UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                       ---------------------------------

                                   FORM 10-K/A

 [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                  For the fiscal year ended September 28, 2002

                                       or

 [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                 For the transition period from ______ to ______

                         COMMISSION FILE NUMBER 0-22632
                        ---------------------------------

                            ASANTE TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its charter)

            Delaware                                    77-0200286
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                                  821 Fox Lane
                           San Jose, California 95131
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (408) 435-8388
                        ---------------------------------

           Securities registered pursuant to Section 12(g) of the Act:
                    Common Stock, par value $0.001 per share
                        ---------------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months  (or for such  shorter  period as the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past ninety days. YES    NO X
                                          ---   ---

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-K/A or any  amendment to
this Form 10-K/A. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant,  based upon the closing  sale price of the Common  Stock on November
29,  2002,  as  reported  on the  OTC  (Over-the-Counter)  Bulletin  Board,  was
approximately  $603,961.  Shares of Common Stock held by officers and  directors
and their  affiliated  entities and related  persons have been  excluded in that
such persons may be deemed to be  affiliates.  This  determination  of affiliate
status is not necessarily conclusive for other purposes.

Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes No X

As of November 22, 2003, the  Registrant  had 10,149,521  shares of Common Stock
outstanding.
                        ---------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions  of items 10 and all of items 11,  12,  and 13 of this Form  10-K/A are
incorporated  by  reference  from the  issued  proxy  statement  filed  with the
Securities and Exchange Commission on January 16, 2003.


<PAGE>

                                TABLE OF CONTENTS
                                                                         Page of
                                                                          Report
                                     PART I

ITEM 1.     BUSINESS                                                           3

ITEM 2.     PROPERTIES                                                        12

ITEM 3.     LEGAL PROCEEDINGS                                                 13

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            EXECUTIVE OFFICERS OF THE COMPANY                                 14

                                     PART II

ITEM 5.     MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
            STOCKHOLDER MATTERS                                               15

ITEM 6.     SELECTED FINANCIAL DATA                                           16

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
            AND RESULTS OF OPERATIONS                                         18

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK        26

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                       27

ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
            ACCOUNTING AND FINANCIAL DISCLOSURE                               48



                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                49

ITEM 11.    EXECUTIVE COMPENSATION                                            49

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT                                                        49

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                    49

ITEM 14     CONTROLS AND PROCEDURES                                           50


                                     PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
            FORM 8-K                                                          51

SIGNATURES                                                                    53


                                       i
<PAGE>

Asante, FriendlyNET, IntraCore, IntraStack, IntraSwitch, NetStacker, AsanteTalk,
AsantePrint,  FriendlyStack,  AsanteFAST,  GigaNix,  and OpenView are registered
trademarks  of Asante  Technologies,  Inc.  Other product and brand names may be
trademarks or registered trademarks of their respective owners.


                                       ii
<PAGE>

Explanatory Note

This  Amendment to Asante  Technology  Inc.'s Annual Report on Form 10-K for the
year ended  September  28, 2002  includes  restated  financial  statements as of
September 28, 2002 and September 29, 2001 and for each of the three fiscal years
in the period ended September 28, 2002.

During fiscal 1998 and 1999, the Company reported reserves  offsetting  accounts
receivable for customers' product returns (stock rotation), price protection and
other customer sales price rebates,  as well as accruals for market  development
funds  and  other  related  obligations  due its  reseller  customers  that were
relatively  large related to its recent sales  activities with those  customers.
The  appropriate  determination  of the  estimated  amount of such  reserves and
accruals under generally accepted accounting principles requires the exercise of
significant judgment.

As a result of an  investigation  undertaken by the Company in 2003, it has been
determined  that a portion of such  reserves and  accruals  were  overstated  at
October  2, 1999 and in  earlier  periods  and were also  misstated  in  periods
subsequent  to October 2, 1999 as the result of errors in applying the Company's
accounting  policies for measuring the  estimated  balances of those  period-end
reserves  and  accruals  in  accordance  with  generally   accepted   accounting
principles.  Those errors  arose,  in part, as a result of the Company not fully
considering the effect of the year-to-year sequential declines in net sales that
the Company  experienced  beginning in fiscal 1998 on the  estimated  period-end
reserve and accrual balances.  The investigation  also revealed that the Company
inappropriately  reversed portions of prior period  overstatements in subsequent
periods  resulting  in  overstatements  of  revenue  and/or  understatements  of
operating   expenses.   In   addition   to  its   investigation   of  sales  and
customer-related reserves and accruals, the scope of the Company's investigation
also  included a review of its  reported  obligations  for  warranty and certain
other  accruals  which  resulted in  adjustments  to such  balances for the same
reasons as those described above.

As a result of the foregoing,  the Company has restated its financial statements
for each of the three  fiscal  years in the period  ended  September  28,  2002,
including  the  corresponding  fiscal 2002 and 2001  interim  periods,  and will
restate the results for the quarterly  periods ended December 28, 2002 and March
29, 2003. The Quarterly  Reports on Form 10-Q previously filed relating to these
periods as well as the interim  periods prior to fiscal 2001 should no longer be
relied upon. The Company has not yet filed its Quarterly Report on form 10-Q for
the quarterly  period ended June 28, 2003. The restatement  also affects periods
prior to fiscal 2000.  The impact of the  restatement  on such prior  periods is
reflected as an adjustment to opening  accumulated deficit as of October 2, 1999
in the financial  statements included under Item 8 of this Annual Report on Form
10-K/A.

In  connection  with their  audits of the  restated  financial  statements,  the
Company's previous  independent auditors have identified and communicated to the
Company  and the  Audit  Committee  a  "material  weakness"  (as  defined  under
standards established by the American Institute of Certified Public Accountants)
relating  to  the  Company's  initial  recording  and  management's  review  and
oversight  of,  certain  accounting  estimates.   In  response  to  the  matters
identified  as  restatement  adjustments,  under  the  direction  of  the  Audit
Committee,  management has directed that the Company dedicate resources and take
steps to strengthen  control  processes and  procedures in order to identify and
rectify past  accounting  errors and prevent a recurrence  of the  circumstances
that resulted in the need to restate prior period financial statements.

The  restatement  of  previously  issued  financial   statements  increased  the
Company's  net loss and basic and diluted net loss per share in the fiscal years
ended  September  28, 2002 and September  29, 2001 by  approximately  $59,000 or
$0.01  and  $910,000  or  $0.09,  respectively,  and  resulted  in a net loss of
$325,000 or $0.03 per basic and diluted  share  versus  previously  reported net
income  of  $392,000  or $0.04  per  diluted  share for the  fiscal  year  ended
September 30, 2000.


                                       1
<PAGE>

On an aggregate  basis for the five-year  period ended  September 28, 2002,  the
restatement   resulted  in  a  cumulative   reduction  in  previously   reported
accumulated net loss of approximately $3.4 million with a corresponding increase
in previously reported net assets.

Note 2, Restatement of Previously Issued Financial  Statements,  to the restated
financial statements discloses the impact of the adjustments on the statement of
operations and balance sheet for each restated annual period. In addition,  Note
2 to the restated financial  statements  discloses the effect of the restatement
on opening retained  earnings as of October 2, 1999,  which adjustment  reflects
the impact of the  restatement on periods prior to fiscal 2000.  This adjustment
decreased  previously  reported  accumulated  net losses by $5.3  million with a
corresponding increase in previously reported net assets. For information on the
impact of the restatement on fiscal 1999 and 1998,  reference is made to Item 6,
Selected Financial Data, in Part II of this Form 10-K/A.

This Form 10-K/A  amends and restates  Items 1 and 3 of Part I, Items 6, 7 and 8
of Part  II,  and  Item  14 of  Part IV of the  original  Form  10-K.  No  other
information   included  in  the  original  Form  10-K  is  amended  hereby.  The
explanatory caption at the beginning of each item of this Form 10-K/A sets forth
the nature of the revisions to that item.

The Company did not amend its Annual  Reports on Form 10-K for periods  affected
by the restatement  that ended prior to September 28, 2002 or Quarterly  Reports
on Form  10-Q for  periods  affected  by the  restatement  that  ended  prior to
December  28,  2002,  and  the  financial   statements  and  related   financial
information contained in such reports should no longer be relied upon.

For a discussion  of events and  developments  subsequent to September 28, 2002,
see the Company's  Quarterly  Report on Form 10-Q for the quarterly period ended
June  28,  2003,  which  had  not  been  previously  filed  but is  being  filed
concurrently with this Form 10-K/A, and the Company's subsequent filings.

This discussion, other than the historical financial information, may consist of
forward-looking  statements  that  involve  risks and  uncertainties,  including
quarterly and yearly  fluctuations  in results,  the timely  availability of new
products,  the impact of competitive  products and pricing,  and the other risks
detailed from time to time in the Company's SEC reports,  including this report.
These forward-looking statements speak only as of the date hereof and should not
be  given  undue  reliance.  Actual  results  may  vary  materially  from  those
projected.

The  Company   undertakes  no  obligation  to  publicly  update  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events, or otherwise.

Some of the  statements  contained  in this  Annual  Report on Form  10-K/A  are
forward-looking  statements,  including  but not  limited to those  specifically
identified  as such,  that  involve  risks  and  uncertainties.  The  statements
contained  in the  Report on Form  10-K/A  that are not  purely  historical  are
forward looking  statements  within the meaning of Section 27A of the Securities
Act  and  Section  21E of  the  Exchange  Act,  including,  without  limitation,
statements  regarding  our  expectations,   beliefs,  intentions  or  strategies
regarding the future. All forward looking statements  included in this Report on
Form 10-K/A are based on information  available to us on the date hereof, and we
assume no  obligation  to updated  any such  forward-looking  statements.  These
statements  involve known and unknown  risks,  uncertainties  and other factors,
which may cause our actual  results to differ  materially  from those implied by
the forward-looking  statements. In some cases, you can identify forward-looking
statements by terminology  such as "may," "will,"  "should,"  "expects,"  plans"
"anticipates,"  "believes,"  "estimates," "predicts," "potential," or "continue"
or the  negative of these  terms or other  comparable  terminology.  Although we
believe that the expectations  reflected in the  forward-looking  statements are
reasonable, we cannot guarantee future results, levels of activity,  performance
or achievements. Moreover, neither any other person nor we assume responsibility
for the accuracy and completeness of such statements. Important factors that may
cause actual  results to differ from  expectations  include  those  discussed in
"Factors  Affecting  Future  Operating  Results"  beginning  on  page 23 in this
document.


                                       2
<PAGE>

                                     PART I
ITEM 1.       BUSINESS

This  Item  1  has  been  revised  to  reflect  the  restatement,   and  certain
developments  occurring  subsequent to the filing of the original Form 10-K with
respect to the Company's business.

Current Information of Note

On August 15, 2003, Michael Kaufman informed  management of his resignation from
the Board of Directors.  Mr. Kaufman's reasons for resigning from the Board were
not related to the Company's  restatement,  or the Company's then ongoing merger
activity.

Recent Acquisition Information

On June 13, 2003, the Company  entered into an Agreement and Plan of Merger with
Oblique,  Inc.  ("Oblique") (the "Merger  Agreement"),  pursuant to which Asante
would  be  merged  with and into  Oblique,  with  Oblique  being  the  surviving
corporation (the "Merger").  The Merger Agreement provided for a cash payment at
closing of up to $0.45 per share plus up to approximately  $0.05 per share to be
distributed  no later than March 31,  2004,  subject to certain  indemnification
obligations.  Taken  together  these  per  share  payments  represented  a total
acquisition price for all of the outstanding shares of Asante common stock of up
to  approximately  $5.1 million.  The Merger was conditioned  upon,  among other
things,  approval  by  holders of Asante  common  stock.  The  Merger  Agreement
provided  for  termination  by Asante  without any  liability on the part of the
Company  in the event  Asante  were to  receive a written  superior  offer.  The
foregoing  description  of the Merger  does not  purport to be  complete  and is
qualified  in its  entirety  by  reference  to the  complete  text of the Merger
Agreement, a copy of which was filed with the SEC on June 18, 2003.

On September 13, 2003, the Company terminated its Merger Agreement with Oblique,
Inc. and entered into a binding  Letter of Intent with Acorn  Campus,  a venture
capital company.  Pursuant to the binding Letter of Intent,  Acorn Campus was to
acquire all of the  outstanding  shares of Asante common stock and any shares of
common stock  underlying any outstanding  stock options for  approximately  $5.4
million in cash. The Company  believed the offer by Acorn Campus was superior to
the offer  from  Oblique,  and  contained  proven  financing.  However,  without
apparent  cause or reason,  Acorn Campus sent a letter to Management on November
18, 2003, informing the Company of its intent to withdraw its offer.  Management
is reviewing its  alternatives,  including  pursuing  legal action against Acorn
Campus for breach of contract.


                                       3
<PAGE>

Overview

Founded in 1988,  Asante  Technologies,  Inc.  ("Asante" or the  "Company") is a
leading provider of network  connectivity  products for Apple Macintosh and PCs.
The Company  believes  that it is one of the largest  third party  providers  of
networking solutions for the Apple platform.

The majority of the  Company's  products  are  designed  for Ethernet  networks.
Ethernet is a type of network  topology that determines how packets,  or message
units, are handled and sent across the network. Ethernet is the most widely used
communication  standard in Local Area Networks  ("LAN").  Although many of these
Ethernet products were originally designed to function at speeds of 10 Mbps, the
majority  of these  Ethernet  products  sold today are  designed  to function at
speeds of 10/100 Mbps (known as "Fast Ethernet", or 100BASE-T). Gigabit Ethernet
(an Ethernet  technology that raises transmission speed to 1 Gbps) has also been
increasingly adopted in the industry due to higher bandwidth requirements needed
in the network brought about by the  standardization  of 10/100 Fast Ethernet at
the user level,  and by the convergence of voice,  data, and video traffic usage
across the same network infrastructure.

In fiscal  2002,  the Company  continued  to focus its  products and services on
providing  high-speed  local area network and  Internet  access  solutions.  The
Company sells to distributors  and resellers who serve several primary  customer
markets: educational, digital design, the Multiple Tenant Unit/Multiple Dwelling
Unit  (MTU/MDU)  market,  and the  medium  and small  business  markets or Small
Office/Home Office (SOHO).

During fiscal 2002,  the high-tech  industry,  and in particular  the networking
sector,  continued to experience a significant  slowdown in sales. This slowdown
in sales was originally  caused by the failure of a significant  number of large
service providers,  who had been responsible for the purchase of a large portion
of mid-range switches,  and large scale network switches and routers,  broadband
routers  and  modems.  Additionally,  a  large  portion  of the  Internet  based
companies have also gone out of business causing a further decrease in purchases
of network systems products and services.  This market-wide  reduction in demand
had several  effects  including  excess new and used  inventories in the market,
excess   inventories   at  global   manufacturers,   and   reduced   demand  for
semi-conductors  and  electronic  components  causing  component  prices to drop
significantly and certain  manufacturers to sell their products at extremely low
margins  in an  attempt  to  reduce  inventory  levels  and  increase  inventory
turnovers.  This  slowdown  has now  affected  a large  number  of other  market
sectors.  This slowdown has been prolonged by the recent economic  downturn that
has affected many industries including the Company's.

The  slowdown in revenues has had global  effects on corporate  spending and has
significantly  affected both larger and smaller  enterprises'  expenditures  for
purchasing/upgrading  network and  Internet  systems.  As such,  the economy has
found itself in its first  recession in more than eleven  years.  According to a
recent report by Zurich Financial Services,  "Despite the resilience of consumer
spending,  there are still  powerful  negative  forces  apparent in the economy.
Corporate  profits have fallen sharply during the past nine months.  The decline
in profits will encourage  firms to further  reduce both  employment and capital
spending."

However,  there are  opportunities in the networking market even in a recession.
The demand for Storage Area Network product appears positive, as does the global
Metropolitan  network and MTU/MDU market. The emergence and increasing  adoption
of broadband  technologies  will continue to create demand for specific products
in these  markets.  Additionally,  opportunities  exist for  providers  offering
alternative  value priced,  easy to use,  feature rich  networking  solutions as
compared with higher priced switch providers.

As the Internet and market for networking products continues to evolve and grow,
management believes several trends will create business  opportunities which the
Company is in a good position to take advantage of. These opportunities include:

    o    Increasing  demand to receive digital content  (information,  graphics,
         video, music, voice);

    o    Rapid acceptance and deployment of high-speed local area networks;

    o    Increasing demand for broadband (high speed / high bandwidth)  Internet
         access for small offices,  home businesses,  shared business complexes,
         schools, consumers; and

    o    Integration  of high speed  networks  using Ethernet into many existing
         technologies.

The increasing availability of streaming audio and video and other digital media
has driven demand in the industry towards formats with substantially larger file
sizes  requiring  much larger  storage  requirements  and  increased  bandwidth.
MPEG-1,


                                       4
<PAGE>

MPEG-2,  MP-3 and TIFF files are all examples of commonly  used  formats,  which
have dominated the industry and user demand. Each format requires faster speeds,
and greater  bandwidth to transfer  data in a reasonable  time.  This  continued
demand at the business  and home  consumer  level  continues to drive demand for
high-speed access to the Internet.

As businesses and individual users continue to develop and use the Internet as a
means of communication, the need for increased speed and bandwidth is increasing
phenomenally.  According to the trade publication Allied Business  Intelligence,
new  technologies and residential  applications  are driving  worldwide sales of
residential gateway revenues to an estimated $3.1 billion by 2004.

This  increased  bandwidth  created  with  broadband  access has  enabled  users
previously  connecting  at 28.8 Kbps,  or up to 56Kbps over their  analog  phone
lines, to access the Internet at speeds of up to 1.5 Mbps, enabling voice, data,
music,  internet based multiplayer gaming and video transfers over the Internet.
Even in the current economic climate, the number of users and the use of digital
voice,  video,  music and graphics has  continued to increase due to  affordable
higher speed processors, the cost effectiveness of Fast Ethernet (10/100, or 100
Mbps) networking,  the emergence of affordable Gigabit Ethernet products and the
standardization  of the Internet as a form of  communication  for businesses and
consumers.

Many   organizations  are  attempting  to  get  closer  to  their  customers  by
implementing  customer  relationship  management  (CRM)  applications.  With the
growth of supply chain management,  businesses must be able to support a diverse
user community that includes suppliers, partners and customers.  Information and
knowledge  management is yet another key part of understanding the customer,  as
databases are consolidated and information  exchanged.  All of this is part of a
larger drive to increase staff efficiency and productivity.  To realize the full
benefits of this  movement,  an  organization  must  integrate  their CRM system
together with their manufacturing system more effectively.

Finally,  network  managers are  increasingly  concerned  about the integrity of
corporate  data and how this data,  their users,  and devices are secured.  This
problem is  magnified  when  users are on the move and  outside  the  controlled
corporate  environment.  More people are  accepting  the  Internet as a business
tool,  which has led to an expansion  of  e-business  and the general  growth of
Internet-based transactions in the commercial workplace.

The Company's  strategy is to  capitalize  on these trends with a  comprehensive
product and service portfolio  encompassing  innovative  technologies,  enhanced
strategic sales channels, and strategic partnerships. While the current economic
climate and extreme  competitiveness of the SOHO market remains,  the Company is
penetrating  certain horizontal markets with the Company's  IntraCore  products,
specifically the MTU/MDU, digital delivery providers, and education markets.

Innovative technologies.

In fiscal 2002,  the Company  continued to invest in  multi-service  networks to
support converged,  high-speed data, voice and video networks.  The Company also
introduced a wide range of Gigabit Ethernet products for our high-end  IntraCore
and  workgroup-oriented  FriendlyNET  product lines. In fiscal 2002, the Company
introduced both IntraCore and FriendlyNET  products with increased  Gigabit port
density to  address  the needs of larger  networks.  Additionally,  the  Company
introduced numerous key features in its networking products designed to meet the
changing needs of its customers.

