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

                                    FORM 10-K

       [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 27, 1997

                                       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 
incorporation or organization)                            Identification No.)

                                  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  X     NO
                                           ---       ---

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 or any amendment to this
Form 10-K. [ ]

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
28,  1997  as  reported  on  the  Nasdaq  National  Market,   was  approximately
$43,738,499.  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.

As of November 28, 1997,  the  Registrant  had 9,148,017  shares of Common Stock
outstanding.

                         ------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  sections of the  Registrant's  definitive  Proxy Statement for the 1998
Annual Meeting of  Stockholders  to be held on February 24, 1998 is incorporated
by reference in Part III of this Form 10-K to the extent stated herein.

================================================================================

<PAGE>


<TABLE>
                                          TABLE OF CONTENTS


<CAPTION>
                                                                                    Page of
                                                                                     Report
                                               PART I
<S>               <C>                                                                  <C>
ITEM 1.           BUSINESS                                                              3

ITEM 2.           PROPERTIES                                                           15

ITEM 3.           LEGAL PROCEEDINGS                                                    15

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                  16


                                               PART II

ITEM 5.           MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
                  STOCKHOLDER MATTERS                                                  18

ITEM 6.           SELECTED FINANCIAL DATA                                              19

ITEM 7.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS                                            20

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                          27

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                  ACCOUNTING FINANCIAL DISCLOSURE                                      43


                                              PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                   44

ITEM 11.          EXECUTIVE COMPENSATION                                               44

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                  MANAGEMENT                                                           44

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                       44


                                               PART IV

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                  FORM 8-K                                                             45

SIGNATURES                                                                             48

</TABLE>
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<PAGE>


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.


ITEM 1.       BUSINESS

Asante Technologies, Inc. ("Asante" or the "Company"), founded in 1988, designs,
manufactures  and markets  high-performance  computer  networking  products that
address  networking  requirements at the departmental and workgroup level within
corporations  and small  businesses.  The Company  sells its products  primarily
through  distributors and supports this distribution  channel with marketing and
promotional  programs and a network of direct sales and service  personnel.  The
Company focuses much of its efforts in certain  vertical  markets,  namely,  the
educational channel and in pre-press, digital graphic communications and related
markets requiring high bandwidth solutions,  where the Company can differentiate
the performance and features of its products from those of its competitors.

The majority of the  Company's  products are designed to function  across either
standard Ethernet (10 Megabits per second known as 10 Mbps,  10BASE-T),  or Fast
Ethernet  (100  Megabits  per second,  known as 100 Mbps,  100BASE-T)  networks.
Ethernet is a type of network topology which 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").

There are five primary trends in computer  networking  that affect the Company's
business:  1) the adoption of switched Ethernet  technology,  2) the adoption of
Fast  Ethernet  products,  3)  the  use of  "Intranet"  software  technology  in
corporate local area networks, 4) the gains in market share of Microsoft Windows
NT(TM), and 5) the seasonality of certain segments of the networking industry.

The first  trend is the growth in  commercialization  and  adoption  of Ethernet
switching technology,  which enables a dedicated communication between a sending
and  receiving  computer or device as opposed to  traditional  shared  Ethernet,
where multiple users share communication  lines.  Initially,  switching products
were used primarily  within larger  companies which were the first to experience
congestion in their traditional network architectures.  More recently,  adoption
of  switching  technology  has spread to smaller  companies.  Furthermore,  many
companies  are  deploying  switching at all layers of the network:  in the local
area network  backbone,  in server groups, at the workgroup level, and in direct
connections  to desktop PCs.  This is especially  applicable to those  companies
which  focus in high  bandwidth  graphics  intensive  applications.  The Company
introduced several new switching products in 1996, delivered two new families of
high  performance  switching  products in 1997 designed to meet the needs of the
most high-bandwidth  demanding applications and, in early fiscal 1998, announced
a fourth  switching  product line designed to meet the needs of those  customers
demanding high performance,  cost effective solutions. In 1998, the Company will
continue to focus  research  and  development  resources on the  development  of

                                       3
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additional switching products and plans to bring switches to market based on its
own ASIC technology. Switches with the Company's ASIC technology are designed to
have more features with a lower manufacturing cost.

The second trend is the adoption of Fast  Ethernet  (100 Mbps)  technology.  The
users of this technology are in two very different sectors of the market:  large
corporations  seeking a solution to congestion  at the "top" of their  networks,
and those using specific vertical applications,  such as publishing,  pre-press,
imaging and multimedia,  which routinely  transfer very large files across their
networks.  The Company offers a wide range of 100 Mbps Fast Ethernet shared hubs
and cards and  switch  products  which  have  achieved  strong  recognition  and
critical acclaim.

The  Company's  Fast  Ethernet  products  are  differentiated  from those of the
Company's  competitors through software utilities that significantly improve the
overall performance of a Fast Ethernet networking solution. In 1996, the Company
introduced  NetDoubler(TM),  a software enhancement utility which optimizes Fast
Ethernet  performance  significantly  across most network  topologies  including
standard  Ethernet,  Fast  Ethernet,  and token  ring  networks.  NetDoubler(TM)
currently  runs on Windows  NT(TM),  Macintosh(TM)  and Power  PC(TM),  and Unix
operating systems.  The Company has entered into technology licensing agreements
with several other companies that offer networking  software solutions to enable
NetDoubler(TM) to be offered on both Sun and Silicon Graphics servers.  This has
had the effect of increasing the demand for the Company's desktop portion of the
NetDoubler(TM)  solution,  and in turn,  the demand  for  NetDoubler(TM)-enabled
adapter cards and Fast Ethernet hubs have  increased.  An adapter card, or "NIC"
as they are often  called,  is a card that plugs into a  computer  enabling  the
computer to communicate with all other computers on the network.

