Delaware (State or other jurisdiction of incorporation or organization)

36-3687863 (I.R.S. Employer Identification No.)

		Page
PART I—FINANCIAL INFORMATION		3
Item 1.    Financial Statements		3
Unaudited Balance Sheets as of June 30, 2002 and December 31, 2001		3
Unaudited Statements of Operations for the three months ended June 30, 2002 and 2001 and the six months     ended June 30, 2002 and 2001		4
Unaudited Statements of Cash Flows for the six months ended June 30, 2002 and 2001		5
Notes to Unaudited Financial Statements		6
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations		8
Item 3.    Quantitative and Qualitative Disclosures About Market Risk		11
PART II—OTHER INFORMATION		12
Item 1.    Legal Proceedings		12
Item 2.    Changes in Securities and Use of Proceeds		12
Item 4.    Submissions of Matters to a Vote of Security Holders		12
Item 5.    Other Information		13
Item 6.    Exhibits and Reports on Form 8-K		13
SIGNATURES		14

		June 30, 2002				December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$	530,965			$	582,579
Investments			10,175,857				6,842,956
Trade accounts receivable, less allowance for doubtful accounts of $25,000 at June 30, 2002 and December 31, 2001			1,043,149				1,112,952
Other receivable, net			74,006				67,449
Inventories, net			776,815				956,268
Prepaid expenses and other current assets			295,429				381,696
Total current assets			12,896,221				9,943,900
Equipment and leasehold improvements, net			9,090,981				8,914,745
Other assets, net			349,596				325,743
		$	22,336,798			$	19,184,388
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	629,854			$	714,135
Current portion of capital lease obligations			59,238				48,352
Accounts payable			584,959				1,233,466
Accrued expenses			1,223,670				732,427
Total current liabilities			2,497,721				2,728,380
Long-term debt, less current maturities			553,812				758,490
Long-term portion of capital lease obligations, less current maturities			66,970				53,900
			620,782				812,390
Contingent liabilities			—				—
Stockholders’ equity:
Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding			—				—
Common stock, $.01 par value, 25,000,000 shares authorized; 15,106,032 and 13,705,931 shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively			151,060				137,059
Additional paid-in capital			56,568,815				50,260,747
Accumulated deficit			(37,501,580	)			(34,754,188	)
Total stockholders’ equity			19,218,295				15,643,618
		$	22,336,798			$	19,184,388

		Three months ended June 30,								Six months ended June 30,
		2002				2001				2002				2001
Revenue:
Product revenue		$	1,516,197			$	957,314			$	2,829,773			$	1,937,489
Other revenue			145,649				92,065				239,755				183,815
Total revenue			1,661,846				1,049,379				3,069,528				2,121,304
Operating expense:
Cost of revenue			1,401,696				1,006,749				2,696,720				1,857,122
Research and development expense			480,042				362,519				1,003,726				800,189
Selling, general and administrative expense			1,006,104				1,090,995				2,091,319				2,226,949
Total operating expense			2,887,842				2,460,263				5,791,765				4,884,260
Loss from operations			(1,225,996	)			(1,410,884	)			(2,722,237	)			(2,762,956	)
Interest income			33,041				165,436				61,177				416,616
Interest expense			(28,792	)			(8,272	)			(56,282	)			(17,664	)
Other, net			(951	)			(3,000	)			(50	)			(12,000	)
Loss before provision for income taxes			(1,222,698	)			(1,256,720	)			(2,717,392	)			(2,376,004	)
Provisions for income taxes			(30,000	)			(30,000	)			(30,000	)			(30,000	)
Net loss		$	(1,252,698	)		$	(1,286,720	)		$	(2,747,392	)		$	(2,406,004	)
Net loss per share—basic and diluted		$	(0.09	)		$	(0.09	)		$	(0.20	)		$	(0.18	)
Weighted average number of common shares outstanding			14,232,786				13,643,771				13,980,694				13,628,562

		Six months ended June 30,
		2002				2001
Operating activities:
Net loss		$	(2,747,392	)		$	(2,406,004	)
Adjustment to reconcile net loss to net cash (used in) operating activities:
Depreciation and amortization			569,170				379,755
Allowance for excess inventory quantities			25,019				(12,172	)
Provision for asset write-down			—				14,086
Changes in assets and liabilities related to operations:
Trade accounts receivable			69,803				696,788
Other receivable			(6,557	)			51,352
Inventories			154,434				(1,129,513	)
Prepaid expenses and other assets			54,783				25,072
Accounts payable			62,261				758,945
Accrued liabilities			491,243				3,189
Net cash (used in) operating activities			(1,327,236	)			(1,618,502	)
Investing activities:
Acquisition of equipment and leasehold improvements			(573,964	)			(3,821,301	)
Purchases of held-to-maturity investments			(55,698,953	)			(36,035,911	)
Maturities of held-to maturity investments			52,366,052				41,083,299
Net cash (used in) provided by investing activities			(3,906,865	)			1,226,087
Financing activities:
Principal payment on debt obligations, including capital leases			(305,758	)			(153,259	)
Proceeds from borrowings			—				782,333
Proceeds from sale of common stock, net, and exercise of stock options			6,322,069				285,370
Payments of accounts payable incurred for the purchase of equipment and leasehold improvements			(833,824	)			—
Net cash provided by financing activities			5,182,487				914,444
(Decrease) increase in cash and cash equivalents			(51,614	)			522,029
Cash and cash equivalents at beginning of period			582,579				473,036
Cash and cash equivalents at end of period		$	530,965			$	995,065