The greatly increased  bandwidth and speed has been created primarily due to the
emergence  of 10/100  Ethernet  technology  over the  desktop as the  networking
standard and to broadband technologies continuing to lead the growth in internet
connectivity.  This  increased  bandwidth  has created much  greater  demand and
downward  pricing  pressures as the telephone  companies  and larger  networking
companies are pressured to deliver  "all-in-one"  Local Area Network (LAN), Wide
Area Network (WAN), phone, fax, and video  communications  centers at attractive
price points.  With this new affordability and the continued  emergence of newer
technologies  such  as  wireless  and  Internet  Protocol  (IP)  telephony,  and
broadband  technologies  allowing easy  connectivity in the home, the reality of
the true home network is occurring. Additionally, small businesses can afford to
have the same access to these resources and digital media  previously  available
only to large companies.  The  infrastructure  behind this broadband access must
offer  more  services  and  quality  of service  (QOS)  features  such as strong
security features,  configuration options,  traffic segmentation,  rate metering
and multi-cast traffic pruning.

The proliferation of affordable high-speed broadband technologies, combined with
the availability of affordable,  feature rich networking products has influenced
both  commercial  and  residential  real  estate  and  building   developers  to
incorporate


                                       5
<PAGE>

networking and broadband  infrastructure equipment at the developmental stage of
new construction.  The Company's technology development group spends substantial
resources  integrating many advanced features into its products to differentiate
its products and to offer features similar to those offered by larger networking
corporations.  The Company pioneered integration of Internet technology into its
network products.  The Company continues to incorporate these  technologies into
its managed switches and Internet access products.  The Company was the first to
integrate  Intranet  technology into its new switches in the form of a built-in,
Java-enabled HTTP server. The Company's FriendlyNET routers,  including its 3004
Cable/DSL  routers  and new 3002  wireless  routers  have  attained  significant
recognition,  including more than 30 different  awards from PC World, Mac World,
C-NET, MacHome, Practically Networked, and Amazon.

Based on its  technological  expertise,  the Company is well  positioned to take
advantage of growing markets for all-in-one  products to answer the needs of the
converged  network for homes and small businesses.  Additionally,  the Company's
products are differentiated through its strong software expertise.

Strategic sales channels.

By  expanding  its  international  distribution  channels  to meet the  needs of
emerging Internet consumers,  Asante expects to grow its sales through strategic
partners and businesses  that sell products and services on the Internet,  while
continuing  to service  traditional  retail  channels  that provide  revenue and
profit  opportunities.  In fiscal 2002,  the Company  continued  its Value Added
Reseller  (VAR) program aimed at  attracting  additional  resellers to carry the
Company's  products both focusing on the Company's  IntraCore  products and SOHO
products.  The Company  re-entered the superstore  retail market in fiscal 2001.
The Company is in discussion  with several  national  retail chains for its SOHO
products and will continue to focus on strengthening its retail presence.  Also,
the  Company  added a number of  IntraCore  and fiber VARs  specializing  in the
Company's key focus markets  including  education,  MTU/MDU,  digital design and
Internet Service Providers (ISPs).

During fiscal 2002,  the Company was  successful in  negotiating  business terms
with  several key business  partners.  These  business  partners  have  included
Original  Equipment  Manufacturer  (OEM),  Original Design  Manufacturer  (ODM),
direct integration,  and contracts for the sale of switching products to certain
large digital media  providers.  The Company plans to seek  additional  business
partners  and  alternative  sales  channels to increase  its market share in its
areas of expertise and will leverage these  relationships  to expand the markets
for its new products and services going forward.

Strategic Partnerships.

In fiscal  2002,  the  Company  successfully  continued  its  process of seeking
strategic partnerships designed to place the Company in a leadership position in
several areas. The Company's  relationship with Apple Computer,  Inc.  continued
during fiscal 2002. In fiscal 2001, the Company  announced several customers and
relationships  in the MTU/MDU market with well-known  service  providers such as
Novus  Telecommunications  and  Solutions,  Inc.  In fiscal  2002,  the  Company
partnered  with  several  additional   strategic  partners  including  Shoreline
Communications, a provider of IP telephony, Maxtor, Siemens, and AVID Video. The
Company  has  continued  its focus on  Gigabit  Ethernet  switching  with  other
technological  partners  including  National  Semiconductor,   Switchcore,   and
Broadcom,  enabling the Company to be early to market with several of its switch
products,  and has also worked with several  large  Internet  Service  Providers
(ISP's), and corporations to leverage its sales channels.


                                       6
<PAGE>

In addition,  the Company is focusing its efforts on certain strategic  business
and technical  relationships to increase its strength and presence in the market
and to continue to introduce cutting edge technologies.

Products

The  Company  offers  both  advanced,  or managed,  systems  products  (hubs and
switches) and simple,  easy to use  unmanaged  systems  products.  The Company's
advanced  switches  and hubs  allow more  sophisticated  users the  ability  for
increased   administration,   system   analysis,   identification   of   network
communication  problems,  and  security  among  other  functions.  Many of these
products offer advanced  management features designed to allow service providers
and other entities  differentiated  software features not generally available on
most  larger  competitor's  products  at similar  price  points.  The  Company's
unmanaged products feature easy to use, Plug-and-Play operation for the customer
needing  convenient  connectivity at a cost-effective  price, or just needing to
extend an existing network.  The Company's  unmanaged,  or SOHO products include
Internet connectivity products (routers), hubs, switches, and adapter cards.

Internet Gateway Products (Routers)

The Company  manufactures a series of Cable/DSL routers designed for any user to
affordably  connect to the Internet  while at home or in a small office,  and to
communicate with the enterprise easily and securely.  The Company manufactures a
rich family of Cable/DSL  routers including an Internet secured firewall router,
a family of Virtual Private Network (VPN) routers, and two feature rich internet
secured  routers  offering   powerful,   yet  reliable  switching  and  Internet
connectivity.

Wireless Internet Gateways (802.11b Products)

In fiscal 2002, the Company  manufactured a series of 802.11 compatible wireless
products that enable users to stay connected to information while at their desk,
within an  enterprise,  or at home.  Due to the ease of access to the  Internet,
and/or  enterprise  network,  the  productivity   increase  has  convinced  many
corporations and retail businesses to deploy wireless  technologies.  Due to the
proprietary  drivers needed to support  different vendor  chipsets,  the Company
markets various PC cards including  standard range PCMCIA (a credit-card  sized,
removable module for portable computers standardized by Personal Computer Memory
Card  International  Association),  an  extended  range  card,  and  802.11b USB
modules.  In fiscal 2003, the Company plans to introduce  additional products to
support  various   wireless   technologies.   The  Company  plans  to  focus  on
strengthening its channels to sell branded products.

LAN  Infrastructure Switches

Asante's  comprehensive  line of switches includes multiple families of switches
designed to meet the needs of both its vertical and horizontal market customers.
Asante's  IntraCore  Series  Switches were  introduced  during fiscal 2000,  and
currrently  consist  of four new  families  of  advanced  managed  multi-service
10/100/1000 Mbps switches. Each product offers Asante's built-in HTTP management
server  software  featuring  Java-enabled  features  as well as  other  advanced
features.

Core  Switching.  The Company  recently  introduced  a new line of feature  rich
products which support Layer 2/4 features. These products, such as the IntraCore
35160 offer advanced features such as multi-layer packet classification designed
to enhance network control,  improve  efficiency,  and automatically  prioritize
real-time  traffic such as LAN  telephony,  an important  feature for  converged
voice/data networks.

Edge  Switching.  The  Company  offers a full  range of Layer 2  IntraCore  (IC)
managed switches.  These switches include several families of IntraCore switches
including the 65120,  3548,  3524, the 9000 and the 8000.  These cost effective,
feature  rich  products,   offer  advanced  management   capabilities  including
Independent Print Media Group (IPMG) multicast pruning which allows  Information
System (IS)  managers to filter out  unwanted  Internet  broadcast  messages and
unwanted  data,  Virtual  Local Area  Network  (VLAN ),  Remote  Monitoring  and
Management of the Network  (RMON),  Simple Network  Management  Protocol  (SNMP)
management,  as well as  prioritization.  For those  customers who don't wish to
deal with network  management,  the Company offers one of the industry's largest
assortment  of  Gigabit  switches  designed  to  offer  maximum  power  and cost
effective simplicity.

Small Business. The Company offers many products in its FriendlyNET(R) family of
products,  including  a  complete  line  of  easy  to use  gateways,  firewalls,
switches,  hubs,  USB  hubs and  print  routers.  These  products  are  designed
specifically   for   cost-


                                       7
<PAGE>

sensitive  users  operating in smaller  networking  environments.  The Company's
wireless and wired gateways bring  economical,  secure Internet sharing to small
offices.  Many of the Company's  Gigabit switch products meet the most demanding
needs  of  small  business   including  those  in  businesses  such  as  digital
graphics/prepress and media designers, a primary vertical market of the Company.

Fiber Switch Solutions.  The Company features several Fiber switches designed to
meet the needs of many  customers.  Fiber offers several  advantages over copper
including longer ranges and lack of grounding  issues.  Due to these advantages,
they  are  highly  demanded  in  distributed   network   environments,   MTU/MDU
applications, and education.

Media  Converters.  The Company's media converters allow customers with existing
copper  Ethernet  equipment to convert to fiber without the need to purchase all
new equipment.  The Company's  Fiber  Converter (FC) series of products  provide
existing  10/100/1000  copper connected devices with distribution over copper or
fiber  to  remote   buildings,   workgroups  and  desktops.   With  a  range  of
Ethernet/Fast  Ethernet and Gigabit Ethernet media converters the FriendlyNET FC
series offers extensive mixed media infrastructure  provisioning.  The FC series
is  interoperable  with all independent and Asante copper and fiber switches and
provides instant upgrade into a 16-port chassis concentrator

Business and Personal Connectivity and Access Products

The  Company  offers a wide  range of  products  in its  FriendlyNET  family  of
products which support its large  enterprise  customers as well as the Company's
SOHO and personal use customers. These products include fiber and copper Gigabit
adapter cards, 10/100 adapters, USB and USB 2.0 products, a family of local talk
to  Ethernet  converters,  and several  Macintosh  platform  compatible  adapter
products.  The Company is  commited to  supporting  Mac OS,  Windows,  and Linux
operating systems.

Technology

The Company is a provider of leading edge  products in the  Ethernet  networking
industry.  The  Company  introduced  the first  100 Mbps  stackable  hub  system
products in 1995 and has  continued to bring new  technology to the market ahead
of competition. In addition, the Company has continued to ship products based on
its proprietary  10/100 ASIC chip allowing the Company to offer high performance
switches at competitive prices. The Company is continuing its development of new
and enhanced  products for  connecting to the Internet and corporate  Intranets.
The Company has and will continue to focus efforts to expand its Gigabit product
line.  Additionally,  the Company currently focuses a significant portion of its
research and  development  efforts in bringing to market more  advanced  Layer 3
switches,  and in differentiating its Layer 3 and Layer 2 switches with features
demanded in its vertical markets.

The Company was one of the first to ship fully  integrated  management  software
with its products,  providing powerful  capabilities only found in much costlier
third party software  products.  The Company will continue to emphasize security
and firewall designs for its products.

Marketing and Distribution

The Company  markets its products in three main channels:  first,  through a two
tier  distribution  channel which sells  primarily to  commercial  and corporate
users;  second,  the  Company  sells  to a  significant  number  of  educational
institutions;  and third,  through a number of Original  Equipment  Manufacturer
(OEM) customers and several large corporate customers.

Asante's  major  distributors  are leading  wholesale  distributors  of computer
products in North  America.  To  supplement  the  efforts of these  distributors
overseas,  the Company has  appointed  international  distributors  for specific
territories.  All of the Company's  distributors  are  generally  appointed on a
non-exclusive basis,  however, the Company has appointed a master distributor in
China on an exclusive  basis in order to build the  Company's  channel in China.
Fulfillment of products to e-commerce  customers are typically  handled  through
the Company's  distribution  channel,  or directly from the Company to customers
within the United States.

Asante also sells its products  directly to major  universities  and educational
institutions to take advantage of the  significant  penetration of the Company's
products in these markets.

From time to time, the Company pursues OEM opportunities  which it believes make
sense based on the Company's  current  business plan.  These  relationships  may
typically cause  fluctuations  in the Company's  business based on the Company's
ability


                                       8
<PAGE>

to locate,  or maintain various OEM opportunities and the ability of the Company
to  offer  cutting  edge,  cost  effective  technology  of  interest  to its OEM
customers. The Company will continue to focus resources on obtaining additional,
cost effective  agreements  with larger OEM customers,  although there can be no
assurance that such  agreements  will be obtained.  OEM sales are expected to be
fairly flat in fiscal 2003, compared to fiscal 2002.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for  approximately  20%,  23%, and 23% of the  Company's net sales in
fiscal  years 2002,  2001,  and 2000,  respectively.  From fiscal 2001 to fiscal
2002, the Company  experienced reduced sales in all three geographic regions due
to the economic  downturn  affecting a large  portion of the world  economy.  Of
these  decreases  the  greatest  impact  was  in  Europe  where  sales  declined
approximately  29% due to  factors  similar to those  encountered  domestically.
Sales in Asia Pacific decreased  slightly in fiscal 2002,  compared to the prior
year due primarily to competition from Asian  competitors and softness in demand
in Macintosh related products.

The Company  intends to continue to introduce new products  through its existing
distribution  channels.  The Company  encourages  the  marketing  efforts of its
distributors with cooperative advertising allowances and incentive-based rebates
and  promotes  its  products  and  builds  brand  name   recognition   by  trade
advertising, participation in industry trade shows, and other marketing efforts.
As of  September  28,  2002,  the  Company  supported  the sales  efforts of its
distributors  with  20  direct  sales  and  support  related  employees  located
throughout the United States who promote the Company's  products within assigned
territories and with 13 outside sales representatives.

The Company's agreements with its distributors can generally be terminated after
an initial term of one year or on short notice  without cause and do not provide
for minimum  purchase  commitments  or preclude the  distributors  from offering
products that compete with those offered by the Company.

The  Company  grants  to  its  distributors  limited  rights  to  return  unsold
inventories of the Company's products in exchange for new purchases and provides
certain price  protection  to its  distributors.  Although the Company  provides
reserves for projected returns and price decreases, any product returns or price
decreases in the future that exceed the Company's reserves will adversely affect
the Company's business,  financial condition and results of operations. See Item
7:  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations.

The  distribution  of  products  such as those  offered by the  Company has been
characterized   by  rapid  change,   including   consolidations   and  financial
difficulties of some distributors and the emergence of alternative  distribution
channels.  In  addition,  there are an  increasing  number of product  suppliers
competing for access to these channels. Distributors may, at their option and at
any time,  cease  marketing the Company's  products  without prior notice to the
Company.  During fiscal 2000,  the Company took action to eliminate  Pinacor,  a
distributor of the Company,  as a primary distributor due to perceived financial
risk. Subsequently,  Pinacor initiated Chapter 11 bankruptcy proceedings. In the
beginning  of the fourth  quarter of fiscal  2000,  the Company  ceased  product
shipments  to Merisel USA, due to a perceived  risk of financial  exposure.  The
debt write-off to these two distributors did not exceed $265,000 in fiscal 2000.
In  fiscal  2002,  the  Company  terminated  its  relationship  with  Tech  Data
domestically on terms mutually agreed by both parties.  Although the Company has
increased its business with its other  distributors,  it does not believe it has
completely  offset the loss of revenues  from the cessation of business with the
aforementioned distributors, however the Company has taken steps to increase its
channels  which it believes  has  benefited  the Company  during  fiscal 2002. A
reduction in the sales effort by any of the Company's  other major  distributors
or the loss of any one of  these  distributors  would  have a  material  adverse
effect on the Company's business, financial condition and results of operations.
There can be no assurance that future sales by the Company's  distributors  will
remain at current  levels or that the Company will be able to retain its current
distributors on terms that are commercially reasonable to the Company.  Although
the Company believes, except as described above, that its major distributors are
currently adequately  capitalized,  there can be no assurance that in the future
one or more of these  distributors will not experience  financial  difficulties.
Such difficulties could have a material adverse effect on the Company.

Although some prior products contained lifetime, or limited lifetime warranties,
most new  products  contain  limited  warranties  ranging  from one year to five
years. These limited warranties exclude from lifetime coverage the fan and power
supply  included with its products,  due to the shorter life expectancy of these
parts. The Company has not encountered material warranty claims,  although there
can be no assurance that claims will not increase  substantially  over time as a
result of the  change to a limited  warranty  for a  majority  of the  Company's
products.  Future warranty claims exceeding the Company's  reserves for warranty
expense  could  have an  adverse  effect on the  Company's  business,  financial
condition and results of operations. The Company plans on reviewing its warranty
policy as it brings new  products to market to offer its  customers  competitive
policies while reducing its exposure to adverse warranty claims.


                                       9
<PAGE>

Company warranties are limited to the Company's  obligation to repair or replace
the defective  product.  The Company  attempts to further limit its liability to
end-users through disclaimers of special, consequential and indirect damages and
similar provisions in its end-user warranty.  However, no assurance can be given
that such limitations of liability will be legally enforceable.

Backlog

The Company  generally  ships  products  shortly  after  orders are received and
consequently  maintains very little backlog.  Accordingly,  the Company does not
believe  that its  backlog as of any  particular  date is  indicative  of future
sales.

Engineering and Product Development

The markets for the Company's  products  continue to be characterized by rapidly
changing  technology,  evolving  industry  standards  and  frequent  new product
introductions. Asante believes that maintaining its market position in the Apple
Macintosh  connectivity  market and expanding its presence in the multi-platform
market requires continuing investment to develop new products,  enhance existing
products and reduce manufacturing costs.

As of September 28, 2002,  the Company had 13 employees  engaged in  engineering
and product  development.  During the fiscal  years 2002,  2001,  and 2000,  the
Company's  engineering and product development  expenses were approximately $2.6
million, $2.8 million, and $3.0 million, respectively.

The Company continues to invest significant resources in engineering in order to
develop and bring to market  additional  high  technology,  high demand products
supporting  both its  network  systems  and the  Intranet/Internet  markets.  In
particular,  in fiscal  2003 and going  forward,  the  Company  intends to focus
additional  efforts in the areas of embedded  software  design,  development  of
additional Layer 2-7 switches and other LAN-edge  devices,  WAN router products,
wireless,  security,  and on system integration.  The Company will also continue
product development efforts to expand its Gigabit product offerings.

The Company  believes its future success will depend upon its ability to enhance
and expand its existing product  offerings and to develop in a timely manner new
products  that  achieve  rapid  market  acceptance.  Substantially  all  of  the
Company's products are designed to provide connectivity to Ethernet LANs. If the
Company is unable, for technological or other reasons, to modify its products or
develop new products to support Fast Ethernet or Switched Ethernet technology or
if Ethernet's importance declines as a result of alternative  technologies,  the
Company's  business,  financial  condition  and results of  operations  would be
materially  and adversely  affected.  There can be no assurance that the Company
will be  successful in  developing  and marketing  enhanced or new products in a
timely  manner,  that those  products will gain market  acceptance,  or that the
Company  will be able to respond  effectively  to  technological  changes or new
industry standards.

Manufacturing and Suppliers

The  Company's  manufacturing  operations  consist  primarily  of  managing  its
materials and inventories,  purchasing  certain  components,  performing limited
final assembly of some products,  and testing and performing  quality control of
certain   materials,   components,   subassemblies  and  systems.   The  Company
subcontracts   substantially   all  of  the  assembly  of  its   products.   The
subcontractors  include  Orient  Semiconductor  Electronics,  Ltd.  ("OSE"),  an
assembler of  semiconductor  and printed  circuit boards based in Taiwan,  Delta
Networks,  Edimax, Surecom Communications,  as well as other manufacturers based
in California,  Taiwan and China. Both OSE and Delta are stockholders of Asante.
The  Company  believes  that its  quality  control  procedures  and the  quality
standards  of its  manufacturing  partners  have been  instrumental  in the high
performance and reliability of the Company's products. To date, customer returns
of the Company's products due to quality issues have not been material.