The third trend affecting the market for local area networking  equipment is the
rapid  adoption  of internet  software  for  internal  corporate  networks.  The
resulting "Intranets" are based on web servers and web browser technology.  This
technology  is easily  deployed and the  development  tools offer large gains in
programmer  productivity.  This has  caused  growth in both the  development  of
in-house  corporate  applications based on Intranet  technology,  and efforts by
standard  product  software  companies  to develop  products  based on this same
technology.   Many  corporations   view  Intranet   software   technology  as  a
cost-effective  alternative to traditional client-server software architectures.
The  Company  has taken  steps to  integrate  Intranet  technology  into its new
switches in the form of a built-in,  Java(TM)-enabled,  HTTP server. The Company
has also developed  IntraSpection(TM),  discussed  below,  to capitalize on this
trend.

The fourth trend in the local area  networking  market is the reported growth in
sales and market share for the Microsoft  Windows NT(TM) operating  system.  The
low installation  and maintenance  cost,  scalability,  and  compatibility  with
desktop  versions of Windows have made Windows NT(TM) an effective  solution for
servers in corporations.

In  response  to the third and  fourth  trends,  the  Company  has  developed  a
web-based  network  management  software product called  IntraSpection(TM)  that
allows networks to be managed by any web browser,  thus  facilitating the use of
Intranet  technology and Windows  NT(TM) or Windows  95(TM)  network  management
solutions.  By using  IntraSpection(TM) for Windows NT(TM) or Windows 95(TM) and
Intranet  technology,  customers may reduce their network management costs since
Windows  NT(TM) and Windows  95(TM) are much lower cost  platforms than the Unix
platforms used for most of the major networks.  In addition,  Intranet  software
tools offer higher programmer productivity, thus allowing customers to customize
the IntraSpection(TM) system inexpensively. IntraSpection(TM) also

                                       4
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allows  the  customer  to manage  all of its  network  resources  using only one
system, thus decreasing network management costs.

The fifth trend which effects the local area  networking  market and the Company
in particular is the  seasonality  of the Company's  business.  The first factor
which  affects the  Company  most in the market is caused by the  budgeting  and
purchasing  cycles of certain segments of the Company's  customers.  The Company
has a strong presence in the educational market. This market is characterized by
its  typically  seasonal  purchasing  habits  due to the  nature of  educational
seasons and the ability for school administrators to more easily install network
systems  during times when the majority of users  (students) are not in session.
Secondly,  many schools and other governmental  agencies spend based on seasonal
budgets and accept bids only seasonally.

The Company  continues to sell Ethernet and Fast Ethernet  adapters to customers
who use Apple Macintosh(TM) computers. The Company historically has been heavily
associated  with, and therefore had a dependence  on, selling  products into the
Apple after-market.  While the Company currently designs its products to work on
all computer platforms and does not rely on new Apple product  introductions,  a
large  portion of its sales in the near term are expected to be related to Apple
products.   Any  material   decrease  in  sales  of  Macintoshes  or  additional
developments  adversely affecting Apple'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.

The Company is dependent  on the release of new  products,  specifically  in the
switch and Fast Ethernet areas.  Delays in bringing new products to market would
have a material adverse effect on the Company's financial results and condition.

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 and 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 in
inventory which would adversely affect working capital.


Industry Segment Information

Asante operates in one industry as described above.


Products

Switch Products

Asante's  comprehensive  line of switches includes multiple families of switches
designed  to  meet  the  needs  of  both  its  vertical  and  horizontal  market
customers.The  IntraStack(TM)  10/100  dual  speed  switch  family is  currently
Asante's highest performance product,  designed to provide maximum bandwidth for
those customers requiring a solution for high congestion situations.  The family
features an integrated HTTP management server with Java(TM)-enabled features, as
well as other advanced  functions.  The

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IntraStack(TM)  family, which uses the Company's patented Goldcard(TM) connector
technology  to expand the  switching  system via a 2.1  Gigabit  PCI  backplane,
currently  includes a suite of 3 units.  The  IntraStack(TM)  6014DSB  base is a
12-port  10/100  auto-sensing  management  switch  offering two  additional  MII
expansion  slots which allow  additional  10/100 ports,  10/100 Fiber,  or 10 FL
modules to be added.  The  Intrastack(TM)  6016DSE  switch  offers an  expansion
module with 16 10/100TX ports and is fully manageable from the base module.  The
third product in this family is the IntraStack(TM)  6008FXE switch, which offers
8 100Base-FX  (fiber) ports and is fully stackable  using Asante's  Goldcard(TM)
technology with the entire  IntraStack(TM)  family. The IntraStack(TM) family is
manageable with IntraSpection(TM) software.

The  IntraSwitch(TM)   switch  family  currently  features  two  products.   The
IntraSwitch(TM)  5324  is a  high  performance  10 +  100  switch  featuring  24
dedicated, 10 Mbps switched ports: one fixed, dual-speed 10/100TX port featuring
NWay  autonegotiation to automatically  determine 10 or 100 Mbps operation;  and
two MII  slots  for  optional  10/100TX,  100Base-FX,  or  10Base-FL,  expansion
modules.  The  IntraSwitch(TM)  5212  introduced  in the first quarter of fiscal
1998, has 12 dedicated,  10 Mbps switched ports: one fixed, dual-speed 10/100 TX
port featuring NWay  autonegotiation;  and one MII slot.  Both products  feature
integrated HTTP management software, RMON, and VLAN, among other features.

