{{ Here’s the first part of the letter to the shareholders, which explains the game board
theme of the Dot Hill Annual Report. }}

Dear Fellow Shareholders,

Welcome to the Game of Survival, otherwise known as the Dot Hill Annual Report 2000. We chose this appropriate theme for a variety of reasons.

Our SANnet line of disk storage systems demonstrates survival quite literally. These products are certified to withstand real-life disasters such as major earthquakes, lightning strikes and dust storms to ensure that they remain operational under almost any circumstances. This quality is called "survivability," and it’s extremely important in the world of disk storage. Dot Hill is the only company to offer a line of storage products with NEBS level 3 certification, a survivability level equal to that of global telephone networks.

In the marketplace, the SANnet family has not only survived, but thrived. Introduced in 1999, SANnet systems produced $30 million in sales in 2000. This product family represented 35% of Dot Hill’s net revenue in Q4 2000. In fact, SANnet sales jumped up 45% from Q3 to Q4, foreshadowing continuing demand in 2001. Not only have we transitioned most of our existing customers to SANnet, but garnered $7.8 million in new customer revenue. SANnet has been essential to Dot Hill’s continuing climb up the storage market food chain.