OSE and the Company's other  subcontract  manufacturers  purchase or manufacture
most components,  assemble printed circuit boards, and test and package products
for Asante on a purchase  order,  turnkey  basis.  In fiscal  2002,  the Company
purchased  $0.5  million of goods from OSE and  purchased  $3.2 million of goods
from Delta  Networks,  Inc. (See Note 5 of Notes to Financial  Statements).  The
Company  does  not  have  a  long-term   supply   agreement   with  any  of  its
subcontractors.  If any one of these  subcontractors  experiences  financial  or
operational  difficulties  that result in a  reduction  or  interruption  in the
supply of products to the Company or otherwise fails to deliver  products to the
Company on a timely basis,  the Company would be required to procure  sufficient
manufacturing  services  from  alternative  sources.  The Company  believes that
alternative  manufacturers  are available;  however,  the  qualification of such
alternative  sources  and  the  commencement  of  volume  manufacturing  of  the
Company's  products could take a significant  period of time.  Accordingly,  any
reduction  or  interruption  of


                                       10
<PAGE>

supply from its existing  subcontractors  would  materially and adversely affect
the  Company's  business,  financial  condition  and results of  operations.  In
addition, the use of OSE, Delta and other offshore  subcontractors  subjects the
Company to  certain  risks of  conducting  business  internationally,  including
changes in trade  policy and  regulatory  requirements,  tariffs and other trade
barriers and restrictions,  and changes in the political or economic environment
in Taiwan and other countries where the Company's subcontractors are located.

Although  the Company  generally  uses  standard  parts and  components  for its
products,  certain key components  used in the Company's  products are available
from only one source,  and others are  available  from only a limited  number of
sources.  Components  currently  available from only one source  include,  among
others,  custom integrated  circuits used in the Company's  intelligent hubs and
certain ASICs used in the  Company's  10/100 and Gigabit  switching  products as
well as ASIC's used in several of the  Company's  other  products  including the
Company's Print Router  products.  The Company does not have a long-term  supply
agreement  with any of its  suppliers.  The Company  believes  that  certain key
components  remain in short supply and from time to time  receives  only limited
allocations of these products which in prior years has caused shipping delays of
one or more of the  Company's  products.  If the Company or any of its suppliers
experience  component  shortages  in the future or any of its  competitors  have
long-term  supply  agreements  under  which it is  possible  for them to  obtain
greater  supplies of such components than the Company,  the Company's  business,
financial  condition and results of operations could be materially and adversely
affected.  The Company  also relies on OSE,  Delta and other  subcontractors  to
procure  many  of  the  components  used  in  the  Company's   products.   These
subcontractors  procure  and stock  components  and  subassemblies  based on the
Company's purchase orders.

Competition

The markets for the Company's products are highly  competitive,  and the Company
believes that such competition will remain vigorous.  Competitive  trends in the
Company's  markets are continuing  declines in average selling  prices,  coupled
with improvements in product features and performance.  The Company expects such
trends to  continue.  The current  slowdown in the economy has served to magnify
the effects of the competitive pressures in the industry.

The Company competes with Cisco Systems,  Nortel,  3Com, Intel, Netgear and many
smaller  companies.  Competition from these and other  companies,  including new
entrants,  is expected to intensify,  particularly in the SOHO,  workgroup,  and
departmental  user markets.  Many of the Company's  competitors in these markets
are more established, enjoy significant name recognition and possess far greater
financial, technological and marketing resources than the Company.

The Company  believes  the  principal  competitive  factors in the  departmental
connectivity  market are brand  name  recognition,  value for price,  breadth of
product line,  technical features,  ease of product use,  reliability,  customer
support  and the  ability to develop  and  introduce  new or  enhanced  products
rapidly.  The Company  believes that it has established  itself as a supplier of
high quality,  reliable products and, as a result,  currently competes favorably
with respect to these  factors.  There can be no  assurance,  however,  that the
Company will be able to compete  successfully  in the future against  current or
future competitors,  or that it will be able to adapt successfully to changes in
the market for its products.  The Company's inability to compete successfully in
any  respect or to  respond  timely to market  demands  or changes  would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

In the Macintosh  client access market,  Apple(R)  develops and markets products
that compete directly with certain of the Company's client access products.  The
Company also competes with a number of other companies in this market.  Apple(R)
provides  Ethernet  connectivity in its computers  which has adversely  affected
sales of the  Company's  client access  products.  The Company also relies on an
informal  working  relationship  with Apple(R) in connection  with the Company's
product  development  efforts.  Apple(R)  is likely  to  continue  to  introduce
competitive  products and has  significantly  greater  financial,  marketing and
technical  resources  than the Company.  Furthermore,  no assurance can be given
that  Apple(R)  will not  pursue a more  aggressive  strategy  with  respect  to
competitive  products,  or in other  ways  attempt  to make  the sale of  add-on
products  by  third  party  developers  and  vendors  such as the  Company  more
difficult.  If  Apple(R)  takes any of such  actions,  the  Company's  business,
financial  condition and results of operations would be materially and adversely
affected.  See  Item  7:  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.

The  Company's  sales to OEMs  represented  9% and 3% of its  total net sales in
fiscal  2002 and fiscal  2001,  respectively.  While the Company has pursued and
will continue to pursue additional OEM agreements with larger  companies,  there
can be no assurance  that  existing  OEM  agreements  will  continue or that new
agreements  will be  obtained.  In addition,  since the Company  intends to seek
additional high volume product arrangements, the acquisition or loss of a single
large OEM customer or several smaller OEM customers would have a material effect
on the  Company's  revenues.  Unless  the  Company  signs  additional  large


                                       11
<PAGE>

OEM  agreements  in the near  future,  the Company  expects  that OEM sales will
remain fairly flat as a percentage of total revenue in fiscal 2003.

A significant  percentage of the Company's  sales in fiscal 2002 and fiscal 2001
were derived from products  designed for use with  Macintosh  Power PC, and iMAC
computers.  Sales of these  products as a percentage of total  Company  revenue,
excluding OEM sales,  have steadily  declined over the last several years due to
Apple(R)'s competition in the Company's adapter card market and incorporation of
Ethernet into the motherboard of a large portion of its products, and Apple(R)'s
decline  in market  share.  However,  the  Company  expects  that  sales of such
products will  continue to represent a substantial  portion of its net sales for
the  foreseeable  future.  There can be no  assurance  that unit  sales of these
products will continue at their  present  levels or increase in the future.  Any
material  adverse  developments  in  Apple(R)'s  business  could have a material
adverse  effect on sales of the Company's  client access  products,  which would
materially and adversely affect the Company's business,  financial condition and
results of  operations.  See Item 7:  Management's  Discussion  and  Analysis of
Financial Condition and Results of Operations.

Proprietary Rights

The  Company  is  currently  evaluating  several  domestic  and  foreign  patent
applications  relating to its  software and systems  technology.  The Company is
currently filing renewals on several of its existing patents.

The  Company   has   received  in  the  past  and  may  receive  in  the  future
communications from third parties asserting intellectual property claims against
the  Company.  Claims  made in the  future  could  include  assertions  that the
Company's products infringe,  or may infringe on the proprietary rights of third
parties or requests for indemnification against such infringement.  There can be
no assurance that any claim will not result in  litigation,  which could involve
significant  expense to the  Company.  If the  Company is  required  or deems it
appropriate  to  obtain a license  relating  to one or more  products  or future
technologies,  there can be no assurance that the Company would be able to do so
on commercially reasonable terms, or at all.

The Company  relies on a combination of patents,  trade  secrets,  copyright and
trademark law, nondisclosure  agreements and technical measures to establish and
protect its proprietary rights in its products.  Despite these  precautions,  it
may be possible for unauthorized  third parties to copy aspects of the Company's
products  or  to  obtain  and  use  information  that  the  Company  regards  as
proprietary. Policing unauthorized use of the Company's technology is difficult,
and there can be no assurance  that the measures being taken by the Company will
be successful.  Moreover,  the laws of some foreign countries do not protect the
Company's  proprietary  rights in its products to the same extent as do the laws
of the United States. See Item 3: Legal Proceedings.

Employees

As of  September  28,  2002,  the  Company  had 68  employees,  including  13 in
engineering  and product  development,  15 in  manufacturing  operations,  28 in
marketing,  sales and support services, and 12 in corporate administration.  The
number  reflects a small  decrease in all areas except  engineering  and product
development  which  remains  unchanged  when compared to fiscal 2001. In October
2002,  the Company  reduced  approximately  10% of its  regular  and  contractor
headcount as part of its cost reduction efforts.

The Company's success depends to a significant  extent upon the contributions of
key sales, marketing, engineering,  manufacturing, and administrative employees,
and on the Company's  ability to attract and retain highly qualified  personnel,
who are in great  demand.  None of the  Company's key employees are subject to a
non-competition  agreement  with the  Company.  Unless  vacancies  are  promptly
filled, the loss of current key employees or the Company's  inability to attract
and retain other qualified employees in the future could have a material adverse
effect on the Company's business, financial condition and results of operations.

None of the Company's employees are represented by a labor organization, and the
Company is not a party to any collective bargaining  agreement.  The Company has
never had any employee  strike or work stoppage and considers its relations with
its employees to be good.

ITEM 2.       PROPERTIES

The  Company's  headquarters,  including  its  executive  offices and  corporate
administration,   manufacturing,   marketing,   sales  and   technical   support
facilities,  are located in San Jose, California.  The Company occupies a 44,700
square foot  facility


                                       12
<PAGE>

under a lease that expires on August 31,  2004,  with an option to extend for an
additional  five years.  In fiscal  2002,  the Company  closed its leased  sales
office  in  Oregon  and  moved its  inside  sales  activities  into its San Jose
location.  The Company  currently has a leased sales office in Utah. The Company
believes  that its  existing  facilities  are  more  than  adequate  to meet its
requirements for the foreseeable future and believes that suitable additional or
substitute  space will be available as needed.  See Note 8 of Notes to Financial
Statements.

ITEM 3.       LEGAL PROCEEDINGS

This Item 3 has been updated for events and developments occurring subsequent to
the filing of the original Form 10-K.

From time to time the Company is subject to legal  proceedings and claims in the
ordinary  course of  business,  including  claims  of  alleged  infringement  of
trademarks and other intellectual property rights.

In September 1999, certain inventory having a cost of approximately $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL").  In March
2003, the US Attorney and the Company  entered a final  settlement for an amount
consisting of $57,000, plus removal of improper marks from the product


ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of fiscal 2002.

EXECUTIVE OFFICERS OF THE COMPANY

The executive  officers of the Company,  their ages as of December 10, 2002, and
certain information regarding each of them are as follows:

       Name            Age          Position with the Company
       ----            ---          -------------------------

Wilson Wong            55           President and Chief Executive Officer
Jeff Lin               51           Chief Operating Officer
Rusty Callihan         53           Vice President of Sales
Anthony Contos         39           Vice President of Finance and Administration
Jim Hsia               40           Vice President of Marketing
Chiu K. Fung           55           Vice President of Operations

Mr. Wilson Wong  co-founded  the Company in 1988 and has served as President and
Chief  Executive  Officer since December 1998,  when he assumed these  positions
following  the  resignation  of Jeff Lin. From 1994 to August 1997, he served as
Vice  President and General  Manager and  Co-Chairman of the Board of Directors.
From 1993 to 1994,  he served as Vice  President  and  General  Manager  for the
Company's client access products.  From 1988 to 1993, he served as the Company's
President and Chief Executive Officer.  Mr. Wong serves as Chairman of the Board
of Directors.

Mr. Jeff Lin  co-founded  the Company in 1988 and  rejoined  the Company in June
2002 as Chief  Operating  Officer.  Mr. Lin has been a General Partner at Proton
Management  Consulting  since  January  2001.  Mr.  Lin was  President  and Vice
Chairman of Lite-on  Communication in Taiwan from January 1999 to July 2000. Mr.
Lin served as the Company's  President,  Chief Executive Officer and Chairman of
the Board of Directors  until his  resignation  in December  1998.  From 1993 to
1994,  he served as the Company's  Vice  President,  General  Manager of Network
Systems Business.  From 1991 to 1993, he served as the Compnay's Chairman of the
Board of  Directors  and Chief  Operating  officer.  From 1988 to 1991,  Mr. Lin
served as the Company's  Vice  President of Operations  and  Engineering,  Chief
Financial Officer and Secretary.

Mr. Rusty Callihan  rejoined the Company in August 1999 and currently  serves as
Vice President of Sales.  Mr. Callihan  initially  joined the Company in October
1990 and served in various sales positions  until July 1996.  Prior to rejoining
the Company Mr.  Callihan was the Vice  President of Sales for UMAX  Corporation
from June 1997 to July 1998. He also held senior sales management positions with
RasterOps Corporation and Apple Computer Inc.


                                       13
<PAGE>

Mr.  Anthony  Contos  joined the  Company  in June 1994,  and has served as Vice
President of Finance and  Administration,  and corporate  Secretary since August
1999.  From  October  1997 to August 1999 he served as the  Company's  Corporate
Controller/Director  of Finance.  Prior to joining the Company Mr.  Contos was a
financial  consultant for Electronic Arts, Inc. where he was responsible for the
international  consolidation  activities.  Prior to that he was a financial  and
operations analyst with Ross Stores.

Mr.  Jim Hsia  joined  the  Company  in  September  1999 and has  served as Vice
President of Marketing for the Company. From February 1996 to September 1999 Mr.
Hsia was the Vice President of Marketing at ZNYX  Corporation.  Prior to that he
held various marketing positions at National Semiconductor,  Eagle Technology (a
business unit of Artisoft), Accton Technology and 3Com Corporation.

Mr. Chiu K. Fung (C.K.)  joined the Company in October  2000,  and has served as
Vice President of Operations  since October 2001.  Before that Mr. Fung held the
position of Senior  Director of Operations  with the Company.  From June 1998 to
June 2000,  Mr. Fung served as Monitor  Service  Manager for  Nakamichi  America
Corporation  where he was  responsible  for  management  of  service  and repair
operations.  From  December  1995 to March 1998,  Mr.  Fung served as  Technical
Director at Orient Power Holding Ltd. where he was responsible for management of
their  audio  business  unit.  Prior to that,  Mr.  Fung held  other  management
positions in operations.


                                       14
<PAGE>

PART II

ITEM 5.       MARKET FOR THE REGISTRANT'S COMMON STOCK AND  RELATED  STOCKHOLDER
              MATTERS

The Company's Common Stock traded on the NASDAQ National Market System under the
trading symbol ASNT until September 30, 1999 at which time the Company's  Common
Stock commenced trading on the  Over-the-Counter  (OTC) Bulletin Board under the
trading symbol ASNT.OB.

The  following  table sets  forth the high and low bid prices for the  Company's
Common Stock for each quarter  during the last two fiscal years.  The quotations
set forth below reflect inter-dealer prices, without retail mark-up, mark-downs,
or commissions and may not represent actual transactions.

Fiscal 2002                         High                      Low
-----------------------------------------------------------------------
First quarter                      $    7/16                $    3/16
Second quarter                     $    3/8                 $    2/8
Third quarter                      $    5/16                $    3/16
Fourth quarter                     $    3/16                $    1/16

Fiscal 2001                         High                      Low
-----------------------------------------------------------------------
First quarter                      $1   5/16                $    7/16
Second quarter                     $1   1/8                 $    1/2
Third quarter                      $    7/8                 $    1/12
Fourth quarter                     $    5/8                 $    1/8


As of November 29, 2002,  there were 100 stockholders of record of the Company's
Common  Stock.  This  number does not include  shares held in street  name.  The
Company has not paid cash dividends on its Common Stock and does not plan to pay
cash dividends in the foreseeable future.

Factors such as announcements  of  technological  innovations or new products by
the  Company,  its  competitors  and other third  parties,  as well as quarterly
variations  in the Company's  anticipated  or actual  results of operations  and
market conditions in high technology  industries  generally may cause the market
price of the Company's Common Stock to fluctuate significantly. The stock market
has on occasion  experienced extreme price and volume  fluctuations,  which have
particularly  affected the market prices of many high  technology  companies and
have often been unrelated to the operating performance of such companies.  These
broad market fluctuations may adversely affect the market price of the Company's
Common Stock.  In addition,  the market price of the Company's  Common Stock may
not be indicative of current or future performance.

In March 2000,  the Company  sold  500,000  shares of its common stock for gross
proceeds  of $1.5  million.  The shares were sold to one  corporate  entity in a
private transaction. The shares were issued pursuant to a claimed exemption from
registration  under  Section  4(2) of the  Securities  Act of 1933 as a  private
placement to one investor which acquired the shares with investment  intent.  In
August 2001,  the Company  filed an S-2  Registration  Statement,  pursuant to a
request  by  the  purchasing  shareholders,  to  register  the  shares  under  a
registration rights agreement. The Registration Statement was declared effective
on August 31, 2001 covering the resale of up to 500,000  shares of the Company's
common stock by selling shareholders.


                                       15
<PAGE>

Asante Equity Compensation Plan Information

As of  September 28, 2002

<TABLE>
<CAPTION>
Plan Category                 Number of securities to     Weighted-average         Number of securities
                              be issued upon exercise     exercise price of        remaining available for
                              of outstanding options,     outstanding options,     future issuance under
                              warrants and rights         warrants and rights      equity compensation
                                                                                   plans (excluding
                                                                                   securities reflected in
                                                                                   column (a))
                              (a)                         (b)                      (c)

<S>                                <C>                    <C>                       <C>
Equity compensation plans          62,775 (1)             0.5338 (1)                937,225 (1)
approved by security holders      195,000 (2)             1.0320 (2)                 50,474 (2)
                                  230,000 (3)             3.5978 (3)                 70,000 (3)
                                1,202,045 (5)             1.3577 (5)                      0 (5)

Equity compensation plans          29,700 (4)             0.8125 (4)                120,300 (4)
not approved by security
holders

Total                           1,719,520                                        1,177,999
</TABLE>


(1) the 2001 Stock Option Plan
(2) the Key Executive Option Plan
(3) the 1993 Directors' Stock Option Plan
(4) the 2000 Non-Statutory Stock Option Plan
(5) the 1990 Stock Option Plan


ITEM 6.       SELECTED FINANCIAL DATA

The Five-Year  Financial  Summary in this Item 6 has been revised to reflect the
restatement.

The  restated  selected  financial  data  set  forth  below  should  be  read in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations", and the restated financial statements of the Company
and the notes to the restated  financial  statements  included elsewhere in this
Annual Report on Form 10-K/A.

(In thousands, except per share data)
<TABLE>
<CAPTION>
                                                           Year ended
                                  -----------------------------------------------------------------
                                   Restated      Restated      Restated     Restated       Restated
                                     2002          2001          2000         1999(1)      1998(1)
                                  --------      --------      --------      --------      ---------
<S>                               <C>           <C>           <C>           <C>           <C>
Statement of Operations Data:
Net sales                         $ 15,237      $ 21,732      $ 29,001      $ 39,555      $ 51,365

Loss from operations              $ (2,219)     $ (2,087)     $   (517)     $(10,638)     $(11,137)

Net loss                          $ (2,208)     $ (1,859)     $   (325)     $(10,936)     $(13,122)
Diluted net loss per share        $  (0.22)     $  (0.19)     $  (0.03)     $  (1.18)     $  (1.43)

Balance Sheet Data:
Working Capital                   $  3,811      $  5,982      $  7,660      $  5,877      $ 15,546

Total assets                      $  8,021      $ 10,711      $ 14,674      $ 15,332      $ 30,738

Stockholders' equity              $  4,073      $  6,271      $  8,088      $  6,808      $ 17,751
</TABLE>

(1) The restatement  adjustments affecting the years 1999 and 1998 are set forth
in the following table (in thousands, except per share data):


                                       16
<PAGE>

                                               Year ended
                           -----------------------------------------------------
                                      1999                       1998
                               As                          As
                           Previously        As        Previously        As
                            Reported      Restated      Reported      Restated
                            --------      --------      --------      --------
Net sales                   $ 37,488      $ 39,555      $ 51,433      $ 51,365

Loss from operations        $(13,863)     $(10,638)     $(12,450)     $(11,137)

Net loss                    $(14,161)     $(10,936)     $(14,435)     $(13,122)

Diluted net loss per share  $  (1.53)     $  (1.18)     $  (1.57)     $  (1.43)

Balance Sheet Data:
Working Capital             $    751      $  5,877      $ 13,645      $ 15,546

Total assets                $ 13,345      $ 15,332      $ 30,359      $ 30,738

Stockholders' equity        $  1,682      $  6,808      $ 15,850      $ 17,751

The  restatement  adjustments  affecting  the  fiscal  years  1999  and 1998 are
adjustments  with  respect  to  sales  returns,  sales  rebate  accruals,  price
protection,  channel  marketing  and other  sales  expenses  and to some  extent
general and  administrative  expenses,  as described in Note 2,  Restatement  of
Previously Issued Financial  Statements,  to the restated financial  statements.
Certain  adjustments to stockholders'  equity affecting  periods prior to fiscal
1998, including  adjustments for price protection and accrued expenses in excess
of  requirements,  are  reflected  as a decrease  of  approximately  $718,000 to
opening accumulated deficit as of September 27, 1997.