The FriendlyNet  switch family features cost effective,  high performance 10/100
Mbps  unmanaged  switches  for the smaller  network and "power  users" with high
bandwidth  needs.  The switches  feature NWay  autonegotiation  to automatically
determine  either 10 or 100 Mbps  operation.  The Company  also offers an 8 port
plus 2 10/100  uplink  FriendlyNet  Switch.  In fiscal  1998,  the Company  will
introduce additional FriendlyNet switches to compliment its existing FriendlyNet
switches, 100 Mbps hubs, and 10 Mbps hubs.

In fiscal 1996, the Company announced their first four  full-featured  workgroup
switches  for  small to medium  sized  networks.  The  Asante  5216  Switch is a
high-performance 16-port segmentation switch with two 100BASE-TX "fat pipes" for
high-speed  connections  to servers or  backbones.  This product helps solve LAN
congestion  problems by increasing  aggregate  bandwidth by up to 16 times for a
total of 360 Mbps. The 5216xp Switch offers the same port  configuration  as the
5216 switch, but with two additional expansion slots for 100BASE-TX, 100BASE-FX,
or FDDI (single or dual attached station) modules. These modules can be utilized
in any combination or individually as needed.  The ReadySwitch  5104 and 5104 FX
are smaller  four-port  Ethernet switches offering a single Fast Ethernet uplink
for  networks  with high  demand  for  server  access.  The 5104 FX  includes  a
100BASE-FX fiber optic port, providing a long distance backbone connection of up
to two kilometers.


100BASE-T (Fast Ethernet) Systems

In addition to the Company's  switches,  the Company offers a complete family of
Fast  Ethernet  systems and  adapters  to allow  customers  to connect  personal
computers and high performance servers over a corporate intranet.  The Company's
award-winning,  high  performance  products offer  customers with high bandwidth
needs a complete  line of products to fulfill  their  intranet  needs and offers
those  customers  with  existing  10BASE-T  Ethernet  networks a cost  effective
migration path to transition to 100BASE-T networking.

The Asante Fast 100 Hub is a 100BASE-TX hub providing ten times the  performance
of 10 Mbps Ethernet and is targeted for bandwidth intensive graphic, multimedia,
and  mission-critical   applications.

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The 12-port version has a stackable  architecture  that supports up to 180 ports
and comes in intelligent and non-intelligent configurations.  The 6-port version
is  non-intelligent   and  comes  in  a  non-stackable  form.  Features  include
autonegotiation for seamless integration of existing 10BASE-T with new 100BASE-T
systems. The Asante Fast 100 Hub works with all personal computers equipped with
a  100Mbps  adapter,  and  supports  Windows  95(TM),   Windows  NT(TM),  Novell
NetWare(TM), Banyan VINES(TM), and other popular network operating systems.

The Asante Fast 10/100 Bridge integrates  100Mbps Fast Ethernet  workgroups into
existing  10 Mbps  networks by  segmenting  network  traffic  through the use of
filtering and forwarding data packets. It is compatible with any 100BASE-TX Fast
Ethernet  hub,  includes   autonegotiation  and  LEDs  for  network  performance
indication, and supports the network operating systems mentioned above.

The Asante  Fast 100  Management  Module  provides  network  management  of Fast
Ethernet  and  10BASE-T  networks  in order to  determine  network  performance,
traffic  bottlenecks,  collisions and other vital signs.  The Management  Module
fully  integrates with the Asante Fast 100 Hub shared backplane with a key-sized
expansion  card so that it  snaps  on top of the hub  eliminating  the  need for
external  cabling.  The module's  built-in  simple network  management  protocol
("SNMP") support enables the  interconnected hub stack to be managed as a single
logical repeater and controlled from any workstation  running AsanteView network
management software or from any SNMP-compatible or Telnet console.


Fast Ethernet Adapter Cards

The  Company's  Asante  Fast  10/100  dual  speed  adapters  provide  all-in-one
compatibility  to  10BASE-T  and  100BASE-TX   Ethernet  networks  for  personal
computers  utilizing  standard PCI bus architecture.  The product plugs into the
PCI slot of the computer and  automatically  configures itself to the system. It
utilizes an "autonegotiating"  feature that senses whether the network hub speed
is 10 Mbps or 100 Mbps and sets the  adapter  speed  accordingly.  As such,  the
product allows the customer to migrate from the existing  10BASE-T  network to a
new Fast Ethernet network.  The Asante Fast 10/100 has four LED lights to assist
with trouble shooting and to indicate  connection speed, link integrity and data
traffic.


10BASE-T Systems and Adapter Cards

Along  with the  trend of new  customers  to move to  switching  among  the more
sophisticated  sectors of the networking market, the demand for low cost 10 Mbps
Ethernet technology from more price-sensitive  customers continued to grow. This
trend is  particularly  strong in the  kindergarten  through  grade 12 education
market  in  which  the  Company  has  a  strong   reputation  and  product  name
recognition.  The  adoption  by  schools  of wide  area  links to the  worldwide
internet  has led to the use of low cost 10 Mbps  shared  technology  for  their
local area networks.  Schools connecting to the internet for the first time find
that they need to install an Ethernet LAN and they have favored low cost 10 Mbps
solutions.  The Company  continues to hold a competitive  position in the market
for 10 Mbps shared hubs, and will continue to pursue cost  reduction  objectives
for its 10 Mbps product  line to maintain  competitiveness  in this market.  The
Company  expects  that the growth in the 10 Mbps market will not continue at the
current  rate  indefinitely  as pricing for  switching  technology  and 100 Mbps
shared Ethernet  technology will gradually make adoption of these standards more
attractive.

