x Mean -3.8% -7.5% -4.8% -0.7% % -8.8% 0.9x 0.8x 9.0x 9.6x Median 0.0% -0.7% 0.1% -3.6% -17.7% 2.1% 1.2x 1.1x 9.4x 9.4x Page 3 of 5

4 Select Public Company LTM Equity Performance Index 40% 30% 20% 10% 0% (10%) (20%) (30%) (40%) 8/20/ /20/ /20/2012 2/20/2013 4/20/2013 6/20/2013 8/20/ % Large Cap. Companies (16.3%) Small Cap. Companies 16.7% NASDAQ 16.1% S&P % Russell 2000 Note: Index components listed on previous page. Aggregate Flash Storage Funding vs. Top 10 Most Well-Funded Companies April 2007 to June 2013 ($ in millions) Source: CB Insights. Page 4 of 5

5 Select Recent Private Placement Financing Activity in the Storage Industry Last 18 Months Date ($M) Announced Issuer Investors Amount Raised 08/12/2013 OCZ Technology Group, Inc. (NasdaqCM:OCZ) Undisclosed Investors /22/2013 Savage IO, Inc. Undisclosed Investors /22/2013 Tegile Systems, Inc. MeriTech Capital Partners; SanDisk Corp. (NasdaqGS:SNDK); Western Digital 35.0 Capital 07/02/2013 SolidFire, Inc. New Enterprise Associates; Novak Biddle Venture Partners; Samsung Venture 31.0 Investment Corporation; Valhalla Partners 04/19/2013 XIO Oak Investment Partners /11/2013 OCZ Technology Group, Inc. (NasdaqCM:OCZ) Hercules Technology Growth Capital, Inc. (NYSE:HTGC) /21/2013 Skyera, Inc. Western Digital Corporation (NasdaqGS:WDC); Dell Corporate Ventures /28/2013 Virident Systems, Inc. Seagate Technology Public Limited Company (NasdaqGS:STX) /22/2013 Hutchinson Technology Inc. (NasdaqGS:HTCH) Undisclosed Investors /17/2013 Adesto Technologies Corporation, Inc. Undisclosed Investors /16/2013 Enmotus Inc. Undisclosed Investors /25/2012 Kaminario Inc. Mitsui & Co. Global Investment, Inc. n/a 08/08/2012 Adesto Technologies Corporation, Inc. Undisclosed Investors /12/2012 Tintri, Inc. Menlo Ventures; New Enterprise Associates; Lightspeed Venture Partners /05/2012 WhipTail Technologies, Inc. RRE Ventures LLC; Ignition Partners; Spring Mountain Capital, LP; SanDisk 31.0 Ventures 05/18/2012 Kaminario Inc. Globespan Capital Partners; Pitango Venture Capital; Tenaya Capital; Sequoia 25.0 Capital Israel 05/08/2012 NextIO, Inc. Adams Capital Management, Inc.; Crescendo Venture Management LLP /09/2012 Virident Systems, Inc. Globespan Capital Partners; Sequoia Capital; Mitsui & Co. Global Investment Ltd.; 26.0 Artiman Ventures; Hercules Technology Growth Capital, Inc. (NYSE:HTGC) 04/04/2012 Starboard Storage Systems Inc. Grazia Equity GmbH; JP Ventures GmbH /29/2012 Adesto Technologies Corporation, Inc. Undisclosed Investors /28/2012 Hutchinson Technology Inc. (NasdaqGS:HTCH) Goldman Sachs Asset Management, L.P.; Silver Lake Credit; Liberty Harbor Master 40.0 Fund I, L.P., 03/20/2012 Link_A_Media Devices Corporation Undisclosed Investors /14/2012 Violin Memory, Inc. Highland Capital Partners; SAP Ventures; Toshiba Corp. (TSE:6502); GE Asset Management; Juniper Networks, Investment Arm; Intuitive Venture Partners 96.2 Select Recent M&A Activity in the Storage Industry Last 18 Months Date ($M) Announced Target Buyer Deal Value 07/11/2013 Scaleio, Inc. EMC Corporation (NYSE:EMC) n/a 07/02/2013 SMART Storage Systems, Inc. SanDisk Corp. (NasdaqGS:SNDK) /24/2013 STEC, Inc. (NasdaqGS:STEC) HGST, Inc /14/2013 Enpirion, Inc. Altera Corp. (NasdaqGS:ALTR) /14/2013 Cool International, LLC Techware Distribution, Inc. n/a 04/24/2013 NexGen Storage, Inc. Fusion-io, Inc. (NYSE:FIO) /18/2013 GridIron Systems Inc. Violin Memory, Inc. n/a 11/16/2012 EPOS Technologies Limited Qualcomm Technologies, Inc. n/a 08/16/2012 Texas Memory Systems, Inc. International Business Machines Corporation (NYSE:IBM) n/a 06/19/2012 Link_A_Media Devices Corporation SK Hynix, Inc. (KOSE:A000660) /10/2012 XtremIO Ltd. EMC Corporation (NYSE:EMC) /02/2012 Standard Microsystems Corp. Microchip Technology Inc. (NasdaqGS:MCHP) 37.0 Page 5 of 5