For further information,  see Note 2, Restatement of Previously Issued Financial
Statements.


                                       17
<PAGE>

ITEM 7.       MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF  FINANCIAL CONDITION AND
              RESULTS OF OPERATIONS

This discussion, other than the historical financial information, may consist of
forward-looking  statements  that  involve  risks and  uncertainties,  including
quarterly and yearly  fluctuations  in results,  the timely  availability of new
products,  including  switch  products,  the impact of competitive  products and
pricing,  and the other risks  detailed  from time to time in the  Company's SEC
reports,  including this report. These forward-looking  statements speak only as
of the date thereof and should not be given undue  reliance.  Actual results may
vary materially from those projected.

The  Company   undertakes  no  obligation  to  publicly  update  or  revise  any
forward-looking  statements,  whether  as a result  of new  information,  future
events, or otherwise.

The Management's  Discussion and Analysis of Financial  Condition and Results of
Operations set forth in this Item 7 has been revised to reflect the  restatement
and certain events occurring subsequent to the filing of the original Form 10-K.

Recent Developments

During fiscal 1998 and 1999, the Company reported reserves  offsetting  accounts
receivable for customers' product returns (stock rotation), price protection and
other customer sales price rebates,  as well as accruals for market  development
funds  and  other  related  obligations  due its  reseller  customers  that were
relatively  large related to its recent sales  activities with those  customers.
The  appropriate  determination  of the  estimated  amount of such  reserves and
accruals under generally accepted accounting principles requires the exercise of
significant judgment.

As a result of an  investigation  undertaken by the Company in 2003, it has been
determined  that a portion of such  reserves and  accruals  were  overstated  at
October  2, 1999 and in  earlier  periods  and were also  misstated  in  periods
subsequent  to October 2, 1999 as the result of errors in applying the Company's
accounting  policies for measuring the  estimated  balances of those  period-end
reserves  and  accruals  in  accordance  with  generally   accepted   accounting
principles.  Those errors  arose,  in part, as a result of the Company not fully
considering the effect of the year-to-year sequential declines in net sales that
the Company  experienced  beginning in fiscal 1998 on the  estimated  period-end
reserve and accrual balances.  The investigation  also revealed that the Company
inappropriately  reversed portions of prior period  overstatements in subsequent
periods  resulting  in  overstatements  of  revenue  and/or  understatements  of
operating   expenses.   In   addition   to  its   investigation   of  sales  and
customer-related reserves and accruals, the scope of the Company's investigation
also  included a review of its  reported  obligations  for  warranty and certain
other  accruals  which  resulted in  adjustments  to such  balances for the same
reasons as those described above.

As a result of the foregoing,  the Company has restated its financial statements
for each of the three  fiscal  years in the period  ended  September  28,  2002,
including  the  corresponding  fiscal 2002 and 2001  interim  periods,  and will
restate the quarterly  periods ended  December 28, 2002 and March 29, 2003.  The
Quarterly Reports on Form 10-Q previously filed relating to these periods should
no longer be relied upon. The Company has not yet filed its Quarterly  Report on
Form 10-Q for the quarterly  period ended June 28, 2003.  The  restatement  also
affects  periods  prior to fiscal 2000.  The impact of the  restatement  on such
prior periods is reflected as an adjustment to opening accumulated deficit as of
October 2, 1999 in the financial statements included under Item 8 of this Annual
Report on Form 10-K/A.

In  connection  with their  audits of the  restated  financial  statements,  the
Company's previous  independent auditors have identified and communicated to the
Company  and the  Audit  Committee  a  "material  weakness"  (as  defined  under
standards established by the American Institute of Certified Public Accountants)
relating  to  the  Company's  initial  recording  and  management's  review  and
oversight of certain accounting estimates. In response to the matters identified
as  restatement  adjustments,  under  the  direction  of  the  Audit  Committee,
management  has directed that the Company  dedicate  resources and take


                                       18
<PAGE>

steps to strengthen  control  processes and  procedures in order to identify and
rectify past  accounting  errors and prevent a recurrence  of the  circumstances
that resulted in the need to restate prior period financial statements.

The  restatement  of  previously  issued  financial   statements  increased  the
Company's  net loss and basic and diluted net loss per share in the fiscal years
ended  September  28, 2002 and September  29, 2001 by  approximately  $59,000 or
$0.01  and  $910,000  or  $0.09,  respectively,  and  resulted  in a net loss of
$325,000 or $0.03 per basic and diluted  share  versus  previously  reported net
income  of  $392,000  or $0.04  per  diluted  share for the  fiscal  year  ended
September 30, 2000.

On an aggregate  basis for the five-year  period ended  September 28, 2002,  the
restatement   resulted  in  a  cumulative   reduction  in  previously   reported
accumulated net loss of approximately $3.4 million with a corresponding increase
in previously reported net assets.

Note 2, Restatement of Previously Issued Financial  Statements,  to the restated
financial statements discloses the impact of the adjustments on the statement of
operations and balance sheet for each restated annual period. In addition,  Note
2 to the restated financial  statements  discloses the effect of the restatement
on opening retained  earnings as of October 2, 1999,  which adjustment  reflects
the impact of the  restatement on periods prior to fiscal 2000.  This adjustment
decreased  previously  reported  accumulated  net losses by $5.3  million with a
corresponding increase in previously reported net assets. For information on the
impact of the restatement on fiscal 1999 and 1998,  reference is made to Item 6,
Selected Financial Data, in Part II of this Form 10-K/A.

Throughout  the  following  Management's  Discussion  and  Analysis of Financial
Condition and Results of Operations, all referenced amounts reflect the balances
and amounts on a restated basis.

Results of Operations

The  following  table sets  forth  certain  selected  financial  information  as
restated  expressed  as a  percentage  of net sales for the fiscal  years  ended
September 28, 2002, September 29, 2001, and September 30, 2000, respectively:

                                           2002          2001         2000
                                       (As restated) (As Restated) (As Restated)
Net sales                                  100.0 %       100.0 %      100.0 %
Cost of sales                               64.0          65.2         65.5
                                          -----           ----         ----
Gross profit                                36.0          34.8         34.5
                                          -----           ----         ----
Operating expenses:
   Sales and marketing                      25.5          23.2         19.8
   Research and development                 16.7          12.7         10.5
   General and administrative                8.4           8.5          6.0
                                          -----           ----         ----
     Total operating expenses               50.6          44.4         36.3
                                          -----           ----         ----
Income (loss) from operations              (14.6)         (9.6)        (1.8)
Interest and other income (expense), net     0.1           1.0          0.7
Income (loss) before income taxes          (14.5)         (8.6)        (1.1)
Provision (benefit) for income taxes          --            --           --
                                          -----           ----         ----
Net income (loss)                         (14.5) %        (8.6) %      (1.1) %
                                          =====           ====         ====

Net Sales

Net sales decreased 29.9% to $15.2 million in fiscal 2002, from $21.7 million in
fiscal 2001.  Net sales were $29.0  million in fiscal 2000.  The decrease in net
sales from fiscal 2001 to fiscal 2002 was due to several  factors  including the
economic  downturn  in the  high  tech  industry  and  network  industry,  heavy
competitive pressures  particularly for unmanaged products, and to the continued
incorporation  of Ethernet  onto the  motherboard  of Apple's  newer  computers.
During fiscal 2001, sales of unmanaged  products  decreased across most existing
product lines,  except for Gigabit switch sales,  which increased  marginally to
$0.5 million,  from $0.2  million.  In addition,  a  significant  portion of the
Company's OEM sales were of unmanaged Gigabit products.


                                       19
<PAGE>

The  decrease  in net sales from  fiscal  2000 to fiscal 2001 was due to several
factors including the economic downturn in the high tech industry. Additionally,
heavy competitive  pressures for unmanaged 10/100 products  including  cable/DSL
routers and, to some extent,  the continued  incorporation  of Ethernet onto the
motherboard  of  Apple's  newer  computers  negatively  affected  the  Company's
results.  This continued  incorporation of Ethernet onto the motherboard as well
as other  factors  described  in this form  10-K/A,  has caused a  reduction  in
revenues  and  volume of  product  sold for  Apple  specific  applications.  Mac
specific  products  are  expected  to  comprise  a much  smaller  portion of the
Company's  revenues going forward.  During fiscal 2001,  sales of unmanaged hubs
decreased  $2.9  million,  from $5.6  million in fiscal 2000 to $2.6  million in
2001,  reflecting slower economic  conditions and the continued  transition from
shared systems  products to switches.  During this same period,  sales of 10/100
unmanaged switches remained constant at $3.4 million.

In fiscal 2002, 2001, and 2000, one customer, a distributor,  accounted for 40%,
43%, and 48%, respectively, of the Company's total sales.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for 20%,  24%, and 23% of net sales in fiscal 2002,  2001,  and 2000,
respectively.  The reduction in international sales during fiscal 2002, compared
to fiscal  2001,  was due  partially  to the  elimination  of Merisel as a major
distributor in the US and Canada. The Company continues to believe the demand in
the  MTU/MDU  markets is  particularly  strong in Europe and Asia,  and plans to
continue to focus  additional  efforts to increase sales in these areas. To that
end, the Company has hired additional sales  representatives in these areas, and
has focused on adding  distributors  in these areas to strengthen  its channels.
However, there cannot be any assurance that its efforts will be successful.

International  revenue as a percentage  of net sales  remained  constant  during
fiscal 2001,  compared to fiscal 2000, as the economic downturn has affected the
networking industry internationally.

The Company believes that the economic  downturn  beginning just prior to fiscal
2001, will continue during fiscal 2003. The Company's  declines in revenues were
offset  partially  by increased  sales of the  Company's  managed and  unmanaged
Gigabit  switches.  The Company  believes that the competition in the markets in
which it competes has intensified and will continue to intensify as existing and
potential  competitors introduce competing products.  Consequently,  the Company
anticipates  that the selling  prices of its existing  products will continue to
decline and that sales of older systems  products and adapter cards as a percent
of total  sales will  continue  to  decline  in fiscal  2003.  The  Company  has
continued to focus on  introducing  newer managed  systems  products such as its
IntraCore  3524 and 3548 Layer 2 switches,  which it believes  should offset the
declines in revenues of its older systems products. The Company will continue to
focus on those  markets in which it believes it can  increase  its  revenues and
will continue to seek to increase its OEM revenues, compared to fiscal 2002.

Cost of Sales and Gross Profit

The Company's gross profit as a percentage of net sales increased  marginally to
36.0%,  in fiscal 2002,  from 34.8% in fiscal 2001. The increase in fiscal 2002,
compared to fiscal 2001 was due  primarily  to decreased  inventory  write-downs
during the year due to tight inventory controls,  reduced manufacturing overhead
due to the Company's cost  reduction  efforts,  and cost  reductions on products
during the year.  During fiscal 2002,  sales prices  continued to be affected by
heavy  competitive  pricing  pressures  and  reduced  volumes  for  many  of the
Company's  products.  The Company has brought to market and plans to continue to
bring to market  lower cost  replacement  products  and is focusing  its product
development  efforts on introducing  additional  unmanaged  Gigabit products and
managed  IntraCore  products to help offset those  products  which are under the
most significant  margin pressure.  The Company will continue to take additional
measures going forward to maintain its competitiveness in the market place.

The  decrease  in gross  margin in fiscal  2001  compared  to fiscal  2000,  was
primarily due to reduced  selling prices for the Company's  products,  which was
substantially  offset by stronger  inventory  and  purchasing  controls.  During
fiscal 2001, sales prices continued to be affected by heavy competitive  pricing
pressures.

The Company  will  continue in its efforts to develop new  products and decrease
its  manufacturing  costs faster than related declines in selling prices. If the
Company  is unable to offset  anticipated  price  declines  in its  products  by
reducing its  manufacturing  costs and by  introducing  new  products  that gain
market acceptance,  its business,  financial condition and results of operations
will be materially and adversely affected.


                                       20
<PAGE>

Sales and Marketing

Sales and  marketing  expenses were $3.9 million in fiscal 2002 compared to $5.0
million in fiscal 2001,  or a decrease of 23%.  Fiscal 2001 sales and  marketing
expenses  decreased  $0.7  million,  or 12%,  compared to $5.7 million in fiscal
2000.  As a percentage of net sales,  sales and  marketing  expenses were 25.5%,
23.2%,  and 19.8%,  in fiscal 2002,  2001, and 2000,  respectively.  The reduced
fiscal 2002  expenditures  in absolute  dollars and increase as of percentage of
sales reflect  reduced sales levels during fiscal 2002 and reduced  expenditures
for outside  representative  commissions,  co-operative  advertising,  and trade
advertising activities. The reduced fiscal 2001 expenditures,  primarily reflect
reduced sales levels and related sales based activity expenditures.

The Company expects that its sales and marketing expenses will remain at current
levels, or decrease slightly in fiscal 2003 in absolute dollars. As a percent of
total sales, the Company believes these  expenditures  should decrease  slightly
compared to fiscal 2002.

Research and Development

Research and  development  expenses  decreased by 7.4% to $2.6 million in fiscal
2002, from $2.8 million in fiscal 2001.  Research and development  expenses were
$3.0  million  in fiscal  2000.  As a  percentage  of net  sales,  research  and
development  expenses were 16.7%,  12.7%,  and 10.5%, in fiscal 2002,  2001, and
2000,  respectively.  The  decrease  in  research  and  development  expenses in
absolute  dollars in fiscal 2002  compared to fiscal 2001 was due  primarily  to
decreases in personnel  related  expenditures  as a result of salary  reductions
implemented by the Company. The increase in research and development expenses as
a  percentage  of sales was due to the  decline  in  revenue.  The  decrease  in
research  and  development  expenses  from fiscal 2000 to fiscal 2001 was due to
decreases in personnel related expenditures as a result of lower staffing levels
and lower depreciation expense.

The Company  expects that  spending on research and  development  in fiscal 2003
will remain fairly flat in comparison to fiscal 2002 in absolute dollars,  while
the Company  continues to leverage the  engineering  expertise of its  strategic
partners.

General and Administrative

General and  administrative  expenses  decreased  to $1.3 million in fiscal 2002
from $1.8 million in fiscal 2001. General and administrative  expenses were $1.7
million in fiscal 2000. As a percentage of net sales, general and administrative
expenses  were  8.4%,  8.5%,  and 6.0% in fiscal  years  2002,  2001,  and 2000,
respectively.  The decrease in general and  administrative  expenses in absolute
dollars  in fiscal  2002 is  primarily  related  to  reduced  personnel  related
expenditures.  The  increase  in  general  and  administrative  expenses  as  of
percentage  of sales was due to the decline in revenue.  The decrease in general
and  administrative  expenses  in absolute  dollars in fiscal  2001  compared to
fiscal  2000,  was  primarily  related to reduced  legal and  personnel  related
expenditures.

The  Company  expects  that  general  and  administrative  expenses  will remain
constant or decrease somewhat in fiscal 2003 in absolute dollars.

Income Taxes

The Company  recorded no provision for federal and state income taxes for fiscal
2002,  2001, or 2000 due  principally  to a valuation  allowance on deferred tax
assets being  recorded.  The Company has recorded a full valuation  allowance on
its   deferred   tax  assets  as   sufficient   uncertainty   exists   regarding
recoverability. The Company's effective tax rate was 0.0% for fiscal 2002, 2001,
and 2000, respectively.


                                       21
<PAGE>

Liquidity and Capital Resources, as restated

During  fiscal  2002,  the  Company's  operating  activities  used  cash of $1.7
million.  During fiscal 2001, the Company's  operating  activities  used cash of
$1.4 million.  During fiscal 2000, the Company's operating  activities used cash
of $0.1 million.

During fiscal 2002,  net cash used in  operations  resulted  primarily  from the
Company's  net operating  loss of $2.2 million,  and a decrease in both accounts
payable and accrued  expenses of $0.4 million.  These uses were partially offset
by decrease in accounts receivable of $0.7 million and increase in inventory and
prepaid expenses of $0.3 each.

During fiscal 2001,  net cash used in  operations  resulted  primarily  from the
Company's net operating loss of $1.9 million,  and decreases in accounts payable
and accrued expenses of $1.2 million and $0.6 million, respectively.  These uses
were  partially  offset  primarily  by  decreases  in  accounts  receivable  and
inventories  of $0.7  million  and  $0.6  million,  respectively.  Days of sales
outstanding in accounts receivable, net, was 68 days at the end of fiscal 2002.

Net cash  used in  investing  activities  in  fiscal  2002 and  fiscal  2001 was
insignificant.  In  fiscal  2002,  purchases  of  property  and  equipment  were
approximately $0.1 million. In fiscal 2001,  purchases of property and equipment
were insignificant.  In fiscal 2000, purchases of property and equipment totaled
$0.1  million.  In fiscal 2002 and fiscal 2001,  net cash  provided by financing
activities  was  insignificant.  In fiscal 2000,  net cash provided by financing
activities amounted to $1.6 million, due primarily to a private placement of the
Company's common stock resulting in proceeds of $1.5 million.

At September 28, 2002,  the Company had cash,  cash  equivalents  and short-term
investments of $3.3 million compared to $5.1 million at September 29, 2001 which
represents a 35%  decline.  Working  capital was $3.8  million at September  28,
2002,  compared to $6.0 million at September  29, 2001. As of December 31, 2002,
the Company had renewed its line of credit for $2.0  million,  which  expired on
November 30, 2003.

On September  30, 1999,  the  Company's  stock ceased to be traded on the NASDAQ
National  Market  System and was moved to the  Over-The-Counter  (OTC)  Bulletin
Board.  During fiscal 2000,  the Company  successfully  completed a $1.5 million
private  placement  of 500,000  shares of common  stock,  however the  Company's
access  to  further  equity  financing  could be  affected  by the  level of the
Company's share price and the Company's listing status.

The Company has an operating  lease for its main facility that expires on August
31, 2004. Future minimum lease payments under these leases at September 28, 2002
are as follows (in thousands):

             Year
             2003                       989
             2004                       909
                                  ---------
                                  $   1,898
                                  =========

The Company  operates in a highly  competitive  market  characterized by rapidly
changing  technology,  together  with  competitors  and  distributors  that have
significantly greater financial resources than Asante.

In fiscal  years 2002 and 2001,  the  Company  incurred  substantial  losses and
negative cash flows from  operations  and as of September 28, 2002,  the Company
had an accumulated  deficit of $24.3 million.  For the year ended  September 28,
2002, the Company  recorded a loss from operations of $2.2 million and cash used
in operating activities was $1.7 million.

Based upon the Company's  operating budget and cash flow projections the Company
expects to continue to experience  negative cash flows from  operations  through
fiscal year 2004.

The Company is currently pursuing additional equity financing and renewal of its
line of credit  agreement  that expired  November 30, 2003.  The Company is also
considering  other  corporate  transactions  as a means of providing  additional
financing.  Failure  to  raise  additional  capital,  secure  other  sources  of
financing or enter into a corporate  transaction  would have a material  adverse
effect on the  Company's  ability to achieve its  intended  business  objectives
which  raises  substantial  doubt about the  Company's  ability to continue as a
going concern.


                                       22
<PAGE>

Factors Affecting Future Operating Results

The Company operates in a rapidly changing  industry,  which is characterized by
intense competition from both established companies and start-up companies.  The
market for the Company's products is extremely  competitive both as to price and
capabilities.  The Company's  success  depends in part on its ability to enhance
existing  products and  introduce  new  technology  products.  This requires the
Company to accurately  predict future  technology  trends and  preferences.  The
Company  must also bring its  products to market at  competitive  price  levels.
Unexpected  changes in technological  standards,  customer demand and pricing of
competitive  products could adversely affect the Company's  operating results if
the Company is unable to respond effectively and timely to such changes.