The Company offers a broad family of 10BASE-T systems and adapters to meet needs
ranging from the  corporate  workgroup to the  departmental  workgroup and small
business user.

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The   NetStacker(TM)   is  a  dual-slot,   two-segment,   intelligent   Ethernet
concentrator  that gives the user the  flexibility of a multi-slot  chassis with
the  convenience  of a stackable  hub. Up to three  NetStacker(TM)  units can be
snapped  together  to  support  up to 72 users via  10BASE-T  connections.  Each
chassis accommodates two multi-port repeater modules for 10BASE-T,  10BASE-2 and
10BASE-F  Ethernet  connectivity.  A  two-port  Ethernet  bridge  module  may be
installed in any available  chassis slot to segment and isolate network traffic.
The  NetStacker(TM)  is also  available  with an SNMP-based  network  management
module  and  is  manageable  with  IntraSpection(TM)  and  AsanteViewTM  Network
Management software.

The  AsanteHub   2072,  an  expandable,   seven-slot,   chassis-based,   72-port
intelligent hub, offers departmental network managers  enterprise-level features
at a  departmental  price.  It has a  seven-slot  architecture  that  allows the
addition of a variety of multi-port  repeater  modules  (10BASE-T,  10BASE-2 and
10BASE-F),  a bridge module and an SNMP-based network management module. Network
growth can be accommodated  simply,  inexpensively  and on an as-needed basis by
inserting new modules.  A dual segment  backplane  allows the network manager to
create two completely  separate  networks within the AsanteHub 2072's chassis to
segment traffic and optimize network  efficiency.  When combined with AsanteView
network  management  software,  this hub  provides  centralized  management  and
diagnosis which can be operated both locally and remotely to configure,  control
and set alarms for the hub from a personal  computer.  The  Company  also offers
dual  redundant  power  supplies  for  the  AsanteHub  2072  for  fault-tolerant
applications.

The 10T Unmanaged hub family  includes  multiple port versions  including 8, 12,
and 24 port versions.  In addition,  the Company offers a 6-port,  BNC unmanaged
hub. These 10T hubs form a family of inexpensive,  non-intelligent Ethernet hubs
for  connecting  personal  computers,  workstations  (including  UNIX),  network
printers and other network resources to an Ethernet  network.  These systems are
used for creating small networks or extensions to existing networks.  They allow
network managers to use economical  unshielded twisted pair (UTP) telephone wire
instead of coaxial  cable to set up their LANs,  and  support all major  network
operating systems and hardware configurations.

The FriendlyNet 10T Hub in 5 port and 8 port product configuration also comprise
a family of  inexpensive,  non-intelligent  Ethernet hubs designed to complement
the  10T-Hub/8,  /12 and /24 meet the needs of the  economy-minded  user,  small
business,  and home  network.  Their  smaller  size  makes  them ideal for small
businesses and personal or home users who have limited workspace.

Adapter Cards for IBM-compatible personal computers. The Company's AsanteNIC(TM)
and EtherPaC(TM)  line of 10BASE-T  Ethernet client access products  consists of
nine  different  cards,  which support  either PCI, ISA, EISA or MCA buses.  All
cards  support  Novell  NetWare,  Windows NT,  Windows  95(TM) and other popular
network operating systems and protocols.

Adapter Cards for Macintosh(TM) Computers. The Company sells an Ethernet adapter
card and transceiver product line supporting all Macintosh(TM) platforms and all
Ethernet cabling options. The Company also offers AsantePrint which allows older
printers to be connected to 10 Mbps networks.

Other Client  Access  Products.  Asante offers a family of converters to connect
LocalTalk devices to an Ethernet network.  These converters  connect from 2 to 8
devices such as printers to an Ethernet network.

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In addition,  the Company  offers  FriendlyNet  media adapters to connect PC and
Macintosh(TM)  computers  or  printers  with  built-in  Ethernet  support  to an
Ethernet network.


Software Products

Software design and  implementation  is a key component of all Asante  products.
Separately, the company markets several cutting edge software products.

Asante currently offers two network management  options:  IntraSpection(TM)  and
AsanteView.  IntraSpection(TM)  is the Company's  Web-based  network  management
software  program,  providing  users with  customized  management  solutions and
support for every SNMP-based  network device on the market.  IntraSpection(TM)'s
customized support is available through Asante plug-in  Personality Modules that
are sold as  additions  to the basic  IntraSpection(TM)  software.  Furthermore,
because IntraSpection(TM) allows for programming in HTML and Java(TM) instead of
the customary C++,  network  managers can quickly create  customized  management
modules on their own, a capability  previously  not available in the  networking
industry. The basic  IntraSpection(TM)  software is available at no cost through
the Company's internet site at  http://www.asante.com.  The Company has a patent
pending on the IntraSpection(TM) software technology.

AsanteView  is  the  Company's  proprietary  network  management  software  that
operates  with the SNMP  protocol.  Using  AsanteView  with an  AsanteHub  1016,
NetStacker  or 2072,  a network  manager can  monitor  and control the  network.
AsanteView  enables the manager to gather network  statistics,  monitor  network
performance,  pinpoint  bottlenecks and errors and optimize network performance.
The graphical user interface conveys network information at a glance. AsanteView
offers both local and remote  capabilities  and permits  management  of up to 12
Asante hubs at the same time from a single management station.

