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		18
Item 4:		Controls and Procedures		18
Part II:		Other Information		19
Item 1:		Legal Proceedings		19
Item 2:		Changes in Securities		19
Item 3:		Defaults upon Senior Securities		19
Item 4:		Submission of Matters to a Vote of Security Holders		19
Item 5:		Other Information		19
Item 6:		Exhibits and Reports on Form 8-K		19
		a:   Exhibits		19
		b:   Reports on Form 8-K		19
Signatures				20
Certifications				21

		September 30, 2002				December 31, 2001
ASSETS
Current assets:
Cash and cash equivalents		$	15,401			$	9,789
Short-term investments			5,043				11,216
Accounts receivable, net			2,555				4,227
Inventories			4,127				3,575
Income tax receivable			112				59
Due from Axel Johnson Inc.			651				574
Prepaid expenses and other current assets			854				1,598
Total current assets			28,743				31,038
Property and equipment, net			2,218				3,135
Other non-current assets, net			250				—
Total assets		$	31,211			$	34,173
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	1,883			$	2,115
Accrued expenses and other current liabilities			7,459				7,120
Total current liabilities			9,342				9,235
Other non-current liabilities			1,715				2,162
Total liabilities			11,057				11,397
Stockholders’ equity:
Class A Common Stock			89				88
Class B Common Stock			100				100
Additional paid-in capital			83,231				83,210
Accumulated other comprehensive income/(loss)			10				(1	)
Accumulated deficit			(63,276	)			(60,621	)
Total stockholders’ equity			20,154				22,776
Total liabilities and stockholders’ equity		$	31,211			$	34,173

		Three Months Ended September 30,								Nine Months Ended September 30,
		2002				2001				2002				2001
Product revenues		$	4,009			$	8,905			$	14,725			$	29,519
Service revenues			1,333				1,470				4,162				4,342
Total revenues			5,342				10,375				18,887				33,861
Product cost of revenues			1,926				4,884				7,232				19,498
Service cost of revenues			202				421				815				1,579
Total cost of revenues			2,128				5,305				8,047				21,077
Gross profit			3,214				5,070				10,840				12,784
Operating expenses:
Research and development			1,036				1,697				3,073				5,814
Selling, general and administrative			3,844				4,909				12,390				16,606
Restructuring			(61	)			—				192				4,761
Total operating expenses			4,819				6,606				15,655				27,181
Loss from operations			(1,605	)			(1,536	)			(4,815	)			(14,397	)
Interest and other income			90				284				308				1,057
Loss before income taxes			(1,515	)			(1,252	)			(4,507	)			(13,340	)
Income tax provision/(benefit)			5				26				(1,851	)			15,896
Net loss		$	(1,520	)		$	(1,278	)		$	(2,656	)		$	(29,236	)
Basic and diluted net loss per share		$	(0.08	)		$	(0.07	)		$	(0.14	)		$	(1.56	)
Basic and diluted weighted average shares			18,858				18,823				18,852				18,800

		Nine Months Ended September 30,
		2002				2001
Cash flows from operating activities:
Net loss		$	(2,656	)		$	(29,236	)
Depreciation and amortization			1,164				1,624
Non-cash restructuring and cost of revenue charges			—				2,280
Decrease in deferred income taxes			—				15,790
Increase/(decrease) in deferred revenue			587				(205	)
Decrease in accrued restructuring			(855	)			(1,858	)
Net decrease in other working capital accounts			1,824				8,113
Net cash provided by/(used in) operating activities			64				(3,492	)
Cash flows from investing activities:
Purchases of property and equipment			(192	)			(1,195	)
Purchases of short-term investments			(9,248	)			(15,066	)
Sales and maturities of short-term investments			15,420				20,851
Purchase of licenses			(333	)			—
Net cash provided by investing activities			5,647				4,590
Cash flows from financing activities:
Payments to Axel Johnson Inc.			(77	)			(605	)