The industry is also  dependent to a large  extent on  proprietary  intellectual
property rights.  From time to time the Company is subject to legal  proceedings
and  claims in the  ordinary  course of  business,  including  claims of alleged
infringement  of patents,  trademarks and other  intellectual  property  rights.
Consequently,  from time to time,  the Company  will be required to prosecute or
defend against alleged infringements of such rights.

The  Company's   success  also  depends  to  a   significant   extent  upon  the
contributions  of  key  sales,  marketing,   engineering,   manufacturing,   and
administrative  employees,  and on the  Company's  ability to attract and retain
highly qualified  personnel,  who are in great demand. None of the Company's key
employees  are subject to a  non-competition  agreement  with the Company.  High
employee  turnover in the technology  industry is typical.  Although the Company
has reduced its workforce  during fiscal 2002 and in the first quarter of fiscal
2003,  vacancies in the workforce must be promptly  filled,  because the loss of
current key  employees  or the  Company's  inability to attract and retain other
qualified  employees in the future could have a material  adverse  effect on the
Company's  business,  financial  condition  and results of  operations.  The job
market  in  the  San  Francisco  Bay  Area  is   characterized   by  significant
competition, rapidly changing salary structures, and a need for very specialized
experience.  These conditions  could affect the Company's  ability to retain and
recruit a sufficiently qualified workforce.

The Company's current  manufacturing and sales structure is particularly subject
to various risks associated with international  operations  including changes in
costs of labor and  materials,  reliability  of sources  of supply  and  general
economic  conditions  in  foreign  countries.   Unexpected  changes  in  foreign
manufacturing or sources of supply, and changes in the availability,  capability
or pricing of foreign  suppliers could adversely affect the Company's  business,
financial  condition  and results of  operations.  The  networking  industry and
technology  markets in general  continue to adjust to a widespread  reduction in
demand for products  due to  financial  problems  experienced  by many  Internet
Service  Provider's  (ISP's),  and the failure of many Internet  companies.  The
duration,  or  long-term  effect on the  Company's  operations  is  difficult to
measure,  but the inability to alter its strategic markets, or react properly to
this slowdown could have an adverse effect on the Company's financial position.

The 10/100 Mbps and 100 Mbps Ethernet technology (100BASE-T, or "Fast-Ethernet")
has  become a  standard  networking  topology  in the  networking  and  computer
industries.  This standard has been adopted widely by end-user customers because
of its ability to  increase  the  efficiency  of LANs and because of its ease of
integration into existing 10BASE-T  networks.  Because of the importance of this
standard,   the  Company  has  focused  its  ongoing  research  and  development
activities on introducing future products  incorporating  100BASE-T  technology.
The Company  realizes the  importance  of bringing more  10/100BASE-T  (10 Mbps)
switching and 100BASE-T  switching to market in order to complement its existing
100BASE-T  shared  products.  In  addition,  Gigabit  (1000BASE-T,  or 1000Mbps)
Ethernet  technology  is  increasingly  being  adopted in the  backbone of large
enterprises and educational  institutions.  In that regard, the Company's future
operating  results may be  dependent  on the market  acceptance  and the rate of
adoption of these technologies, as well as timely product releases. There can be
no  assurance  that the market will accept,  adopt,  or continue to use this new
technology or that the Company can meet market demand in a timely manner.

The Company's success will depend in part on its ability to accurately  forecast
its future sales due to the lead time required to order  components and assemble
products.  If the  Company's  product sales  forecasts are below actual  product
demand,  there may be delays in fulfilling  product  orders;  consequently,  the
Company could lose current and future sales to  competitors.  Alternatively,  if
the Company's product sales forecasts are above actual product demand,  this may
result in excess orders of  components  or assembled  products and a build-up of
inventory that would adversely affect working capital.

The  Company  commits  to  expense  levels,  including  manufacturing  costs and
advertising  and promotional  programs,  based in part on expectations of future
net sales levels. If future net sales levels in a particular quarter do not meet
the Company's  expectations or the Company does not bring new products timely to
market,  the Company may not be able to reduce or reallocate such expense levels
on a timely basis, which could adversely affect the Company's  operating results
and cash


                                       23
<PAGE>

position.  There can be no  assurance  that the Company  will be able to achieve
profitability on a quarterly or annual basis in the future.

The Company's target markets include end-users,  value-added resellers,  systems
integrators,  retailers,  education, Multiple Tenant Unit/Multiple Dwelling Unit
(MTU/MDU) providers, and OEMs. Due to the relative size of the customers in some
of these  markets,  particularly  the OEM market,  sales in any one market could
fluctuate  dramatically  on a quarter to quarter basis.  Fluctuations in the OEM
market could  materially  adversely  affect the  Company's  business,  financial
condition and results of operations.  Additionally,  the Company's  revenues and
results of operations could be adversely  affected,  if the Company were to lose
certain key distribution partners.

In summary,  the  Company's net sales and  operating  results in any  particular
quarter may fluctuate as a result of a number of factors,  including competition
in the markets for the Company's products,  delays in new product  introductions
by the Company, market acceptance of new products incorporating 100BASE-T by the
Company  or its  competitors,  changes  in product  pricing,  material  costs or
customer  discounts,  the size and timing of customer  orders,  distributor  and
end-user purchasing cycles, fluctuations in channel inventory levels, variations
in the mix of product sales,  manufacturing  delays or disruptions in sources of
supply, the current economic downturn and seasonal  purchasing patterns specific
to the computer and  networking  industries  as discussed  above.  The Company's
future  operating  results will  depend,  to a large  extent,  on its ability to
anticipate  and  successfully  react to these  and  other  factors.  Failure  to
anticipate  and  successfully  react to these and other factors could  adversely
affect the Company's business, financial condition and results of operations.

In addition to the above,  the Company is also susceptible to other factors that
generally  affect the market for stocks of technology  companies.  These factors
could affect the price of the Company's  stock and could cause such stock prices
to fluctuate over relatively short periods of time.

Due to the time  involved to finalize this  restated  10-K/A,  and to complete a
related audit of those periods  presented,  the Company did not file a Form 10-Q
for the period ended June 28, 2003, and therefore is not in compliance  with the
Over the  Counter  Bulletin  Board  (OTCBB)  listing  requirements.  The Company
believes that once it files these  required  reports,  including a Form 10-Q for
the period  ended June 28,  2003,  it will be current in its SEC  filings and in
compliance  with OTCBB  listing  requirements.  .  However,  the  Company has no
assurances this would occur.

The Company is currently pursuing additional equity financing and renewal of its
line of credit  agreement  that expired  November 30, 2003.  The Company is also
considering  other  corporate  transactions  as a means of providing  additional
financing.  The Company  believes it must be current  with its filings  with the
Securities and Exchange Commission at its earliest  opportunity to complete such
a  transaction.  Failure to raise  additional  capital,  secure other sources of
financing or enter into a corporate  transaction  would have a material  adverse
effect on the  Company's  ability to achieve its  intended  business  objectives
which  raises  substantial  doubt about the  Company's  ability to continue as a
going concern.

Critical Accounting Policies and Estimates

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations are based upon Asante Technologies,  Inc. financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and  liabilities  at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Management bases estimates and judgments on historical experience and on various
other factors that are believed to be reasonable  under the  circumstances;  the
results of which form the basis for making  judgments  about the carrying values
of assets and liabilities.  Actual results may differ from these estimates under
different assumptions or conditions.  Management believes the following critical
accounting  policies,  among others,  affect its more significant  judgments and
estimates used in the preparation of its financial statements.

Revenue  Recognition.  The Company  recognizes  revenue net of estimated product
returns,   expected  payments  to  resellers  for  customer  programs  including
cooperative  advertising and marketing  development funds,  volume rebates,  and
special pricing  programs.  Product returns are provided for at the time revenue
is recognized, based on historical return rates, at what stage the product is in
its expected life cycle,  and assumptions  regarding the rate of sell-through to
end  users  from our  various  channels,  which  again,  is based on  historical
sell-through  rates.  Should these  product  lives vary  significantly  from our
estimates,  or should a  particular  selling  channel  experience  a higher than
estimated return rate, or a slower sell-through rate causing inventory build-up,
then our estimated returns,  which net against revenue,  may need to be revised.
Reductions  to revenue for expected and actual  payments to resellers for volume
rebates and pricing  protection are based on actual expenses incurred during the
period


                                       24
<PAGE>

and on  estimates  for what is due to resellers  for  estimated  credits  earned
during the period.  If market  conditions were to decline,  the Company may take
action to increase promotional  programs resulting in incremental  reductions in
revenue at the time the  incentive is offered based on our estimate of inventory
in the channel that is subject to such pricing actions.


Accounts  Receivable.  The Company  performs  ongoing credit  evaluations of its
customers'  financial  condition and generally  requires no collateral  from our
customers.  The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required  payments.
If the financial condition of our customers should deteriorate,  resulting in an
impairment  of their  ability to make  payments,  additional  allowances  may be
required.


Inventory.  The Company recognizes write downs for estimated excess and obsolete
inventory based on projected future  shipments using  historical  selling rates,
and  taking  into  account  market  conditions,   inventory  on-hand,   purchase
commitments,  product  development  plans and life  expectancy,  and competitive
factors. If markets for the Company's products and corresponding  demand were to
decline, then additional write downs may be deemed necessary.


Warranty.  The Company provides for the estimated cost of warranties at the time
revenue is  recognized.  Should actual  failure rates and material  usage differ
from our estimates, revisions to the warranty obligation may be required.

Recent Accounting Pronouncements

In  April  2002,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 145,  "Rescission of
SFAS Nos. 4, 44 and 64,  Amendment of FAS 13, and  Technical  Corrections  as of
April 2002," which is effective for fiscal years  beginning  after May 15, 2002.
This  Statement   rescinds  SFAS  No.  4,  "Reporting   Gains  and  Losses  from
Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund  Requirements."  This
Statement also rescinds SFAS No. 44,  "Accounting for Intangible Assets of Motor
Carriers."  This  statement  amends  SFAS No. 13,  "Accounting  for  Leases," to
eliminate an inconsistency  between the required  accounting for  sale-leaseback
transactions and the required  accounting for certain lease  modifications  that
have  economic  effects that are similar to  sale-leaseback  transactions.  This
Statement  also  amends  other  existing  authoritative  pronouncements  to make
various technical corrections, clarify meanings, or describe their applicability
under  changed  conditions.  The  provisions  of SFAS No.  145  relating  to the
rescission  of SFAS No. 4 shall be applied in fiscal years  beginning  after May
15, 2002.  The  provisions  in paragraphs 8 and 9(c) of SFAS No. 145 relating to
SFAS No. 13 shall be effective for  transactions  occurring  after May 15, 2002.
All other provisions of SFAS No. 145 shall be effective for financial statements
issued on or after May 15, 2002.  The Company  believes the adoption of SFAS No.
145 will not have a significant impact on its financial statements.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This Statement addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  (EITF)  Issue  No.  94-3,   "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized  when the liability is incurred.  The  provisions of this
Statement are effective for exit or disposal activities that are initiated after
December  31,  2002.  The  Company  believes  that SFAS No.  146 will not have a
material impact on its financial position, results of operations or cash flows.

Financial   Accounting  Standards  Board  Interpretation  No.  45,  Guarantor  s
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others ( FIN 45 ), was issued in November  2002.
FIN 45 requires that upon issuance of a guarantee,  the guarantor  must disclose
and recognize a liability for the fair value of the  obligation it assumes under
that guarantee.  The initial recognition and measurement  requirements of FIN 45
are effective for  guarantees  issued or modified  after  December 31, 2002. The
disclosure  requirements  of FIN 45 are effective for interim and annual periods
ending after  December 15, 2002,  and are  applicable to the  Company's  product
warranty liability.

In November 2002, the EITF reached a consensus on Issue 00-21, addressing how to
account for  arrangements  that involve the delivery or  performance of multiple
products,  services,  and/or  rights to use assets.  Revenue  arrangements  with
multiple  deliverables  are divided into  separate  units of  accounting  if the
deliverables in the arrangement meet the following  criteria:  (1) the delivered
item has value to the customer on a standalone basis; (2) there is objective and
reliable  evidence of the fair value of undelivered  items;  and (3) delivery of
any undelivered item is probable.  Arrangement consideration should be allocated
among the separate units of accounting based on their relative fair values, with
the amount  allocated to the delivered  item being limited to the amount that is
not  contingent on the delivery of additional  items or meeting other  specified
performance conditions.  The final consensus is applicable to agreements entered
into in fiscal  periods  beginning  after June 15,  2003.  The


                                       25
<PAGE>

Company does not expect the  provisions of this  consensus to have a significant
effect on the Company's results of operations or financial position

FASB  Interpretation  No. 46,  Consolidation of Variable  Interest Entities (FIN
46),  was  issued in  January  2003.  FIN 46  requires  that if an entity is the
primary beneficiary of a variable interest entity, the assets, liabilities,  and
results of operations of the variable  interest entity should be included in the
consolidated  financial  statements of the entity.  The provisions of FIN 46 are
effective  immediately for all arrangements entered into after January 31, 2003.
For those arrangements entered into prior to February 1, 2003, the provisions of
FIN 46 were  required  to be adopted at the  beginning  of the first  interim or
annual period beginning after June 15, 2003.  However, in October 2003, the FASB
deferred the effective  date of FIN 46 to the end of the first interim or annual
period ending after December 15, 2003 for those arrangements  entered into prior
to February 1, 2003. In December 2003,  the FASB further  deferred the effective
date of FIN 46 to the end of the first interim or annual reporting period ending
after March 15, 2004 for those non-special purpose entity  arrangements  created
prior to February 1, 2003. The Company does not expect the adoption of FIN 46 to
have a significant impact on its results of operations or financial position.

Statement of Financial  Accounting Standards No. 149, Amendment of Statement 133
on Derivative  Instruments and Hedging Activities (SFAS 149) was issued in April
2003.  SFAS 149 amends and  clarifies  accounting  for  derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging  activities under Statement of Financial  Accounting  Standards No. 133,
Accounting  for  Derivative  Instruments  and Hedging  Activities  . SFAS 149 is
generally effective for derivative instruments, including derivative instruments
embedded in certain contracts,  entered into or modified after June 30, 2003 and
for hedging  relationships  designated after June 30, 2003. The Company does not
expect  the  adoption  of SFAS 149 to have a  material  impact on its  operating
results or financial condition.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). SFAS
150 changes the accounting for certain financial instruments that under previous
guidance issuers could account for as equity. It requires that those instruments
be  classified as  liabilities  in balance  sheets.  The guidance in SFAS 150 is
generally effective for all financial instruments entered into or modified after
May 31, 2003,  and otherwise is effective on July 1, 2003.  The adoption of SFAS
150 is not  expected  to have a  material  impact  on the  Company  s  financial
position, cash flows or results of operations.

Item 7A.      Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk. As of September 28, 2002,  the Company's cash and investment
portfolio did not include fixed-income securities.  Due to the short-term nature
of the Company's investment portfolio,  an immediate 10% increase or decrease in
interest rates would not have a material  effect on the fair market value of the
Company's  portfolio.  Since the  Company  has the  ability  to  liquidate  this
portfolio,  it does  not  expect  its  operating  results  or cash  flows  to be
materially  affected to any significant  degree by the effect of a sudden change
in market interest rates on its investment portfolio.

Foreign  Currency  Exchange Risk. All of the Company's  sales are denominated in
U.S.  dollars,  and as a result  the  Company  has  little  exposure  to foreign
currency  exchange risk. The effect of an immediate 10% change in exchange rates
would not have a material impact on the Company's  future  operating  results or
cash flows.


                                       26
<PAGE>

ITEM 8.       RESTATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The restated financial statements and supplementary data, including the notes to
the restated financial statements, set forth in this Item 8 have been revised to
reflect the restatement and certain events occurring subsequent to the filing of
the original Form 10-K.

     Index to Restated Financial Statements and Financial Statement Schedule

Financial Statements:

    Report of Independent Auditors                                            28

    Balance Sheets at September 28, 2002 and
           September 29, 2001, as restated                                    29

    Statements of Operations for the years ended September 28, 2002,
           September 29, 2001 and September 30, 2000, as restated             30

    Statements of Stockholders'  Equity for the years ended September 28,
           2002, September 29, 2001 and September 30, 2000,
           as restated                                                        31

    Statements of Cash Flows for the years ended September 28, 2002,
           September 29, 2001 and September 30, 2000, as restated             32

    Notes to Financial Statements, as restated                                33

    Quarterly Results of Operations (unaudited), as restated                  45

Financial Statement Schedule:

    Schedule II - Valuation and Qualifying Accounts, as restated              55

All  other  schedules  are  omitted,  because  they  are not  required,  are not
applicable  or  the  information  is  included  in  the  consolidated  financial
statements and notes thereto.


                                       27
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS


To the Board of Directors and Stockholders of
  Asante Technologies, Inc.

In our opinion,  the financial statements listed in the accompanying index under
Item 8 present  fairly,  in all material  respects,  the  financial  position of
Asante Technologies,  Inc. at September 28, 2002 and September 29, 2001, and the
results of its  operations and its cash flows for each of the three years in the
period  ended  September  28,  2002 in  conformity  with  accounting  principles
generally accepted in the United States of America. In addition, in our opinion,
the financial  statement  schedule listed in the accompanying index under Item 8
presents  fairly,  in all material  respects,  the information set forth therein
when read in conjunction with the related financial statements.  These financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements and the financial  statement schedule based on our audits.
We  conducted  our  audits  of these  statements  in  accordance  with  auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

As described in Note 2, the Company has restated its  financial  statements  for
each of the three years in the period ended September 28, 2002.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  As discussed in Note 1, the Company
has suffered  recurring losses and negative cash flows from operations,  and has
an  accumulated  deficit  which  raise  substantial  doubt  about its ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  1.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.