Asante has developed  multiple  versions of its network  acceleration  software,
NetDoubler(TM).   Providing  a  high-performance  solution  for  publishing  and
pre-press  networks  when  combined  with  Asante  switched  and  Fast  Ethernet
products,  NetDoubler(TM)  runs on  Macintosh(TM)  computers  and  most  popular
servers  including  Windows  NT(TM)  Macintosh(TM)  and UNIX.  The Company has a
patent pending for its acceleration software technology.


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 line with its goal to provide its customers with value-added
features which continue to  differentiate  the Company's  products from those of
its  competitors,  the Company  has  developed  and  patented  its  GoldCard(TM)
connector  technology.  The Company's  Goldcard(TM)  connector technology allows
customers to expand the Company's switching via a 2.1 Gbps PCI backplane without
having to use  valuable  100BASE-T  ports in order to connect  the  modules in a
stack,  giving the Company a true  stackable  system  architecture  that is cost
effective for the customer.


Marketing and Distribution

                                       9
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<PAGE>


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  directly to a large  number of  educational
institutions; and third, through a number of large OEM 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 appointed on a non-exclusive
basis.

Asante also sells its client  access and  network  system  products  directly to
major  universities  and  educational  institutions  to  take  advantage  of the
significant penetration of the Company's products in these markets. Beginning in
fiscal  1996,  the  Company  expanded  its effort to sell more  products  to OEM
customers.  As a result,  a  significantly  increased  portion of the  Company's
revenue  resulted from OEM sales in fiscal 1997, due to certain  agreements with
larger 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 constitute a  significantly  smaller  portion of the Company's total
sales in fiscal 1998.

Sales to customers  outside the United States accounted for  approximately  18%,
23% and 28% of the  Company's  net sales in fiscal years 1997,  1996,  and 1995,
respectively. The decrease in international sales as a percentage of total sales
in fiscal 1997,  was due  predominately  to  increased  sales of products to OEM
customers  in the  United  States.  All  sales to  international  customers  are
denominated in U.S. dollars.  Accordingly,  the Company's  operating results are
subject to the risks inherent in international  transactions,  including changes
in  regulatory  requirements,  exchange  rate  fluctuations  that  may  make the
Company's  products  more  expensive  to non-U.S.  purchasers,  tariffs or other
barriers.

The Company  believes that it has good  relationships  with its distributors and
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  extensive  trade  advertising,
participation  in industry  trade  shows,  and other  marketing  efforts.  As of
September 27, 1997, the Company  supported the sales efforts of its distributors
with 55 direct sales and support related employees located throughout the United
States who promote the Company's products within assigned  territories,  and two
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.

                                       10
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<PAGE>


The  distribution  of  products  such as those  offered by the  Company has been
characterized   by  rapid  change,   including   consolidations   and  financial
difficulties  of  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.  A  reduction  in the  sales  effort  by any  of  the  Company's  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 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.

In fiscal 1995,  the Company  changed its limited  warranty  policy to cover all
products for the life of the  product.  In fiscal  1997,  the Company  altered a
portion of its  warranty  policy  limiting  coverage on certain of its  high-end
switch products to 3 years.  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 lifetime  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.

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 client access and network system 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  Macintosh(TM)  connectivity  market and  expanding  its
presence in the multiplatform  market requires continuing  investment to develop
new products, enhance existing products and reduce manufacturing costs.

As of September 27, 1997,  the Company had 33 employees  engaged in  engineering
and product  development.  During the fiscal  years ended  September  27,  1997,
September  28, 1996,  and  September 30, 1995,  the  Company's  engineering  and
product development  expenses were approximately $7.1 million,  $6.2 million and
$4.5 million, respectively.

                                       11
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<PAGE>


The Company continues to invest  significant  resources in engineering  projects
and will continue to focus  additional  resources as needed in order to bring to
market  additional high  technology,  high demand  products  supporting both its
network systems and the Intranet/Internet markets. In particular, in fiscal 1998
and going  forward,  the Company will focus  additional  efforts in the areas of
software design,  ASIC (Application  Specific Integrated Circuit) design, and on
system integration.

The  Company's  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.  This includes
Orient  Semiconductor  Electronics,  Ltd.  ("OSE"),  a semiconductor and printed
circuit board assembler based in Taiwan,  and several other  subcontractors  and
manufacturers  based in California,  Taiwan and China. 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
poor  workmanship  have not  been  material.  See  Note 3 of Notes to  Financial
Statements.

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  1997,  the Company
purchased $16.8 million of goods from OSE. The Company does not have a long-term
supply  agreement  with  any  of  its  subcontractors.   If  any  one  of  these
subcontractors experience financial or operational difficulties that result in a
reduction or interruption in the supply of products to the Company, or otherwise
fail to deliver  products to the Company on a timely basis, the Company would be
required to procure sufficient manufacturing supply through 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  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 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.

                                       12
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<PAGE>


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 10T  switching  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 and
subcontractors to procure many of the components used in the Company's products.
Procurement  and  stocking  of  components  and  subassemblies  is done by these
subcontractors 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  intensify.  Competitive  factors  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 will continue.

In the mainstream market, the Company competes with Cisco Systems, Bay Networks,
3Com, and many smaller  companies.  Competition  from these and other companies,
including  new  entrants,   is  expected  to  intensify,   particularly  in  the
departmental users market. Many of the Company's  competitors in this market 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 timely  respond 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(TM)  client access market,  Apple 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
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 in  connection  with the  Company's
product  development   efforts.   Apple  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  will  not  pursue  a  more  aggressive  strategy  with  respect  to
competitive  products,  increase the availability of

                                       13
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<PAGE>


Ethernet on the  motherboard  of its  computers 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  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.

