Delaware		77-0470324
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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PART I.		FINANCIAL INFORMATION
		Item 1.		Financial Statements (unaudited)
				Condensed Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001		3
				Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2002 and 2001		4
				Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 2002 and 2001		5
				Notes to Condensed Consolidated Financial Statements		6
		Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
		Item 3.		Quantitative and Qualitative Disclosures of Market Risk		20
PART II.		OTHER INFORMATION
		Item 1.		Legal Proceedings		21
		Item 2.		Changes in Securities and Use of Proceeds		21
		Item 4.		Submission of Matters to a Vote of Security Holders		21
		Item 5.		Other Information		22
		Item 6.		Exhibits and Reports on Form 8-K		22
SIGNATURES						23

		June 30, 2002				December 31, 2001
Assets
Current assets:
Cash and cash equivalents		$	7,592			$	7,509
Marketable securities			22,085				27,619
Accounts receivable, net of allowance for doubtful accounts of $40 and $20, respectively			777				666
Inventories, net			1,354				1,410
Related party notes receivable			406				144
Prepaid expenses and other current assets			772				883
Total current assets			32,986				38,231
Long term investments			1,008				3,048
Related party notes receivable			—				354
Property and equipment, net			1,039				1,216
Intangible assets, net of amortization of $903 and $770, respectively			—				133
Other assets			92				91
Total assets		$	35,125			$	43,073
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	382			$	449
Accrued liabilities			1,050				1,077
Notes payable			126				207
Total current liabilities			1,558				1,733
Other liabilities			55				52
Total liabilities			1,613				1,785
Contingencies (Note 4)
Stockholders’ equity:
Common stock			19				19
Additional paid-in capital			90,323				90,368
Deferred stock compensation			(502	)			(956	)
Accumulated deficit			(56,351	)			(48,291	)
Accumulated other comprehensive income			23				148
Total stockholders’ equity			33,512				41,288
Total liabilities and stockholders' equity		$	35,125			$	43,073

		For the Three Months Ended								For the Six Months Ended
		June 30, 2002				June 30, 2001				June 30, 2002				June 30, 2001
Revenues		$	877			$	568			$	1,816			$	1,786
Cost of goods sold			1,135				1,183				2,218				2,482
Gross loss			(258	)			(615	)			(402	)			(696	)
Operating expenses:
Research and development			842				581				1,631				1,324
Clinical and regulatory			333				464				651				954
Sales and marketing			1,982				2,138				3,860				3,461
General and administrative			1,027				1,129				1,999				2,253
Total operating expenses			4,184				4,312				8,141				7,992
Operating loss			(4,442	)			(4,927	)			(8,543	)			(8,688	)
Interest income, net			207				584				483				1,385
Net loss		$	(4,235	)		$	(4,343	)		$	(8,060	)		$	(7,303	)
Net loss per share, basic and diluted		$	(0.22	)		$	(0.23	)		$	(0.41	)		$	(0.39	)
Shares used in computing net loss per share, basic and diluted			19,509				19,081				19,458				18,887

		For the Six Months Ended,
		June 30, 2002				June 30, 2001
Cash Flows From Operating Activities
Net loss		$	(8,060	)		$	(7,303	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			348				387
Amortization of acquired technology			133				225
Amortization of stock-based compensation			257				706
Accretion of discount on securities, net			(56	)			(99	)
Loss on disposal of fixed assets			24				—
Changes in assets and liabilities:
Accounts receivable, net			(111	)			(255	)
Inventories			56				(787	)
Prepaid expenses and other current assets			111				138
Accounts payable			(67	)			(76	)
Accrued liabilities			(27	)			(349	)
Other long-term assets and liabilities			2				15
Net cash used in operating activities			(7,390	)			(7,398	)
Cash Flows From Investing Activities
Purchase of property and equipment			(195	)			(424	)
Purchase of marketable securities			(13,199	)			(27,721	)
Proceeds from maturities of marketable securities			20,704				27,928
Net cash provided by (used in) investing activities			7,310				(217	)
Cash Flows From Financing Activities
Principal payments on notes payable			(229	)			—
Proceeds from issuance of notes payable			148				—
(Payments) proceeds from related party notes receivable, net			92				(20	)
Proceeds from issuance of common stock, net of issuance costs			152				244
Net cash provided by financing activities			163				224
Net increase (decrease) in cash and cash equivalents			83