PricewaterhouseCoopers LLP
San Jose, California
November  1, 2002,  except  for Note 9,
as to which the date is March 13,  2003,
Note 8, as to which the date is November 30, 2003
and Notes 1 and 2, as to which the date is
December 30, 2003


                                       28
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                            BALANCE SHEETS - RESTATED
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                           September 28,    September 29,
                                                                               2002             2001
                                                                             --------         --------
<S>                                                                          <C>              <C>
ASSETS
  Current assets:
    Cash and cash equivalents                                                $  3,282         $  5,065
    Accounts receivable, net of allowance for doubtful accounts,
      price protection, rebates and sales returns of $1,770
      and $2,338 in 2002 and 2001, respectively                                 2,821            3,109
    Inventory                                                                   1,515            1,848
    Prepaid expenses and other current assets                                     141              400
                                                                             --------         --------
      Total current assets                                                      7,759           10,422
                                                                             --------         --------
  Property and equipment, net                                                      90              117
  Other assets                                                                    172              172
                                                                             --------         --------
      Total assets                                                           $  8,021         $ 10,711
                                                                             ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                                                         $  2,016         $  2,187
    Accrued expenses                                                            1,932            2,245
    Payable to stockholder                                                         --                8
                                                                             --------         --------
      Total current liabilities                                                 3,948            4,440
                                                                             --------         --------
  Commitments and contingencies (See Note 8)

  Stockholders' equity:
    Preferred stock, $0.001 par value; 2,000,000 shares authorized;
      no shares issued or outstanding in 2002 and 2001                             --               --
    Common stock, $0.001 par value; 25,000,000 shares authorized;
      10,066,020 and 10,003,181 shares issued and outstanding in 2002
      and 2001, respectively                                                       10               10
  Additional paid-in capital                                                   28,412           28,402
  Accumulated deficit                                                         (24,349)         (22,141)
                                                                             --------         --------
    Total stockholders' equity                                                  4,073            6,271
                                                                             --------         --------
    Total liabilities and stockholders' equity                               $  8,021         $ 10,711
                                                                             ========         ========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       29
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                      STATEMENTS OF OPERATIONS- AS RESTATED
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                 Year Ended
                                                                 -----------------------------------------------
                                                                 September 28,    September 29,    September 30,
                                                                     2002             2001             2000
                                                                   --------         --------         --------

<S>                                                                <C>              <C>              <C>
Net sales                                                          $ 15,237         $ 21,732         $ 29,001
Cost of sales                                                         9,750           14,177           18,984
                                                                   --------         --------         --------
Gross margin                                                          5,487            7,555           10,017
                                                                   --------         --------         --------
Operating expenses:
   Sales and marketing                                                3,873            5,040            5,744
   Research and development                                           2,552            2,756            3,042
   General and administrative                                         1,281            1,846            1,748
                                                                   --------         --------         --------
     Total operating expenses                                         7,706            9,642           10,534
                                                                   --------         --------         --------
Loss from operations                                                 (2,219)          (2,087)            (517)
Interest and other income (expense), net                                 11              228              192
                                                                   --------         --------         --------
Net loss                                                           $ (2,208)        $ (1,859)        $   (325)
                                                                   ========         ========         ========

Basic net loss per share                                           $  (0.22)        $  (0.19)         $(0,03)
                                                                   ========         ========         ========
Diluted net loss per share                                         $  (0.22)        $  (0.19)        $  (0.03)
                                                                   ========         ========         ========

Weighted average common shares and equivalents outstanding:
   Basic                                                             10,024            9,948            9,620
                                                                   ========         ========         ========
   Diluted                                                           10,024            9,948            9,620
                                                                   ========         ========         ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       30
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                 STATEMENTS OF STOCKHOLDERS' EQUITY- AS RESTATED
                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                     Common Stock            Additional
                               -----------------------         Paid-in     Treasury     Accumulated
                                 Shares          Amount        Capital       Stock         Deficit          Total
                               ---------        -------        -------     -------        --------         -------
<S>                            <C>              <C>            <C>         <C>            <C>              <C>
Balances as of
    October 2, 1999            9,301,272        $     9        $26,873     $  (117)       $(19,957)        $ 6,808
Common stock issued under
   stock plans                   111,191             --            (13)        117              --             104
Issuance of common stock
   in private placement          500,000              1          1,500          --              --           1,501
Net loss                              --             --             --          --            (325)           (325)
Balances as of
   September 30, 2000          9,912,463        $    10        $28,360                    $(20,282)        $ 8,088
Common stock issued under
   stock plans                    90,718                            42                          --              42
Net loss                                                                                    (1,859)         (1,859)
                              ----------        -------        -------      ------        --------         -------
Balances as of
   September 29, 2001         10,003,181             10         28,402                     (22,141)          6,271
Common stock issued under
   stock plans                    62,839                            10                          --              10
Net loss                                                                                    (2,208)         (2,208)
                              ----------        -------        -------                    --------         -------
Balances as of
   September 28, 2002         10,066,020        $    10        $28,412          --        $(24,349)        $ 4,073
                              ==========        =======        =======                    ========         =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       31
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                     STATEMENTS OF CASH FLOWS - AS RESTATED
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                  Year Ended
                                                                  ---------------------------------------------
                                                                  September 28,   September 29,   September 30,
                                                                      2002            2001            2000
                                                                    -------         -------         -------
<S>                                                                 <C>             <C>             <C>
Cash flows from operating activities:
   Net loss                                                         $(2,208)        $(1,859)        $  (325)
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
       Depreciation and amortization                                     88             184             401
       Provision for doubtful accounts receivable                       939           1,010           2,391
   Changes in operating assets and liabilities:
       Accounts receivable                                             (651)            696            (597)
       Inventory                                                        333             627             (20)
       Prepaid expenses and other current assets                        259             123               6
       Accounts payable                                                (171)         (1,178)         (1,084)
       Accrued expenses and other                                      (313)           (646)           (253)
       Payable to stockholder                                            (8)           (322)           (601)
                                                                    -------         -------         -------
         Net cash used in operating activities                       (1,732)         (1,365)            (82)
                                                                    -------         -------         -------

Cash flows from investing activities:
   Purchases of property and equipment                                  (61)            (40)             51
   Other                                                                 --              (5)             51
                                                                    -------         -------         -------
         Net cash provided by (used in) investing activities            (61)            (45)            102
                                                                    -------         -------         -------

Cash flows from financing activities:
   Issuance of common stock                                              10              42           1,605
                                                                    -------         -------         -------
         Net cash provided by (used in) financing activities             10              42           1,605
                                                                    -------         -------         -------

Net increase (decrease) in cash and cash equivalents                 (1,783)         (1,368)          1,625
Cash and cash equivalent at beginning of year                         5,065           6,433           4,808
Cash and cash equivalent at end of year                             $ 3,282         $ 5,065         $ 6,433
                                                                    =======         =======         =======
</TABLE>

   The accompanying notes are an integral part of these financial statements.


                                       32
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                   NOTES TO FINANCIAL STATEMENTS - AS RESTATED


Throughout  these notes to the restated  financial  statements,  all  referenced
amounts  reflect the balances and amounts on a restated  basis,  as described in
Note 2.

Note 1.       The Company and Summary of Significant Accounting Policies

Asante Technologies,  Inc. (the "Company" or "Asante") designs, manufactures and
markets a broad family of 10BASE-T,  100BASE-T ("Fast  Ethernet") and 1000BASE-T
(Gigabit  Ethernet)  network and connectivity  products.  Asante's client access
products  (which include adapter cards and media access  adapters)  connect PCs,
Macintoshes,  iMAC's and  peripheral  devices  (such as  printers)  to  Ethernet
networks.  The Company's network system products,  which include intelligent and
non-intelligent   switches,  hubs,  bridge  modules,   internet  access  devices
(routers), and network management software for Macintoshes and PCs, interconnect
users within and between departmental networks.

The Company  operates in a highly  competitive  market  characterized by rapidly
changing  technology,  together  with  competitors  and  distributors  that have
significantly greater financial resources than Asante.

In fiscal  years 2002 and 2001,  the  Company  incurred  substantial  losses and
negative cash flows from  operations  and as of September 28, 2002,  the Company
had an accumulated  deficit of $24.3 million.  For the year ended  September 28,
2002, the Company  recorded a loss from operations of $2.2 million and cash used
in operating activities was $1.7 million.

At September 28, 2002,  the Company had cash,  cash  equivalents  and short-term
investments  of $3.3 million  compared to $5.1  million at  September  29, 2001,
which  represents a 35% decline.  Working  capital was $3.8 million at September
28, 2002,  compared to $6.0 million at  September  29, 2001.  As of December 31,
2002, the Company had renewed its line of credit for $2.0 million, which expired
on November 30, 2003.

On September  30, 1999,  the  Company's  stock ceased to be traded on the NASDAQ
National  Market  System and was moved to the Over-The  Counter  (OTC)  Bulletin
Board.  Accordingly,  the Company's  access to further equity financing could be
affected  adversely by the level of the Company's  share price and the Company's
listing status.

Based upon the Company's  operating budget and cash flow projections the Company
expects to continue to experience  negative cash flows from  operations  through
fiscal 2004.

The Company is currently pursuing additional equity financing and renewal of its
line of credit  agreement  that expired  November 30, 2003.  The Company is also
considering  other  corporate  transactions  as a means of providing  additional
financing.  Failure  to  raise  additional  capital,  secure  other  sources  of
financing or enter into a corporate  transaction  would have a material  adverse
effect on the  Company's  ability to achieve its  intended  business  objectives
which  raises  substantial  doubt about the  Company's  ability to continue as a
going  concern.  The financial  statements do not include any  adjustments  that
might result from the outcome of this uncertainty.

Management estimates and assumptions

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  prinicples  (GAAP)  requires  the  use  of  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and  contingent  liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. The most significant assumptions are employed in estimates
used in  determining  values of  intangible  assets,  restructuring  charges and
accruals,  sales rebate and return accruals,  legal contingencies and tax assets
and tax  liabilities,  as well as in  estimates  used in  applying  the  revenue
recognition policy. Actual results could differ from estimated results.

Revenue recognition

Revenue  from  product  sales to  customers  is  recognized,  including  freight
charges, when a definite arrangement exists, the product has been shipped to the
customer  and  title  has  transferred,  acceptance  terms,  if any,  have  been
fulfilled, no significant contractual obligations remain outstanding,  the price
is fixed or determinable,  and collection is considered  probable.  Reserves are
provided  for  estimated  returns at the time the related  revenue is  recorded.
Sales to  distributors  are  generally  subject to


                                       33
<PAGE>

agreements  allowing  certain rights of return and price protection with respect
to unsold merchandise held by the distributor.  Reserves for distributor returns
are established based on historical  returns  experience at the time the related
revenue is recorded.  Reserves for price  protection  are  established  based on
actual price reduction programs. Additionally, the Company provides accruals for
incentive  rebates  to  distributors,   warranty   obligations  and  cooperative
advertising at the time the related revenue is recorded.

Cash, cash equivalents and short-term investments

Cash  equivalents  consist  primarily  of  highly  liquid  investments  in  U.S.
government and corporate debt securities with  insignificant  interest rate risk
and  original  maturity  periods  of  three  months  or  less  at  the  date  of
acquisition.  The Company considers all investments with initial maturity at the
time of  purchase  of  greater  than 90 days to be  short-term  investments.  At
September  28,  2002  and  September  29,  2001,  the  Company  did not hold any
short-term investments.

Concentration of credit risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  principally of cash  equivalents  and accounts  receivable.
Accounts  receivable  are  typically  unsecured  and are derived from  worldwide
distributor  and  customer   revenues.   The  Company  performs  ongoing  credit
evaluations of its customers and maintains reserves for potential credit losses;
historically,  such  losses  have  been  within  management's  expectations.  At
September 28, 2002 and September 29, 2001 four customers  accounted for 66%, and
64%, respectively,  of the accounts receivable balance. In fiscal 2002, 2001 and
2000 one customer accounted for 40%, 46% and 48%, respectively, of the Company's
sales.

Inventory

Inventory is stated at the lower of standard  cost,  which  approximates  actual
cost (on a first-in, first-out basis), or market. Appropriate adjustments of the
inventory  cost basis are  provided  for slow moving and  discontinued  products
based upon future expected sales and committed inventory purchases.

Property and equipment

Property  and  equipment  are  recorded at cost.  Depreciation  of property  and
equipment is based on the straight-line  method for financial reporting purposes
over the estimated  useful lives of the related assets,  generally three to five
years.  Equipment  under  capital  leases is  amortized  over the shorter of its
estimated useful life or lease term and included in depreciation expense.

Long-lived assets

The Company  periodically  evaluates the recoverability of its long-lived assets
based upon undiscounted  cash flows and recognizes  impairment from the carrying
value of long-lived assets, if any, based on the fair value of such assets.

Income taxes

Income  taxes are  computed  using the  liability  method.  Under the  liability
method, deferred income tax assets and liabilities are determined based upon the
differences  between  the  financial  reporting  and tax  bases  of  assets  and
liabilities  and are measured using the currently  enacted tax rates and laws. A
valuation  allowance  is  provided  against  deferred  tax  assets  when  it  is
considered more likely than not they will not be realizable.

Research and development costs

Research  and  development   costs  are  expensed  as  incurred.   Research  and
development  of new software  products  and  enhancements  to existing  software
products  are  expensed as incurred  until  technological  feasibility  has been
established. The Company believes its current process for developing software is
essentially  completed  concurrently  with the  establishment  of  technological
feasibility.  Software costs incurred after the  establishment  of technological
feasibility have not been material to date and therefore have been expensed.

Stock-based compensation

The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock  Issued to  Employees"  and  related  interpretations  thereof,  including
Financial Accounting Standards Board (FASB) interpretation No. 44, in accounting
for its employee stock options and stock  purchase  plan. Pro forma  information
regarding  net income  (loss) and net income  (loss) per share is  disclosed  as
required by Statement  of  Financial  Accounting  Standards  Statement  No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123).

The Company  accounts for stock issued to  non-employees  in accordance with the
provisions  of SFAS 123 and  Emerging  Issues Task Force No.  96-18 (EITF 96-18)
"Accounting for Equity  Instraments  that are Issued to Other than Employees for
Acquiring or in Conjunction with Selling Goods or Services."


                                       34
<PAGE>

Fair value of financial instruments

The  carrying  amounts  for certain of the  Company's  cash  equivalents,  trade
accounts receivable,  accounts payable,  and payable to stockholder  approximate
fair value due to the relatively short maturity of these instruments.

Comprehensive income (loss)

The Company had no items of other comprehensive  income (loss) during any of the
periods presented,  and accordingly  comprehensive income (loss) is equal to net
income (loss) for all periods presented.

Reclassifications

Certain  previously  reported amounts in the fiscal 2001 statement of operations
have been reclassified to conform to current period presentation.

Segment information

In accordance  with the  provisions of SFAS No. 131, the Company has  determined
that it operates in one business segment, networking and connectivity,  and does
not have separate reportable segments.

Sales as a percentage of net sales by geographic region were as follows:

                                2002         2001        2000
                                ----         ----        ----
         United States            80%          76%         77 %
         Europe                   14           14          15
         Other                     6           10           8
                                 ---          ---         ---
                                 100 %        100 %       100 %
                                 ===          ===         ===

Substantially all of the Company's assets are located in the United States.

Recently issued accounting pronouncements

In  April  2002,  the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting  Standards  ("SFAS") No. 145,  "Rescission of
SFAS Nos. 4, 44 and 64,  Amendment of FAS 13, and  Technical  Corrections  as of
April 2002," which is effective for fiscal years  beginning  after May 15, 2002.
This  Statement   rescinds  SFAS  No.  4,  "Reporting   Gains  and  Losses  from
Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund  Requirements."  This
Statement also rescinds SFAS No. 44,  "Accounting for Intangible Assets of Motor
Carriers."  This  statement  amends  SFAS No. 13,  "Accounting  for  Leases," to
eliminate an inconsistency  between the required  accounting for  sale-leaseback
transactions and the required  accounting for certain lease  modifications  that
have  economic  effects that are similar to  sale-leaseback  transactions.  This
Statement  also  amends  other  existing  authoritative  pronouncements  to make
various technical corrections, clarify meanings, or describe their applicability
under  changed  conditions.  The  provisions  of SFAS No.  145  relating  to the
rescission  of SFAS No. 4 shall be applied in fiscal years  beginning  after May
15, 2002.  The  provisions  in paragraphs 8 and 9(c) of SFAS No. 145 relating to
SFAS No. 13 shall be effective for  transactions  occurring  after May 15, 2002.
All other provisions of SFAS No. 145 shall be effective for financial statements
issued on or after May 15, 2002.  The Company  believes the adoption of SFAS No.
145 will not have a significant impact on its financial statements.

In July 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal Activities." This Statement addresses financial accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies  Emerging  Issues  Task  Force  (EITF)  Issue  No.  94-3,   "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  This Statement
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized  when the liability is incurred.  The  provisions of this
Statement are effective for exit or disposal activities that are initiated after
December  31,  2002.  The  Company  believes  that SFAS No.  146 will not have a
material impact on its financial position, results of operations or cash flows.

Financial   Accounting  Standards  Board  Interpretation  No.  45,  Guarantor  s
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees of  Indebtedness  of Others ( FIN 45 ), was issued in November  2002.
FIN 45 requires that upon issuance of a guarantee,  the guarantor  must disclose
and recognize a liability for the fair value of the  obligation it assumes under
that guarantee.  The initial recognition and measurement  requirements of FIN 45
are effective for


                                       35
<PAGE>

guarantees   issued  or  modified   after  December  31,  2002.  The  disclosure
requirements of FIN 45 are effective for interim and annual periods ending after
December  15,  2002,  and are  applicable  to the  Company  s  product  warranty
liability.

In November 2002, the EITF reached a consensus on Issue 00-21, addressing how to
account for  arrangements  that involve the delivery or  performance of multiple
products,  services,  and/or  rights to use assets.  Revenue  arrangements  with
multiple  deliverables  are divided into  separate  units of  accounting  if the
deliverables in the arrangement meet the following  criteria:  (1) the delivered
item has value to the customer on a standalone basis; (2) there is objective and
reliable  evidence of the fair value of undelivered  items;  and (3) delivery of
any undelivered item is probable.  Arrangement consideration should be allocated
among the separate units of accounting based on their relative fair values, with
the amount  allocated to the delivered  item being limited to the amount that is
not  contingent on the delivery of additional  items or meeting other  specified
performance conditions.  The final consensus is applicable to agreements entered
into in fiscal  periods  beginning  after June 15,  2003.  The Company  does not
expect the  provisions  of this  consensus to have a  significant  effect on the
Company's results of operations or financial position

FASB  Interpretation  No. 46,  Consolidation of Variable  Interest Entities (FIN
46),  was  issued in  January  2003.  FIN 46  requires  that if an entity is the
primary beneficiary of a variable interest entity, the assets, liabilities,  and
results of operations of the variable  interest entity should be included in the
consolidated  financial  statements of the entity.  The provisions of FIN 46 are
effective  immediately for all arrangements entered into after January 31, 2003.
For those arrangements entered into prior to February 1, 2003, the provisions of
FIN 46 were  required  to be adopted at the  beginning  of the first  interim or
annual period beginning after June 15, 2003.  However, in October 2003, the FASB
deferred the effective  date of FIN 46 to the end of the first interim or annual
period ending after December 15, 2003 for those arrangements  entered into prior
to February 1, 2003. In December 2003,  the FASB further  deferred the effective
date of FIN 46 to the end of the first interim or annual reporting period ending
after March 15, 2004 for those non-special purpose entity  arrangements  created
prior to February 1, 2003. The Company does not expect the adoption of FIN 46 to
have a significant impact on its results of operations or financial position.

Statement of Financial  Accounting Standards No. 149, Amendment of Statement 133
on Derivative  Instruments and Hedging Activities (SFAS 149) was issued in April
2003.  SFAS 149 amends and  clarifies  accounting  for  derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging  activities under Statement of Financial  Accounting  Standards No. 133,
Accounting  for  Derivative  Instruments  and Hedging  Activities  . SFAS 149 is
generally effective for derivative instruments, including derivative instruments
embedded in certain contracts,  entered into or modified after June 30, 2003 and
for hedging  relationships  designated after June 30, 2003. The Company does not
expect  the  adoption  of SFAS 149 to have a  material  impact on its  operating
results or financial condition.

In May 2003,  the FASB  issued SFAS No. 150,  Accounting  for Certain  Financial
Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). SFAS
150 changes the accounting for certain financial instruments that under previous
guidance issuers could account for as equity. It requires that those instruments
be  classified as  liabilities  in balance  sheets.  The guidance in SFAS 150 is
generally effective for all financial instruments entered into or modified after
May 31, 2003,  and otherwise is effective on July 1, 2003.  The adoption of SFAS
150 is not  expected  to have a  material  impact  on the  Company  s  financial
position, cash flows or results of operations.


NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

During fiscal 1998 and 1999, the Company reported reserves  offsetting  accounts
receivable for customers' product returns (stock rotation), price protection and
other customer sales price rebates,  as well as accruals for market  development
funds  and  other  related  obligations  due its  reseller  customers  that were
relatively  large related to its recent sales  activities with those  customers.
The  appropriate  determination  of the  estimated  amount of such  reserves and
accruals under generally accepted accounting principles requires the exercise of
significant judgment.


                                       36
<PAGE>

As a result of an  investigation  undertaken by the Company in 2003, it has been
determined  that a portion of such  reserves and  accruals  were  overstated  at
October  2, 1999 and in  earlier  periods  and were also  misstated  in  periods
subsequent  to October 2, 1999 as the result of errors in applying the Company's
accounting  policies for measuring the  estimated  balances of those  period-end
reserves  and  accruals  in  accordance  with  generally   accepted   accounting
principles.  Those errors  arose,  in part, as a result of the Company not fully
considering the effect of the year-to-year sequential declines in net sales that
the Company  experienced  beginning in fiscal 1998 on the  estimated  period-end
reserve and accrual balances.  The investigation  also revealed that the Company
inappropriately  reversed portions of prior period  overstatements in subsequent
periods  resulting  in  overstatements  of  revenue  and/or  understatements  of
operating   expenses.   In   addition   to  its   investigation   of  sales  and
customer-related reserves and accruals, the scope of the Company's investigation
also  included a review of its  reported  obligations  for  warranty and certain
other  accruals  which  resulted in  adjustments  to such  balances for the same
reasons as those described above.