During fiscal 1997, a larger portion of the Company's sales represented products
sold to OEMs.  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  large product volume
arrangements,  the loss of a single  large OEM  customer or several  smaller OEM
customers would have a material adverse effect on the Company's revenues. Unless
the Company  signs  additional  large OEM  agreements  in the near  future,  the
Company  expects  that OEM sales  will  represent  a lower  percentage  of total
revenue in fiscal 1998.

A significant percentage of the Company's sales in fiscal 1997 were derived from
products designed for use with Macintosh(TM) 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's competition in the Company's
adapter card market and Apple'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'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   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,  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 trade  secret,  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.

                                       14
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<PAGE>


Employees

As of  September  27,  1997,  the Company  had 190  employees,  including  33 in
engineering  and product  development,  47 in  manufacturing  operations,  73 in
marketing, sales and support services, and 37 in corporate administration.

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.  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  this
facility under a lease with an original  expiration  date of September 1997, and
providing  for two options to extend the lease for up to an  additional  two and
five years,  respectively.  During fiscal 1996, the Company exercised its option
to extend the lease for an  additional  two years.  The current  two-year  lease
extension  option  expires on August 31, 1999.  During 1997,  the Company leased
sales  offices  in  Southern  California,   Colorado,   North  Carolina,   Utah,
Washington,  Taiwan,  England and Japan.  The Company believes that its existing
facilities are adequate to meet its requirements for the foreseeable  future and
that suitable  additional or substitute  space will be available as needed.  See
Note 6 of Notes to Financial Statements.


ITEM 3.       LEGAL PROCEEDINGS

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 July and August of 1994,  several  complaints  were filed against the Company
and certain of its  current  and former  officers  and  directors  in the United
States District Court,  Northern District of California,  alleging violations of
federal securities laws. The lawsuits, which purport to be class actions brought
on behalf of all  purchasers  of the  Company's  stock  during the  period  from
December 10, 1993 through July 11, 1994, were  consolidated and plaintiffs filed
a consolidated, amended class action complaint on October 21, 1994. In September
1995, the Company entered into an agreement in principle to settle the suit with
the establishment of a settlement fund of $2.6 million.  The Company contributed
$520,000,  with the remainder funded by the Company's insurance. On November 18,
1996, the Court entered an

                                       15
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<PAGE>


order finally  approving the  settlement  and  dismissing the action against all
defendants with prejudice. See Note 7 of Notes to Financial Statements.

On September  13, 1996, a complaint was filed by Datapoint  Corporation  against
the   Company   and  six  other   companies   individually   and  as   purported
representatives of a defendant class of all manufacturers,  vendors and users of
Fast Ethernet-compliant,  dual protocol local-area network products, for alleged
infringement of United States Letters Patent Nos.  5,077,732 and 5,008,879.  The
complaint  seeks  unspecified   damages  in  excess  of  $75,000  and  permanent
injunctive relief. The Company has filed a response to the Complaint denying any
purported  claims of the suit and the case is currently in its discovery  phase.
The Company intends to defend the action vigorously.


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 1997.


EXECUTIVE OFFICERS OF THE COMPANY

The executive  officers of the Company,  their ages as of November 20, 1997, and
certain information regarding each of them are as follows:

    Name                 Age           Position with the Company
    ----                 ---           -------------------------
Jeff Yuan-Kai Lin        46          President and Chief Executive Officer
Wilson Wong*             50          Vice President and General Manager
Tommy Leung**            54          Vice President of Engineering
William Leung            56          Vice President of Operations
Robert Sheffield         48          Vice President of Finance, Chief Financial
                                     Officer, and Secretary
Paul Smith               39          Senior Vice President of
                                     Marketing and Sales

--------
*        Wilson Wong resigned as a Vice President and General  Manager in August
         1997.
--------
**       Tommy Leung passed away on November 24, 1997.


Mr. Lin co-founded the Company in 1988 and currently serves as President,  Chief
Executive  officer and Chairman of the Board of Directors.  Mr. Lin also assumed
the position of Vice President of Engineering, which position he will hold until
a qualified replacement for Mr. Tommy Leung is hired. From 1993 through 1994, he
served as Vice President, General Manager of Network Systems Business. From 1991
to 1993, he served as the Company'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. Wong  co-founded the Company in 1988. 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

                                       16
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<PAGE>


as the Company's  President and Chief Executive  Officer.  Mr. Wong resigned his
position as an officer with the Company in August 1997,  but  continues to serve
as a Director of the Board of Directors.

Prior to his death,  Mr.  Tommy Leung served as Vice  President  of  Engineering
since  November  1996. He joined the Company in March 1994 and served in various
capacities  including Director of Client Access  Engineering,  Vice President of
Client Access Engineering and Vice President of Technology. From 1989 to 1994 he
was Chief  Executive  Officer of Datatrek  Corporation.  Mr. Tommy Leung was not
related to Mr. William Leung.

Mr.  William  Leung  joined the  Company  in August  1995 as Vice  President  of
Operations.  From  December  1987 to August  1995,  he was  President  and Chief
Executive  Officer of Cache Computers,  Inc., a manufacturer of motherboards for
personal computers. Mr. William Leung is not related to Mr. Tommy Leung.

