Washington (State or Other Jurisdiction of Incorporation or Organization)		91-1405022 (I.R.S. Employer Identification Number)
21919 30th Drive SE, Bothell, WA (Address of Principal Executive Offices)		98021-3904 (Zip Code)

Common Stock, $0.01 par value (Class)

14,081,613 (Outstanding as of August 12, 2002)

				Page No.
PART I		FINANCIAL INFORMATION
Item 1.		Financial Statements (unaudited)
		Condensed Consolidated Balance Sheets—June 30, 2002 and December 31, 2001		3
		Condensed Consolidated Statements of Operations—Three and six months ended June 30, 2002 and 2001		4
		Condensed Consolidated Statements of Cash Flows—Six months 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 about Market Risk		23
PART II		OTHER INFORMATION
Item 1.		Legal Proceedings		23
Item 4.		Submission of Matters to a Vote of Security Holders		24
Item 6.		Exhibits and Reports on Form 8-K		24
SIGNATURE				25

		June 30,     2002				December 31,     2001
		(In thousands, except share data)
Assets
Current assets:
Cash and cash equivalents		$	71,693			$	33,116
Accounts receivable, less allowance for doubtful accounts of $768 and $932			14,002				14,003
Inventories			8,644				8,299
Prepaid expenses and other current assets			1,329				1,017
Total current assets			95,668				56,435
Property and equipment, net			5,873				5,685
Receivable from affiliate			—				188
Other assets			800				870
Total assets		$	102,341			$	63,178
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable		$	2,698			$	1,914
Accrued expenses			4,592				3,816
Current portion of long-term obligations			356				131
Deferred revenue			1,973				1,248
Total current liabilities			9,619				7,109
Deferred rent			224				201
Long-term obligations, less current portion			60				185
Total liabilities			9,903				7,495
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $1.00 par value
Authorized shares – 6,000,000
Issued and outstanding shares – none			—				—
Common stock, $.01 par value:
Authorized shares – 50,000,000
Issued and outstanding shares:
As of June 30, 2002 – 14,077,262
As of December 31, 2001 – 11,363,231			141				114
Additional paid-in-capital			176,163				133,470
Accumulated deficit			(84,062	)			(77,901	)
Accumulated other comprehensive income			196				—
Total shareholders’ equity			92,438				55,683
Total liabilities and shareholders’ equity		$	102,341			$	63,178

		Three Months Ended June 30,								Six Months Ended June 30,
		2002				2001				2002				2001
		(In thousands, except loss per share)
Revenue		$	16,600			$	10,283			$	29,443			$	18,446
Cost of revenue			6,944				5,325				12,339				10,191
Gross margin			9,656				4,958				17,104				8,255
Operating expenses:
Research and development			3,095				3,231				6,343				6,786
Sales and marketing			7,715				5,523				14,046				11,055
General and administrative			1,424				957				2,914				2,086
Total operating expenses			12,234				9,711				23,303				19,927
Other income (loss):
Interest income			173				62				295				450
Interest expense			(42	)			(36	)			(80	)			(69	)
Equity in losses of affiliates			(43	)			(16	)			(177	)			(177	)
Loss on investments			—				(290	)			—				(290	)
Total other income (loss)			88				(280	)			38				(86	)
Net loss		$	(2,490	)		$	(5,033	)		$	(6,161	)		$	(11,758	)
Basic and diluted net loss per share		$	(0.20	)		$	(0.52	)		$	(0.51	)		$	(1.23	)
Weighted average common and potential common shares     used in computing net loss per share			12,623				9,623				12,001				9,595

		Six Months Ended June 30,
			2002				2001
		(In thousands)
Operating activities:
Net loss		$	(6,161	)		$	(11,758	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on investments			—				290
Depreciation and amortization			1,228				1,200
Equity in loss of affiliates			177				177
Changes in operating assets and liabilities:
Accounts receivable			207				(3,095	)
Receivable from affiliates			26				(101	)
Inventories			(294	)			5,093
Prepaid expenses and other current assets			(235	)			760
Other assets			(45	)			(360	)
Accounts payable			784				(3,715	)
Accrued expenses			494				(473	)
Deferred liabilities			748				345
Net cash used in operating activities			(3,071	)			(11,637	)
Investing activities:
Purchase of investments			—				(2,573	)
Proceeds from maturities of investments			—				12,604
Purchase of equipment			(1,329	)			(718	)
Net cash provided by (used in) investing activities			(1,329	)			9,313
Financing activities:
Proceeds from sale of common shares			42,885				—
Repayment of long-term obligations			(64	)			(286	)
Exercise of stock options			102				617
Net cash provided by financing activities			42,923