As a result of the Company's  investigation,  the accompanying balance sheets as
of September 28, 2002 and September 29, 2001,  and the results of operations and
cash flows for each of the three fiscal years in the period ended  September 28,
2002 have been restated from those previously  issued. In addition,  the balance
reported for the accumulated deficit as of October 2, 1999 has been restated.


                                       37
<PAGE>

The following table sets forth the previously  reported amounts and the restated
amounts reflected in the accompanying financial statements (in thousands, except
for per share amounts):
<TABLE>
<CAPTION>
                                            September 28, 2002             September 29, 2001              September 30, 2000
                                        --------------------------      ------------------------       --------------------------
                                            As                              As                             As
                                        previously                      previously                     previously
                                         reported      As restated       reported    As restated        reported      As restated
                                        ----------     -----------      ----------   -----------       ----------     -----------
<S>                                       <C>            <C>             <C>            <C>             <C>            <C>
Statement of Operations:
  Net Sales                               15,218          15,237          22,074          21,732          29,280          29,001
  Total operating expenses                 7,670           7,706           9,117           9,642          10,525          10,534
                                         -------         -------         -------         -------         -------         -------
  Net income (loss)                       (2,149)         (2,208)           (949)         (1,859)            392            (325)
  Basic income (loss) per share
                                           (0.21)          (0.22)          (0.10)          (0.19)           0.04           (0.03
  Diluted income (loss) per share
                                           (0.21)          (0.22)          (0.10)          (0.19)           0.04           (0.03)
Balance Sheet:
  Cash and cash equivalents                3,282           3,282           5,065           5,065           6,433           6,433
  Accounts receivable                      1,558           2,821           1,764           3,109           3,233           4,815
  Inventory                                1,515           1,515           1,848           1,848           2,605           2,475
  Prepaid expenses and other
current assets                               141             141             400             400             523             523
                                         -------         -------         -------         -------         -------         -------
  Total current assets                     6,496           7,759           9,077          10,422          12,794          14,246
Property and equipment, net                   90              90             117             117             261             261
Other assets                                 172             172             172             172             167             167
Total assets                               6,758           8,021           9,366          10,711          13,222          14,674
                                         -------         -------         -------         -------         -------         -------
   Accounts payable                        2,291           2,016           2,469           2,187           3,776           3,365
  Accrued expenses                         3,834           1,932           4,117           2,245           5,437           2,891
  Payable to stockholder                      --              --               8               8             330             330
Total current liabilities                  6,125           3,948           6,594           4,440           9,543           6,586
Stockholders equity
  Additional paid-in capital              28,422          28,422          28,412          28,412          28,370          28,370
  Accumulated deficit                    (27,789)        (24,349)        (25,640)        (22,141)        (24,691)        (20,282)
                                         -------         -------         -------         -------         -------         -------
Total stockholders equity                    633           4,073           2,772           6,271           3,679           8,088
                                         -------         -------         -------         -------         -------         -------
Total liabilities and
stockholders equity                        6,758           8,021           9,366          10,711          13,222          14,674
</TABLE>

The  restatement  adjustments  did not impact total cash flows  associated  with
operating  activities,  investing  activities or financing activities for any of
the three fiscal years in the period ended September 30, 2002.

The  accumulated  deficit  at  October  2, 1999  reported  in the  Statement  of
Stockholders' Equity has been restated to $19,957,000 from the amount previously
reported of $25,083,000,  or a reduction of $5,126,000 to reflect the cumulative
effect at that date of restating for the same matters as those discussed  above.
Such restatement had the corresponding  effect of increasing accounts receivable
by $2,195,000,  and decreasing accounts payable by $578,000 and accrued expenses
by $2,561,000, all at October 2, 1999.

References to the amounts that have been restated that appear elsewhere in these
footnotes have been restated to report the revised amounts.


                                       38
<PAGE>

Note 3.       Basic and Diluted Net Income (Loss) Per Share - As Restated


The Company computes net income (loss) per share in accordance with SFAS No. 128
"Earnings  per  Share"  (SFAS No.  128).  Basic net  income  (loss) per share is
computed  by  dividing  net  income  (loss)  available  to  common  stockholders
(numerator)  by  the  weighted-average   number  of  common  shares  outstanding
(denominator)  during the  period.  Diluted  net income  (loss) per share  gives
effect to all dilutive  potential  common shares  outstanding  during the period
including stock options,  using the treasury stock method.  In computing diluted
net income  (loss) per share,  the average stock price for the period is used in
determining the number of shares assumed to be re-purchased from the exercise of
stock options.

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and  diluted  net income  (loss) per share  computations  for the  periods
presented below (in thousands, except per share data):
<TABLE>
<CAPTION>
                                                         2002             2001             2000
                                                       --------         --------         --------
                                                     (As restated)    (As restated)    (As restated)

<S>                                                    <C>              <C>              <C>
Net loss                                               $ (2,208)        $ (1,859)        $   (325)
                                                       ========         ========         ========

Weighted average common stock outstanding (basic)        10,024            9,948            9,620
Dilutive effect of options                                   --               --               --
                                                       --------         --------         --------
Weighted average common stock outstanding (diluted)      10,024            9,948            9,620
                                                       ========         ========         ========
Net loss per share:
     Basic                                             $  (0.22)        $  (0.19)        $  (0.03)
                                                       ========         ========         ========
     Diluted                                           $  (0.22)        $  (0.19)        $  (0.03)
                                                       ========         ========         ========
</TABLE>

Diluted net loss per share for the years ended September 28, 2002, September 29,
2001 and September  30, 2000,  exclude all dilutive  potential  common shares as
their effect is  antidilutive.  At September  28, 2002,  September  29, 2001 and
September 30, 2000,  1,719,520,  1,613,058 and  1,576,971  outstanding  options,
respectively, were excluded since their effect was antidilutive.


Note 4.       Balance Sheet Components - As Restated
                                                2002            2001
                                              -------         -------
                                                  (in thousands)
Inventory:
     Raw materials and component parts        $   193         $   154
Work-in-process                                    54             130
     Finished goods                             1,268           1,564
                                              -------         -------
                                              $ 1,515         $ 1,848
                                              =======         =======
Property and equipment (1):
     Computers and R&D equipment              $ 2,205         $ 6,221
     Furniture and Fixtures                       508           1,494
                                              -------         -------
                                                2,713           7,715
     Accumulated depreciation                  (2,623)         (7,598)
                                              -------         -------
                                              $    90         $   117
                                              =======         =======
Accrued expenses:
     Payroll-related expenses                 $   574         $   406
     Sales promotion expenses                     314             724
     Legal and professional fees                  373             406
     Warranty                                     430             470
     Other                                        241             239
                                              -------         -------
                                              $ 1,932         $ 2,245
                                              =======         =======

(1) The decrease in gross fixed assets and  accumulated  depreciation  in fiscal
2002 is comprised entirely of the removal of fully depreciated assets.


                                       39
<PAGE>

Note 5.       Related Party Transactions

The  Company  has  a  supply   agreement  (the  "OSE   Agreement")  with  Orient
Semiconductor  Electronics,   Ltd.,  ("OSE").  OSE  and  one  of  its  principal
shareholders  own, in aggregate,  approximately  12.2% of the  Company's  Common
Stock as of September 28, 2002. Under the OSE Agreement,  the Company  purchases
from and sells at cost to OSE certain  component parts. The Company is obligated
to  purchase  goods only to the extent it has signed firm  purchase  commitments
with OSE. At September 28, 2002, the Company's firm purchase  commitments  under
the OSE Agreement were insignificant.

For  fiscal  2002,  2001,  and 2000 the  Company  sold,  at cost,  approximately
$37,000, $0.1 million, and $0.2 million, respectively, of component parts to OSE
and purchased $0.5 million,  $1.3 million,  and $3.7 million,  respectively,  of
goods  from  OSE.  Amounts   classified  as  "payable  to  stockholder"  in  the
accompanying  balance  sheets are solely  related to the  purchases of inventory
from OSE.

On March 16, 2000,  the Company  signed a Stock  Purchase  Agreement  with Delta
Networks Inc., and Delta International  Holdings Ltd. The Company issued 500,000
shares at $3.00 per  share,  amounting  to  $500,000  from Delta  Networks,  and
$1,000,000 from Delta International Holdings Ltd. During fiscal years 2002, 2001
and 2000, the Company  purchased  approximately  $3.2 million,  $4.8 million and
$7.9 million of goods from Delta and sold component parts totaling approximately
$0.01 million,  $0.08 million, and $0.4 million at cost to Delta,  respectively.
At  September  28, 2002 the Company had  approximately  $0.7 million in accounts
payable  to Delta  and  approximately  $29,000  receivable  from  Delta,  and at
September  29,  2001 the  Company  had  approximately  $0.9  million in accounts
payable to Delta and approximately $7,000 receivable from Delta.


Note 6.       Income Taxes - As Restated

There was no  provision  for income taxes made in fiscal  years 2002,  2001,  or
2000.

Deferred  tax assets,  net,  comprise the  following  at September  28, 2002 and
September 29, 2001 (in thousands):

                                                   2002               2001
                                                ---------          ----------
Deferred tax assets :
     Net operating losses                       $   5,141          $    3,941
     Research and development credits               2,942               2,633
     Inventory-related reserves                     2,370               2,456
     Receivable and sales-related reserves            687                 908
     Compensation accruals                            100                  49
     Depreciation                                     103                 202
     Other reserves and accruals                       91                 225
         Total deferred tax assets                 11,434              10,414
         Valuation allowance                      (11,434)            (10,414)
                                                ---------          ----------
                                                $      --          $       --
                                                =========          ==========

The  Company   believes  that  sufficient   uncertainty   exists  regarding  the
realizability  of the deferred tax assets such that a full  valuation  allowance
was provided as of September 28, 2002 and September 29, 2001.

At September  28,  2002,  the Company had federal and state net  operating  loss
carryforwards  of  approximately  $13.7 million and $9.5 million,  respectively,
available to offset  future  taxable  income which expire  beginning in 2018 and
2003. In addition,  as of September 28, 2002, the Company had approximately $1.8
million  and  approximately  $1.2  million of  federal  and state  research  and
development credits, respectively. The federal tax credits will expire beginning
in 2012 if not  utilized.  The state tax  credits may be carried  forward  until
utilized.

Under Internal  Revenue Code Section 382 and 383, the future  utilization of net
operating losses and tax credits may be limited in certain  circumstances  where
there is a significant ownership change. Events which may cause changes include,
but are not limited to, a  cumulative  ownership  change of more than 50% over a
three year period.

A  reconciliation  between the  Company's  income tax  provision  and the amount
computed by applying the  statutory  federal rate to income before taxes for the
recorded provisions follows (in thousands):


                                       40
<PAGE>

                                             2002        2001       2000
                                           -------     -------     ------
Tax (benefit) at U.S. statutory rate       $  (751)    $  (632)    $ (111)
State taxes, net of federal benefits          (106)        (90)       (16)
Other                                         (192)          6          8
Valuation allowance                          1,049         716        119
                                           -------     -------     ------
                                           $    --     $    --     $   --
                                           =======     =======     ======

Note 7.       Stockholders' Equity - As Restated

Preferred Stock

There  are  2,000,000  shares  of  Preferred  Stock  authorized  by the Board of
Directors none of which have been issued.

Stock Based Compensation Plans

As of September 28, 2002, the Company had granted options under five stock-based
compensation plans that are described below.

The 2001 Stock  Option  Plan  allows  for  issuance  of  options to the  Company
employees and  consultants  to purchase a maximum of 1,000,000  shares of common
stock  plus  7% of the  outstanding  common  shares  as of the  last  day of the
immediately  preceeding  year beginning in fiscal year 2002.  This plan replaces
the  Company's  1990 Stock  Option  Plan (the 1990 Plan)  which  allowed for the
issuance of options to Company  employees and  consultants to purchase a maximum
of 4,597,333  shares of common stock. The 1990 Plan expired in May 2000, and was
temporarily  replaced by the 2000  Non-Statutory  Stock Option Plan which allows
for issuance of options to the Company  employees and  consultants to purchase a
maximum of 120,000 shares of common stock.

The Directors' Stock Option Plan allows for the issuance of options to directors
of the Company who are not employees of, or  consultants  to, the Company or any
affiliate  of the  Company.  The  Directors'  Stock  Option  Plan allows for the
issuance of options to  Non-Employee  Directors to purchase a maximum of 300,000
shares of common stock.

The Key  Executive  Option  Plan  allows  for the  issuance  of  options  to key
employees  of the  Company who are not  recognized  under the  Directors'  Stock
Option Plan. The Key Executive Option Plan allows for the issuance of options to
Key Employees to purchase a maximum of 404,999 shares of common stock.

Individuals  owning  more than 10% of the  Company's  stock are not  eligible to
participate  in the above three Plans unless the exercise price of the option is
at least 110% of the fair market value of the common stock at the date of grant.
Incentive  stock  options  issued to holders  of less than 10% of the  Company's
stock must be issued at exercise  prices no less than the fair  market  value of
the Company's  common stock per share on the date of grant and with  expirations
not to exceed  ten  years  from the grant  date.  Under the terms of the  Plans,
options are granted at 100% of the fair market  value of the common stock at the
date of grant  with an  expiration  date of ten  years  from the date of  grant.
Initial option grants  generally  become vested over a period of four years from
the date of hire, commencing on the date one year after the date of grant of the
initial option.  Unexercised  options terminate three months after an Optionee's
termination of all service with the Company and its affiliates.

Activity under the 1990 Stock Option Plan, 2000 Nonstatutory  Stock Option Plan,
2001 Stock  Option  Plan,  Directors'  Stock  Option Plan and the Key  Executive
Option Plan are summarized as follows:


                                       41
<PAGE>
<TABLE>
<CAPTION>
                                      2002                         2001                           2000
                             ----------------------        ---------------------        -----------------------
                                           Weighted                     Weighted                       Weighted
                               Number       Average          Number      Average         Number         Average
                                 of        Price per           of       Price per          of          Price per
                               Shares        Share           Shares       Share           Shares         Share
                             ---------       -----         ---------      -----         ---------        ------
<S>                          <C>             <C>           <C>            <C>           <C>              <C>
Beginning Balance            1,613,058       $1.82         1,576,971      $1.91         1,762,512        $2.03
Granted                        230,726       $0.17           125,500      $0.81           257,866        $1.48
Exercised                           --          --            (2,516)     $0.87           (29,643)       $0.94
Canceled                      (124,264)      $2.22           (86,897)     $1.74          (413,764)       $2.24
                              --------                       -------                     --------
Ending Balance               1,719,520       $1.58         1,613,058      $1.82         1,576,971        $1.91
                             =========       =====         =========      =====         =========        =====
</TABLE>

The following table summarizes  information  about stock options  outstanding at
September 28, 2002:
<TABLE>
<CAPTION>
                                          Options Outstanding                  Options Exercisable
                             -----------------------------------------      -------------------------
                                                Weighted
                                                 Average      Weighted                      Weighted
                                                Remaining      Average                       Average
             Range of           Number         Contractual    Exercise        Number        Exercise
          Exercise Prices    Outstanding      Life in Years     Price       Exercisable       Price
      -----------------      -----------      -------------   --------      -----------     ---------
<S>                             <C>               <C>           <C>            <C>            <C>
      $0.1200 - $0.2800         228,259           9.21          $0.20          30,223         $0.24
      $0.3000 - $0.8125          59,275           8.34          $0.78          27,550         $0.76
      $0.8750 - $0.8750         226,100           6.83          $0.88         195,994         $0.88
      $0.9000 - $1.000           91,700           7.17          $0.94          68,993         $0.94
      $1.0320 - $1.0320         600,000           6.84          $1.03         549,999         $1.03
      $1.6250 - $2.3443         174,137           6.97          $1.92         124,214         $1.92
      $2.3750 - $4.0000         188,024           4.72          $2.63         181,248         $2.64
      $4.2500 - $6.5000         105,825           3.38          $5.21         105,825         $5.21
      $6.8750 - $6.8750           6,200           4.07          $6.88           6,200         $6.88
      $7.5000 - $7.5000          40,000           0.95          $7.50          40,000         $7.50

      $0.1200 - $7.5000       1,719,520           6.65          $1.58       1,330,246         $1.84
                              =========                                     =========
</TABLE>

Under SFAS No. 123, the fair value of each option grant is estimated on the date
of grant  using  the  Black-Scholes  option  pricing  model  with the  following
assumptions  used for grants  during  fiscal  2002,  2001,  and 2000,  risk free
interest  rates  ranging  at the date of grant  from  4.17% to  6.79%;  expected
average volatility of 120%, 119%, and 65%, respectively; an expected option life
of four years,  and no expected  dividends.  The weighted  average fair value of
stock options granted under the plans for fiscal 2002, 2001, and 2000 was $0.17,
$0.69, and $0.74, respectively.

In 1993,  the Company  adopted the Employee  Stock  Purchase Plan (the "Purchase
Plan")  covering an aggregate of 500,000  shares of common stock.  During fiscal
2000 the  Stockholders  approved an  amendment  increasing  the number of shares
available  for issuance  under the Purchase  Plan by 500,000  shares.  Under the
Purchase  Plan, the Board of Directors may authorize  participation  by eligible
employees,  including officers, in periodic offerings following the commencement
of the Purchase Plan. Employees who participate in the Purchase Plan can have up
to 10% of their earnings withheld and used to purchase shares of common stock on
specified dates as determined by the Board.  The price of common stock purchased
under the Purchase Plan is equal to 85% of the lower of the fair market value of
the common stock  determined by the closing price on the Nasdaq  National Market
System,  at the commencement  date or the ending date of each six month offering
period.

Sales  under the  Purchase  Plan in fiscal  2002,  2001,  and 2000 were  62,839,
88,202, and 81,548 shares of common stock, respectively,  at an average price of
$0.15, $0.64, and $0.99, respectively.  On September 28, 2002, 344,011 shares of
common stock were available for future purchase.

The fair  value of the  employee's  purchase  rights  under  SFAS No.  123,  was
estimated using the Black-Scholes model with the following  assumptions used for
grants during fiscal 2002, 2001, and 2000: risk free interest rates ranging from
4.17% to  6.73%,  respectively,  expected  volatility  of 120%,  119%,  and 65%,
respectively,  an  expected  option  life of six months  for all  years,  and


                                       42
<PAGE>

no expected dividends.  The weighted average fair value of stock purchased under
the Purchase Plan for fiscal 2002, 2001, and 2000, was $0.15,  $0.72, and $0.99,
respectively.

If  compensation  expense  under these plans had been  recorded in the Company's
financial  statements  pursuant to SFAS No. 123, the Company's net income (loss)
and net income (loss) per share for fiscal 2002,  2001, and 2000 would have been
as follows (in thousands, except per share amounts):

                                  2002                2001           2000
                             -------------       -------------   -------------
                             (As restated)       (As restated)   (As restated)
Net loss:
     As reported             $    (2,208)        $    (1,859)    $       (325)
     Pro forma               $    (2,397)        $    (2,084)    $       (674)

Net loss per share
     As reported
         Basic               $     (0.22)        $     (0.19)    $      (0.03)
         Diluted             $     (0.22)        $     (0.19)    $      (0.03)
     Pro forma
         Basic               $     (0.24)        $     (0.21)    $      (0.07)
         Diluted             $     (0.24)        $     (0.21)    $      (0.07)

Such pro forma disclosures may not be representative of future compensation cost
because  options vest over  several  years and  additional  grants are made each
year.

Note 8.       Commitments and Contingencies

The Company has an operating  lease for its main facility that expires on August
31, 2004. Other leases for sales offices expire through 2004. Rent expense under
such operating leases aggregated approximately $714,000,  $692,000, and $705,000
for fiscal  2002,  2001,  and 2000,  respectively.  Certain  leases  require the
Company to pay a portion of facility operating expenses.

Future  minimum lease  payments  under these leases at September 28, 2002 are as
follows (in thousands):

             Year
             2003                            989
             2004                            909
                                         -------
                                         $ 1,898
                                         =======

As of September 28, 2002,  none of the Company's  existing  facilities are being
subleased.

