Delaware

77-0302527

(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
2403 Walsh Avenue, Santa Clara
California		95051
(Address of principal executive offices)		(Zip Code)

		December 31, 2001				June 30, 2002
ASSETS
Current assets:
Cash and cash equivalents		$	42,941			$	32,577
Short-term investments			4,620				12,512
Trade accounts receivable, net			1,370				1,732
Related party receivable			747				671
Inventories			805				1,209
Deferred tax assets			512				1,664
Other current assets			1,435				1,347
Total current assets			52,430				51,712
Property and equipment, net			1,357				1,327
Purchased intangibles, including goodwill			—				2,260
Other assets			101				284
		$	53,888			$	55,583
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	602			$	662
Accrued expenses			1,046				1,835
Accrued restructuring			—				262
Deferred revenue			220				498
Total current liabilities			1,868				3,257
Deferred tax liabilities			—				354
Deferred rent			4				—
Total liabilities			1,872				3,611
Stockholders’ equity:
Common stock			19				19
Additional paid-in capital			53,093				53,478
Deferred stock-based compensation			(2,492	)			(1,105	)
Retained earnings (accumulated deficit)			1,396				(420	)
Total stockholders’ equity			52,016				51,972
		$	53,888			$	55,583

		Three Month Period Ended June 30,								Six Month Period Ended June 30,
		2001				2002				2001				2002
Revenue		$	4,147			$	3,493			$	9,822			$	6,915
Cost of revenue (inclusive of amortization of deferred stock-based compensation of $170 and $31 in the three month period ended June 30, 2001 and 2002, respectively, and of $346 and $80 in the six month period ended June 30, 2001 and 2002, respectively)			1,213				652				2,478				1,336
Amortization of acquired developed technology			—				17				—				17
Gross profit			2,934				2,824				7,344				5,562
Operating expenses:
Research and development (exclusive of amortization of deferred stock-based compensation of $750 and $(229) in the three month period ended June 30, 2001 and 2002, respectively, and of $1,476 and $70 in the six month period ended June 30, 2001 and 2002, respectively)			1,793				1,982				3,709				3,895
Sales and marketing (exclusive of amortization of deferred stock-based compensation of $145 and $(32) in the three month period ended June 30, 2001 and 2002, respectively, and of $360 and $(155) in the six month period ended June 30, 2001 and 2002, respectively)			774				1,215				1,377				2,480
General and administrative (exclusive of amortization of deferred stock-based compensation of $371 and $59 in the three month period ended June 30, 2001 and 2002, respectively, and of $782 and $191 in the six month period ended June 30, 2001 and 2002, respectively)			757				1,051				1,564				2,173
Acquired in-process research and development			—				410				—				410
Amortization of purchased intangibles			—				12				—				12
Restructuring expenses			—				443				—				443
Amortization of deferred stock-based compensation			1,266				(202	)			2,618				106
Total operating expenses			4,590				4,911				9,268				9,519
Loss from operations			(1,656	)			(2,087	)			(1,924	)			(3,957	)
Other income, net			532				197				1,174				370
Loss before provision for (benefit from) income taxes			(1,124	)			(1,890	)			(750	)			(3,587	)
Provision for (benefit from) income taxes			(37	)			(1,081	)			707				(1,771	)
Net loss		$	(1,087	)		$	(809	)		$	(1,457	)		$	(1,816	)
Net loss per share:
Basic		$	(0.06	)		$	(0.04	)		$	(0.08	)		$	(0.10	)
Diluted		$	(0.06	)		$	(0.04	)		$	(0.08	)		$	(0.10	)
Weighted average shares outstanding:
Basic			18,712				19,083				18,657				18,998
Diluted			18,712				19,083				18,657				18,998

		Six Month Period Ended June 30,
		2001				2002
Cash flows from operating activities:
Net loss		$	(1,457	)		$	(1,816	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			195				304
Provision for doubtful accounts			4				(9	)
Write-down of property and equipment in connection with restructuring			—				134
Fair value of stock options in exchange for services			16				—
Acquired in-process research and development			—				410
Amortization of acquired developed technology			—				17
Amortization of purchased intangibles			—				12
Amortization of deferred stock-based compensation			2,964				186
Changes in assets and liabilities:
Accounts receivable			943				(122	)
Inventories			(265	)			(177	)
Deferred tax assets			162				(1,034	)
Other assets			(607	)			110
Accounts payable			322				(79	)
Accrued expenses			(2,087	)			200
Accrued restructuring			—				262
Deferred revenue			—				278
Deferred rent			(10	)			(4	)
Net cash provided by (used in) operating activities			180				(1,328