Delaware		94-2362692
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

Part I:		Financial Information		3
Item 1:		Financial Statements (Unaudited)		3
		Condensed Consolidated Balance Sheets		3
		Condensed Consolidated Statements of Operations		4
		Condensed Consolidated Statements of Cash Flows		5
		Notes to Condensed Consolidated Financial Statements		6
Item 2:		Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3:		Quantitative and Qualitative Disclosures about Market Risk		17
Part II:		Other Information		18
Item 1:		Legal Proceedings		18
Item 2:		Changes in Securities		18
Item 3:		Defaults upon Senior Securities		18
Item 4:		Submission of Matters to a Vote of Security Holders		18
Item 5:		Other Information		18
Item 6:		Exhibits and Reports on Form 8-K		19
		a:   Exhibits		19
		b:   Reports on Form 8-K		19
Signatures				20

		June 30, 2002			December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$10,444			$  9,789
Short-term investments		10,213			11,216
Accounts receivable, net		2,372			4,227
Inventories		3,577			3,575
Income tax receivable		88			59
Deferred tax asset		1,894			—
Due from Axel Johnson Inc.		779			574
Prepaid expenses and other current assets		1,307			1,598
Total current assets		30,674			31,038
Property and equipment, net		2,465			3,135
Other non-current assets		292			—
Total assets		$33,431			$34,173
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$  2,133			$  2,115
Accrued expenses and other current liabilities		7,868			7,120
Total current liabilities		10,001			9,235
Other non-current liabilities		1,757			2,162
Total liabilities		11,758			11,397
Stockholders’ equity:
Class A Common Stock		88			88
Class B Common Stock		100			100
Additional paid-in capital		83,228			83,210
Accumulated other comprehensive income/(loss)		13			(1	)
Accumulated deficit		(61,756	)		(60,621	)
Total stockholders’ equity		21,673			22,776
Total liabilities and stockholders’ equity		$33,431			$34,173

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
Product revenues		$	4,387			$	9,767			$	10,716			$	20,614
Service revenues			1,442				1,505				2,829				2,872
Total revenues			5,829				11,272				13,545				23,486
Product cost of revenues			2,576				8,639				5,306				14,614
Service cost of revenues			296				539				613				1,158
Total cost of revenues			2,872				9,178				5,919				15,772
Gross profit			2,957				2,094				7,626				7,714
Operating expenses:
Research and development			1,058				2,021				2,037				4,117
Selling, general and administrative			4,259				5,633				8,546				11,697
Restructuring			253				4,761				253				4,761
Total operating expenses			5,570				12,415				10,836				20,575
Loss from operations			(2,613	)			(10,321	)			(3,210	)			(12,861	)
Interest and other income			132				364				218				773
Loss before income taxes			(2,481	)			(9,957	)			(2,992	)			(12,088	)
Income tax provision/(benefit)			18				16,505				(1,856	)			15,870
Net loss		$	(2,499	)		$	(26,462	)		$	(1,136	)		$	(27,958	)
Basic and diluted net loss per share		$	(0.13	)		$	(1.41	)		$	(0.06	)		$	(1.49	)
Basic and diluted weighted average shares			18,852				18,804				18,849				18,789

		Six Months Ended June 30,
		2002				2001
Cash flows from operating activities:
Net loss		$	(1,136	)		$	(27,958	)
Depreciation and amortization			778				1,163
Non-cash restructuring and cost of revenue charges			—				2,280
(Increase)/decrease in deferred income taxes			(1,894	)			15,790
Increase in deferred revenue			664				48
Decrease in accrued restructuring			(580	)			—
Net decrease in other working capital accounts			2,474				4,583
Net cash provided by/(used in) operating activities			306				(4,094	)
Cash flows from investing activities:
Purchases of property and equipment			(95	)			(1,097	)
Purchases of short-term investments			(9,247	)			(14,021	)
Sales and maturities of short-term investments			10,250				15,747
Licenses long-term			(333	)			—
Net cash provided by investing activities			575				629
Cash flows from financing activities:
Payments to Axel Johnson Inc.			(205	)			(244	)
(Decrease)/increase in long-term deposits and capital lease obligations			(53	)			45
Proceeds from issuances of Class A Common Stock			18				322
Net cash (used in)/provided by financing activities			(240	)			123
Effect of unrealized investment gain and foreign exchange rates on cash			14				2