As of September  28, 2002,  the Company had  available a $3.0 million  revolving
line of credit  under an  agreement  with a bank which  expired on November  30,
2002. As of September 28, 2002, the Company was in compliance with the financial
covenants.  The Company  renewed its line of credit on December  31,  2002.  The
renewed line provided for  borrowings  of up to $2 million with such  borrowings
secured by the  Company's  inventory,  equipment  and  accounts  receivable  and
bearing  interest  at the bank's  prime rate plus 2.00% with a minimum  interest
rate of 6.25%.  The renewed line of credit  expired on November  30,  2003.  The
Company's  ability to borrow  under this line was  subject  to  compliance  with
certain financial covenants related to financial  performance and condition,  as
well as the amount of eligible  receivables.  Further,  the amount of borrowings
available  under the line was limited based on eligible  accounts  receivable at
any point in time. As of September 28, 2002, the amount of borrowings  available
under the line was $0.9 million.

Note 9.       Litigation

From time to time the Company is subject to legal  proceedings and claims in the
ordinary  course of  business,  including  claims  of  alleged  infringement  of
trademarks and other intellectual property rights.

In September 1999, certain inventory having a cost of approximately $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL").  In March
2003, the US


                                       43
<PAGE>

Attorney and the Company entered a final settlement for an amount  consisting of
$57,000, plus removal of improper marks from the product.

Note 10.      Subsequent Events (Unaudited)

On June 13, 2003, the Company  entered into an Agreement and Plan of Merger with
Oblique,  Inc.  ("Oblique") (the "Merger  Agreement"),  pursuant to which Asante
would  be  merged  with and into  Oblique,  with  Oblique  being  the  surviving
corporation (the "Merger").  The Merger Agreement provided for a cash payment at
closing of up to $0.45 per share plus up to approximately  $0.05 per share to be
distributed  no later than March 31,  2004,  subject to certain  indemnification
obligations.  Taken  together  these  per  share  payments  represented  a total
acquisition price for all of the outstanding shares of Asante common stock of up
to  approximately  $5.1 million.  The Merger was conditioned  upon,  among other
things,  approval  by  holders of Asante  common  stock.  The  Merger  Agreement
provided  for  termination  by Asante  without any  liability on the part of the
Company in the event Asante were to receive a written superior offer.

On September 13, 2003, the Company terminated its Merger Agreement with Oblique,
Inc. and entered into a binding  Letter of Intent with Acorn  Campus,  a venture
capital company.  Pursuant to the binding Letter of Intent,  Acorn Campus was to
acquire all of the  outstanding  shares of Asante common stock and any shares of
common stock  underlying any outstanding  stock options for  approximately  $5.4
million in cash. The Company  believed the offer by Acorn Campus was superior to
the offer  from  Oblique,  and  contained  proven  financing.  However,  without
apparent  cause or reason,  Acorn Campus sent a letter to Management on November
18, 2003, informing the Company of its intent to withdraw its offer.  Management
is reviewing its  alternatives,  including  pursuing  legal action against Acorn
Campus for breach of contract.


                                       44
<PAGE>

Unaudited Quarterly Results of Operations (in thousands except net income (loss)
per share):

For a description of the restatement  items and the effect on annual periods for
2002 and 2001,  which also  affect the  unaudited  quarterly  data,  see Note 2,
Restatement of Previously Issued Financial Statements, to the restated financial
statements.

<TABLE>
<CAPTION>
Fiscal 2002                                                                        Quarter Ended
-------------------------------------------------------------------------------------------------
                                              December 30    March 30      June 29   September 28
<S>                                              <C>          <C>          <C>          <C>
Net sales                                        $ 3,959      $ 3,904      $ 4,002      $ 3,371
Gross profit                                     $ 1,317      $ 1,452      $ 1,426      $ 1,293
Net income (loss)                                $(1,126)     $  (627)     $  (413)     $   (42)
Net income (loss) per diluted share              $ (0.11)     $ (0.06)     $ (0.04)     $ (0.00)
<CAPTION>

Fiscal 2001                                                                         Quarter Ended
-------------------------------------------------------------------------------------------------
                                              December 31    March 31      June 30    September 29
<S>                                              <C>          <C>          <C>          <C>
Net sales                                        $ 7,398      $ 5,059      $ 4,462      $ 4,814
Gross profit                                     $ 2,062      $ 1,639      $ 1,955      $ 1,898
Net income (loss)                                $  (245)     $  (715)     $  (798)     $  (101)
Net income (loss) per diluted share              $ (0.02)     $ (0.07)     $ (0.08)     $ (0.01)
</TABLE>

        The following are  reconciliations  of our quarterly  operating  results
from unaudited financial information previously filed to this restated financial
information (in thousands, except per share data):


                      Three Months Ended December 30, 2001
--------------------------------------------------------------------------------
                                           As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                               $    3,859    $      100        $3,959
Gross profit                                1,310             7         1,317
Net income (loss)                            (756)         (370)       (1,126)
Basic net income (loss) per share      $    (0.08)                   $  (0.11)
Diluted net income (loss) per share    $    (0.08)                   $  (0.11)


                                       45
<PAGE>

                        Three Months Ended March 30, 2002
--------------------------------------------------------------------------------
                                           As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 3,955       $   (51)      $ 3,904
Gross profit                               1,437            15         1,452
Net income (loss)                           (466)         (161)         (627)
Basic net income (loss) per share        $ (0.05)                    $ (0.06)
Diluted net income (loss) per share      $ (0.05)                    $ (0.06)


                        Three Months Ended June 29, 2002
--------------------------------------------------------------------------------

                                           As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 4,052       $   (50)      $ 4,002
Gross profit                               1,427            (1)        1,426
Net income (loss)                           (493)           80          (413)
Basic net income (loss) per share        $ (0.05)                    $ (0.04)
Diluted net income (loss) per share      $ (0.05)                    $ (0.04)


                      Three Months Ended September 28, 2002

                                           As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 3,352       $    19       $ 3,371
Gross profit                               1,336           (43)        1,293
Net income (loss)                           (434)          392           (42)
Basic net income (loss) per share        $ (0.04)                    $ (0.00)
Diluted net income (loss) per share      $ (0.04)                    $ (0.00)


                      Three Months Ended December 31, 2000


                                            As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 6,952      $   446       $ 7,398
Gross profit                               2,530         (468)        2,062
Net income (loss)                            232         (477)         (245)
Basic net income (loss) per share        $  0.02                    $ (0.02)
Diluted net income (loss) per share      $  0.02                    $ (0.02)


                        Three Months Ended March 31, 2001

                                           As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 5,016       $    43       $ 5,059
Gross profit                               1,801          (162)        1,639
Net income (loss)                           (498)         (217)         (715)
Basic net income (loss) per share        $ (0.05)                    $ (0.07)
Diluted net income (loss) per share      $ (0.05)                    $ (0.07)


                                       46
<PAGE>

                        Three Months Ended June 30, 2001

                                            As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 4,919       $  (457)      $ 4,462
Gross profit                               1,698           257         1,955
Net income (loss)                           (557)         (241)         (798)
Basic net income (loss) per share        $ (0.06)                    $ (0.08)
Diluted net income (loss) per share      $ (0.06)                    $ (0.08)


                      Three Months Ended September 29, 2001

                                            As
                                       Previously                       As
                                        Reported     Adjustments     Restated
                                       ----------    -----------     --------
Revenues                                 $ 5,187       $  (373)      $ 4,814
Gross profit                               1,911           (13)        1,898
Net income (loss)                           (126)           25          (101)
Basic net income (loss) per share        $ (0.01)           --       $ (0.01)
Diluted net income (loss) per share      $ (0.01)           --       $ (0.01)


                                       47
<PAGE>

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH  ACCOUNTANTS  ON  ACCOUNTING AND
              FINANCIAL DISCLOSURE

Not applicable.


                                       48
<PAGE>

                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General Instruction G(3) to Form 10-K/A, the information required by
this Item concerning the Company's directors is incorporated by reference to the
information  contained  in the  section  captioned  "Proposal  One - Election of
Directors"  in the  Company's  definitive  Proxy  Statement  for the 2002 Annual
Meeting of Stockholders (the "Proxy  Statement") to be filed with the Commission
within 120 days after the end of the Company's  fiscal year ended  September 28,
2002.

The information  required by this Item concerning the executive  officers of the
Company is incorporated by reference to the information set forth in the section
titled  "Executive  Officers  of the  Company" at the end of Part I of this Form
10-K/A.

Information  with respect to Directors  and Officers of the Company  required by
Item 405 of Regulation S-K is incorporated  herein by reference from information
set forth under the caption "Filing of Reports by Directors and Officers" in the
Proxy Statement.

ITEM 11.      EXECUTIVE COMPENSATION

Pursuant to General Instruction G(3) to Form 10-K/A, the information required by
this Item is  incorporated  by  reference  to the  information  contained in the
section captioned "Executive Compensation" in the Proxy Statement.

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Pursuant to General Instruction G(3) to Form 10-K/A, the information required by
this Item is  incorporated  by  reference  to the  information  contained in the
section captioned "Security Ownership" in the Proxy Statement.

ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to General Instruction G(3) to Form 10-K/A, the information required by
this Item is  incorporated  by  reference  to the  information  contained in the
section captioned "Certain  Relationships and Related Transactions" in the Proxy
Statement.


                                       49
<PAGE>

                                     PART IV

ITEM 14. CONTROLS AND PROCEDURES

(a)  Disclosure  controls  and  procedures.  Based  on their  evaluation  of the
Company's  disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended,  (the "Exchange
Act")) as of the end of the period covered by this Annual Report on Form 10-K/A,
the Company's  principal  executive officer and principal financial officer have
concluded that the Company's disclosure controls and procedures,  as modified by
the changes  discussed in subparagraph  (b) below,  are effective to ensure that
information  required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in Securities and Exchange  Commission  rules
and  forms,  and  include  controls  and  procedures  designed  to  ensure  that
information  required  to be  disclosed  by  the  Company  in  such  reports  is
accumulated  and  communicated  to  the  Company's  management,   including  the
principal  executive officer and principal  financial officer, as appropriate to
allow timely decisions regarding required disclosure.

(b) Changes to internal controls over financial  reporting.  During fiscal years
1998 and 1999, the Company reported reserves  offsetting accounts receivable for
customers'  product  returns,  price  protection  and other customer sales price
rebates,  as well as accruals  for market  development  funds and other  related
obligations due to reseller customers that were relatively large compared to the
sales activities with those customers. The Company undertook an investigation of
this issue in 2003 and  determined  that a portion of such reserves and accruals
were  overstated at October 2, 1999 and in earlier periods and were misstated in
periods subsequent to October 2, 1999. As a result of the foregoing, the Company
has restated its financial  statements for each of the three fiscal years in the
period ended September 28, 2002.

         In connection with their audits of the restatement of previously issued
financial  statements,  the Company's prior  independent  auditors  identified a
"material  weakness"  (as  defined  under  standards  established  by the AICPA)
relating  to  the  Company's  initial  recording  and  management's  review  and
oversight  of certain  accounting  estimates.  In  response to the above and the
Company's  investigation,   the  Company,  under  the  direction  of  the  Audit
Committee,  has  directed  management  to dedicate  resources  and take steps to
strengthen  control  processes and procedures in order to identify and prevent a
recurrence  of the  circumstances  that  resulted  in the need to restate  prior
period financial statements.




ITEM 15.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

         (a)(1)   Financial  Statements - See Index to Financial  Statements and
                  Financial Statement Schedule at page 27 of this Form 10-K/A.

         (2)      Financial   Statement   Schedule  -  See  Index  to  Financial
                  Statements and Financial Statement Schedule at page 27 of this
                  Form 10-K/A.  (3)  Exhibits - See Exhibit  Index at page 51 of
                  this Form 10-K/A.

         (b)      The  Registrant  did not file or amend any reports on Form 8-K
                  during the last quarter of the fiscal year ended September 28,
                  2002.

         (c)      See Exhibit Index at page 51 of this Form 10-K/A.

         (d)      See Index to  Financial  Statements  and  Financial  Statement
                  Schedule at page 27 of this Form 10-K/A.


                                       50
<PAGE>

EXHIBIT INDEX

      Number                Description of Document

          2.1     Agreement  and Plan of Merger  between  Registrant  and Asante
                  Technologies,   Inc.,  a  California  corporation,   effective
                  October 12, 1993.(1)

          3.1     Certificate of Incorporation of Registrant. (1)

          3.1A    Certificate of Amendment of Certificate  of  Incorporation  of
                  Registrant. (1)

          3.1B    Certificate of Retirement of Stock of Registrant.

          3.2     By Laws of Registrant. (1)

          4.1     Form of Common Stock certificate.(1)

         10.1*    1990 Stock Option Plan and form of Option Agreement.(1)

         10.2*    1993   Directors'   Stock  Option  Plan  and  form  of  Option
                  Agreement.(1)

         10.3*    1993 Employee  Stock  Purchase  Plan and form of  subscription
                  agreement thereunder.(1)

         10.4*    Form of Key Executive Stock Plan Agreement.(1)

         10.5     Form  of   Indemnification   Agreement  entered  into  between
                  Registrant and its directors and officers.(1)

         10.6     Registration  Rights  Agreement  dated July 10,  1992  between
                  Registrant  and certain  holders of Common  Stock and Series E
                  Preferred Stock.(1)

         10.7     Lease  dated July 16, 1992 for  facilities  located at 821 Fox
                  Lane in San Jose, California.(1)

         10.8     Manufacturing  Payment Agreement dated October 1, 1990 between
                  Registrant and Orient Semiconductor Electronics, Ltd.(1)

         10.9     Distribution   Agreement   dated   November  2,  1989  between
                  Registrant and Ingram Micro, Inc., as amended.(1)(2)

         10.10    Distribution  Agreement dated June 19, 1989 between Registrant
                  and Merisel, Inc. (formerly Macamerica), as amended.(1)(2)

         10.11    Distribution   Agreement   dated   August  30,  1990   between
                  Registrant and TechData Corporation, as amended.(1)(2)

         10.12    Volume  Purchase   Agreement  dated  April  15,  1992  between
                  Registrant and National Semiconductor Corporation.(1)(2)

         10.13    Sublease  agreement  dated  August  21,  1995  for  facilities
                  located  at  821  Fox  Lane  in  San  Jose,  California,   and
                  amendments pertaining thereto.(1)(2)

         10.14    Extension of Sublease Agreement dated June 10, 1997.(2)

         10.15    Distribution   Agreement  dated  September  30,  1992  between
                  Registrant and MicroWarehouse.(4)


                                       51
<PAGE>

         23.1     Consent of Independent Auditors.

         31.1     Certification   by  CEO   pursuant   to  Section  302  of  the
                  Sarbanes-Oxley Act of 2002.

         31.2     Certification   by  CFO   pursuant   to  Section  302  of  the
                  Sarbanes-Oxley Act of 2002.

         32.1     Certification  pursuant to Section  906 of the  Sarbanes-Oxley
                  Act of 2002t.

                  * The item listed is a compensatory plan.

                  (1)  Previously  filed  as  an  Exhibit  to  the  Registrant's
                  Registration Statement on Form S-1 (No. 33-70300).

                  (2) Confidential  treatment  granted as to certain portions of
                  these exhibits.

                  (3) Previously  filed as an Exhibit to the  Registrant's  Form
                  10-K for the fiscal year ended September 30, 1994.

                  (4) Previously filed as an exhibit to the Registrant's  Annual
                  Report on Form 10-K for the fiscal year ended October 3, 1998.


                                       52
<PAGE>

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused this Report on Form 10-K/A to be
signed on its behalf by the undersigned, thereunto duly authorized.

     December 30, 2003

                                     ASANTE TECHNOLOGIES, INC.



                                     By:   /s/WILSON WONG
                                        ----------------------------------------
                                           Wilson Wong,
                                           President and Chief Executive Officer


                                     By:   /s/ ANTHONY CONTOS
                                        ----------------------------------------
                                           Anthony Contos
                                           Vice President of Finance and
                                           Administration, and Secretary


                                       53
<PAGE>

                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Wilson Wong and Anthony Contos, and each of them,
jointly  and  severally,   his   attorneys-in-fact,   each  with  the  power  of
substitution,  for him in any and all capacities, to sign any and all amendments
to this Report on Form 10-K/A and to file the same,  with  exhibits  thereto and
other  documents  in  connection  therewith,  with the  Securities  and Exchange
Commission,   hereby   ratifying   and   confirming   all  that   each  of  said
attorneys-in-fact,  or his substitute or substitutes, may do or cause to be done
by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
on Form 10-K/A has been signed by the following persons in the capacities and on
the dates indicated:
<TABLE>
<CAPTION>
       Signature                               Title                                     Dates
---------------------------   ---------------------------------------------        -------------------
<S>                            <C>                                                  <C>
/s/ WILSON WONG                President, and Chief Executive Officer               September 20, 2003
--------------------------     (Principal Executive Officer) and Director
     (Wilson Wong)


/s/ ANTHONY CONTOS             Vice President of Finance and Administration         September 20, 2003
--------------------------     (Principal Finance and Accounting Officer)
     (Anthony Contos)


/s/ MICHAEL KAUFMAN            (Director)                                           September 20, 2003
--------------------------
     (Michael Kaufman)


/s/ EDMOND TSENG               (Director)                                           September 20, 2003
--------------------------
     (Edmond Tseng)


/s/ JEFF YUAN KAI LIN          (Director)                                           September 20, 2003
--------------------------
     (Jeff Yuan Kai Lin)
</TABLE>


                                       54
<PAGE>

SCHEDULE II

                            ASANTE TECHNOLOGIES, INC.

   VALUATION AND QUALIFYING ACCOUNTS - AS PREVIOUSLY REPORTED AND AS RESTATED
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                    Additions
                                                      Balance at    Charged to                      Balance at
                                                      Beginning     Costs and                         End of
Description                                           of Period      Expenses       Deductions        Period
------------------------------------------------       -------        -------        --------        --------
<S>                                                    <C>            <C>            <C>               <C>
Year ended September 30, 2000:
     Allowance for doubtful accounts,
       price protection and distributor rebates
       Previously reported                             $ 4,607        $   805        $(2,327)          3,085
       Restated (1)                                    $ 2,630        $ 2,124        $(2,711)        $ 2,043

     Allowance for sales returns
        Previously reported                              1,164            267           (323)          1,108
        Restated (1)                                       946            267           (645)            568
                                                       -------        -------        -------         -------
       Previously reported                             $ 5,771        $ 1,072        $(2,650)        $ 4,193
       Restated (1)                                    $ 3,576        $ 2,391        $(3,356)        $ 2,611
                ==                                     =======        =======        =======         =======

Year ended September 29, 2001:
     Allowance for doubtful accounts,
       price protection and distributor rebates
       Previously reported                             $ 3,085        $   529        $(1,147)        $ 2,467
       Restated (1)                                    $ 2,043        $   974        $(1,111)        $ 1,906

     Allowance for sales returns
           Previously reported                           1,108             36            (39)          1,105
          Restated (1)                                     568             36           (172)            432
                                                       -------        -------        -------         -------
          Previously reported                          $ 4,193        $   565        $(1,186)        $ 3,572
          Restated (1)                                 $ 2,611        $ 1,010        $(1,283)        $ 2,338
                                                       =======        =======        =======         =======

     Allowance for doubtful accounts,
       price protection and distributor rebates
       Previously reported                             $ 2,467        $   861        $(1,364)        $ 1,964
       Restated (1)                                    $ 1,906        $   864        $(1,334)        $ 1,436
</TABLE>

                                       55
<PAGE>

<TABLE>
<CAPTION>
<S>                                                    <C>            <C>            <C>               <C>
Year ended September 28, 2002:
     Allowance for sales returns
        Previously reported                              1,105             75           (111)          1,069
        Restated (1)                                       432             75           (173)            334

       Previously reported                               3,572            936         (1,475)          3,033
       Restated (1)                                    $ 2,338        $   939        $(1,507)        $ 1,770
</TABLE>

(1) As a result of an  investigation  undertaken  by the  Company  in 2003,  the
Company has  determined  that a portion of the  reserves  for price  protection,
rebates  and sales  returns  were  overstated  at  October 2, 1999 and were also
misstated  in periods  subsequent  to October 2, 1999 as the result of errors in
applying the Company's  accounting policies for measuring the estimated balances
of those period-end  reserves in accordance with generally  accepted  accounting
principles.  See Note 2, Restatement of Previously Issued Financial  Statements,
in the notes to the financial statements for further information relating to the
restatement.