Mr.  Sheffield  joined the  Company in March 1996 and  currently  serves as Vice
President of Finance, Chief Financial Officer, and Secretary.  From 1994 to 1995
he  served  as  Vice   President  of  Business   Development   for  Time  Warner
Interactive/Atari  Games  Corporation.  From  1989  to 1994  he  served  as Vice
President   of   Finance   and   Chief   Financial   Officer   of  Time   Warner
Interactive/Atari Games Corporation.

Mr.  Smith  joined the Company in May 1995 and  currently  serves as Senior Vice
President of Marketing and Sales.  From May 1995 to March 1997 he served as Vice
President of  Marketing.  From 1994 to 1995 he was Chairman and Chief  Executive
Officer of  Holosoft,  Inc., a developer  of  application  software for Personal
Digital  Assistants.  Mr. Smith continues as Chairman of Holosoft.  From 1993 to
1994, he was Vice President of Product  Development and Manufacturing at Virtual
Microsystems,  Inc.,  a  manufacturer  of high  performance  CD-ROM  servers and
Internet access devices.  From 1988 to 1993 he held senior management  positions
including  Vice  President  of  Marketing at Proxim,  Inc.,  a  manufacturer  of
wireless networking devices.

                                       17
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<PAGE>


                                     PART II

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

The  following  table sets forth the high and low sale prices for the  Company's
Common Stock as reported on the NASDAQ  National Market under the trading symbol
ASNT for the Company's last two fiscal years.

Fiscal 1997                         High                      Low
--------------------------------------------------------------------
First quarter                       $7 3/8                   $4 3/4
Second Quarter                       5 1/2                    4 3/16
Third quarter                        5 3/8                    3 5/8
Fourth quarter                       6 9/16                   4 7/8


Fiscal 1996                         High                      Low
--------------------------------------------------------------------
First quarter                      $14 1/2                   $7 7/8
Second Quarter                       8 1/8                    5 7/8
Third quarter                        9 1/4                    5 1/8
Fourth quarter                       7 1/4                    5 1/8


As of November 28, 1997,  there were 119 stockholders of record of the Company's
Common  Stock.  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 actual  results and related market price of the
Company's stock may not be indicative of current or future performance.

Subsequent to the Company's  fiscal year end, the Company issued 4,648 shares of
its  restricted  common stock to Dr. David Lam as  compensation  for  consulting
services  rendered by Dr. Lam's company during fiscal 1997 prior to his becoming
a board  member of the  Company.  Such shares were issued  pursuant to a claimed
exemption from registration under section 4(2) of the Securities Act of 1933, as
amended,  as a private placement to one individual who acquired such shares with
investment intent.

                                       18
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<PAGE>

<TABLE>
ITEM 6.         SELECTED FINANCIAL DATA
                (In thousands, except per share data)

<CAPTION>
Statement of Operations Data:                      Year ended
----------------------------------------------------------------------------------------

                                 9/27/97     9/28/96    9/30/95      9/30/94    9/30/93
                                 -------     -------    -------      -------    -------
<S>                             <C>        <C>         <C>         <C>        <C>     
Net sales                       $ 83,279   $ 66,990    $ 60,884    $ 79,941   $ 67,283

Income (loss) from operations   $  2,331   $ (1,338)   $ (6,324)   $  1,818   $  4,093

Net income (loss)               $  1,926   $   (457)   $ (3,705)   $  1,125   $  2,101

Net income (loss) per share     $   0.21   $  (0.05)   $  (0.45)   $   0.13   $   0.29
</TABLE>


Balance Sheet Data:
--------------------------------------------------------------------------------
                                  9/27/97  9/28/96    9/30/95   9/30/94  9/30/93
                                  -------  -------    -------   -------  -------

Total assets                     $40,567   $39,966   $36,767   $40,913   $29,417

Mandatorily redeemable
convertible preferred stock         --        --        --        --     $ 1,948

Stockholders' equity             $29,874   $26,909   $26,119   $28,389   $ 6,383


                                       19
================================================================================

<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,  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.


Results of Operations

The following table sets forth certain selected financial  information expressed
as a percentage of net sales for the fiscal years ended  September 27, 1997, and
September 28, 1996, and September 30, 1995, respectively:


                                                    1997       1996       1995
                                                    -----     -----      -----
Net sales                                           100.0%    100.0%     100.0%
Cost of sales                                        63.7      60.0       67.2
                                                    -----     -----      -----
Gross profit                                         36.3      40.0       32.8
                                                    -----     -----      -----
Operating expenses:
   Sales and marketing                               20.8      28.4       29.2
   Research and development                           8.6       9.3        7.3
   General and administrative                         4.1       4.3        6.6
                                                    -----     -----      -----
     Total operating expenses                        33.5      42.0       43.1
                                                    -----     -----      -----
Income (loss) from operations                         2.8      (2.0)     (10.3)
Interest and other income (expense), net              0.8       0.9        0.4
                                                    -----     -----      -----
Income (loss) before income taxes                     3.6      (1.1)      (9.9)
Provision (benefit) for income taxes                  1.3      (0.4)      (3.8)
                                                    -----     -----      -----
Net income (loss)                                     2.3%     (0.7%)     (6.1%)
                                                    =====     =====      =====


The Company  recorded net income for fiscal 1997 of $1.9  million,  or $0.21 per
share  compared to a net loss of $0.5 million,  or ($0.05) per share,  in fiscal
1996.

