Item Number

Part I: Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets at December 31, 2003 and March 31, 2003

Condensed Consolidated Statements of Operations for the three and nine month periods ended December 31, 2003 and December 31, 2002

Condensed Consolidated Statements of Cash Flows for the nine month periods ended December 31, 2003 and December 31, 2002

Notes To Condensed Consolidated Financial Statements

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

Part II: Other Information

Item 1. Legal Proceedings

Item 2. Changes in Securities

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

Signature

March 31,

2003

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable trade, net of allowance for doubtful accounts of $489 at December 31 and $493 at March 31

Inventories

Other

Total current assets

Property and equipment

Acquired intangibles

Goodwill

Deferred income taxes

Other

Total assets

Current liabilities:

Accounts payable

Accrued liabilities

Income taxes payable

Loans payable

Total current liabilities

Long-term liabilities:

Deferred income taxes

Total liabilities

Stockholders’ equity:

Capital Stock:

Preferred stock:

Authorized - 5,000 preferred shares, $0.001 par value Issued and outstanding - none at December 31 or March 31

Common Stock:

Authorized - 100,000 common shares, $0.001 par value Issued and outstanding - 32,087 shares at December 31 and 31,184 shares at March 31

Additional paid-in capital

Cumulative other comprehensive loss

Deferred stock-based compensation

Deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues

Cost of revenues ⁽¹⁾

Gross profit

Operating expenses:

Research and development ⁽²⁾

Selling, general and administrative ⁽³⁾

Amortization of acquired intangibles

Costs associated with patent litigation

Total operating expenses

Loss from operations

Interest income

Gain on sale of investment

Imputed interest on lease liability

Net interest and other income

Income (loss) before income taxes

Provision for (recovery of) income taxes

Net income (loss)

Earnings (loss) per share:

Basic

Diluted

Weighted average number of common shares outstanding:

Basic

Diluted

⁽¹⁾ Amount excludes amortization of acquired developed technology included in amortization of acquired intangibles of:

⁽²⁾ Amount includes non-cash stock-based compensation of:

⁽³⁾ Amount includes non-cash stock-based compensation of:

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss to cash from operating activities:

Depreciation and amortization

Amortization of acquired intangibles

Non-cash stock-based compensation

Deferred income taxes

Gain on sale of investment

Other

Change in operating assets and liabilities:

Accounts receivable trade

Inventories

Other current assets

Accounts payable

Accrued liabilities

Income taxes payable

Net cash from operating activities

Cash flows used in investing activities:

Purchase of short-term investments

Proceeds on sales and maturities of short-term investments

Additions to property and equipment

Other

Net cash used in investing activities

Cash flows provided by financing activities:

Proceeds from issue of common stock

Repurchase of common stock

Repayment of loans payable

Net cash provided by financing activities

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period