                                       20
================================================================================

<PAGE>


Net Sales

Net sales  increased 24.3% to $83.3 million in fiscal 1997 from $67.0 million in
fiscal  1996.  Net sales were $60.9  million in 1995.  The increase in net sales
from fiscal 1996 to fiscal 1997 was due primarily to increased  shipments of the
Company's Fast Ethernet adapter products and new switched  products as well as a
significant increase in OEM sales. This increase was partially offset by reduced
shipments of the  Company's  10T (10 Mbps)  adapter cards due in part to Apple's
incorporation  of Ethernet  connectivity  into the motherboard of certain of its
Macintosh(TM) and PowerBook computers and competitive pricing pressures.

Sales of the Company's 10/100 dual speed "Fast Cards" and PCI products increased
by $6.8 million to approximately $10.8 million in fiscal 1997 from approximately
$4.0 million in fiscal 1996. This is due primarily to increased incorporation of
the 100 Mbps, or "Fast Ethernet" industry standard, into an increasing number of
client  networks  as  prices  decrease  and  the  demand  for  higher  bandwidth
increases.  Sales of these 10/100 Mbps adapter cards are expected to increase in
fiscal 1998 as the Company  introduces  additional 100 Mbps  switching  products
into its product line. The Company also saw  significant  growth in the sales of
its switch products, due primarily to the introduction of the several new switch
products  during  the  second  half of fiscal  1997.  Sales of  switch  products
increased  by  approximately  $3.0  million to $5.1  million in fiscal 1997 from
approximately $2.1 million in fiscal 1996. In addition,  sales of product to OEM
customers  increased to approximately  25% of sales in fiscal 1997 compared with
insignificant  OEM sales in fiscal 1996. In  particular,  sales of the Company's
100 Mbps  Fast  Hubs to OEM  customers  increased  materially  during  the year,
complementing  sales the Company made of an OEM Ethernet/fax  modem card sold by
the Company to Apple  Computer in fiscal 1997, an agreement  which  concludes in
early fiscal 1998. OEM sales are expected to constitute a significantly  smaller
portion of the Company's total sales in fiscal 1998.

During fiscal 1997, the Company  expanded its line of Fast Ethernet  (100Base-T,
or 100 Mbps) products and  introduced new software  technology to complement the
Fast  Ethernet  product  line.  The  Company  continued  to focus its efforts on
certain  vertical market  segments where Fast Ethernet  switches and hub systems
excel over standard  Ethernet.  Pricing  continued to be under heavy competitive
pressure,  and in response, the Company continued a number of programs including
discount   programs,   value  added  reseller  programs,   selling   incentives,
educational  specific discounts,  and announced several product price reductions
during the year.

The  increase in sales from fiscal 1995 to fiscal 1996 was due  primarily to new
product  introductions  of the  Company's  10/100 and 100 Mbps  adapter card and
network  system  products  including  the  completion of a full line of 100 Mbps
stackable and non-stackable  hubs and to the introduction of the Company's first
10 + 100 Mbps switches.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted for 18.0%,  23.1%,  and 28.3% of net sales in fiscal 1997,  1996,  and
1995, respectively. In the third quarter of fiscal 1997, the Company established
a sales office in Germany,  complementing its other  international sales offices
in the United  Kingdom,  Japan,  Taiwan,  and  Canada.  Despite  this  increased
presence  internationally,  the Company experienced reductions in sales from its
international offices,  mostly in Japan and Asia due in part to the weakening of
foreign  currencies  against the dollar worldwide and in part to the softness in
demand for Apple  Macintosh(TM)  related  products  in Asia.  The  Company  will
continue to

                                       21
================================================================================

<PAGE>


focus its efforts on  increasing  sales  internationally  over the next  several
quarters, but cannot be sure that its efforts will be successful.

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. As such, the Company anticipates that
the selling  prices of its products will continue to decline.  The Company makes
significant   ongoing   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.


Gross Profit

The Company's  gross profit as a percentage  of net sales  decreased to 36.3% in
fiscal 1997 from 40.0% in 1996, and 32.8% in fiscal 1995.  This decrease  during
fiscal 1997 was due primarily to increased  sales of product to OEM customers at
lower margins and was also partially affected during the year by charges against
sales due to various pricing and marketing programs.  This gross profit decrease
was partially offset by the Company's ability to achieve higher sales of certain
of its advanced systems products with better margins. The Company's gross profit
percentage  in the future will  continue to be affected by  competitive  pricing
pressures, the Company's ability to further reduce the cost of its products, and
the Company's pursuit of certain OEM sales opportunities at lower margins.

The increase in gross  profit as a percentage  of net sales from 32.8% in fiscal
1995 to 40.0% in fiscal 1996 was attributable  primarily to improved  management
of production cycles and distribution channel inventory balances.  The Company's
gross profit percentage increase was partially offset during the year by charges
against sales due to various pricing and marketing programs.


Sales and Marketing

Sales and marketing  expenses decreased by 8.9% to $17.3 million in fiscal 1997,
from $19.0 million in fiscal 1996.  The fiscal 1996  expenses  increased by 6.9%
from $17.8  million in fiscal  1995.  As a  percentage  of net sales,  sales and
marketing expenses were 20.8%,  28.4%, and 29.2% in fiscal 1997, 1996, and 1995,
respectively.  During fiscal 1996, the Company  increased its direct field staff
organization  in  order to focus  its  sales  strategy  on  penetrating  the IBM
compatible  market and its chosen  vertical  markets in order to capture  market
share.  In  achieving  these  goals the  Company was able to lower the number of
independent sales firms representing the Company,  which served to significantly
reduce spending on outside commissions in fiscal 1997. In addition,  by focusing
more on vertical  markets  and  targeted  markets,  the Company has been able to
reduce its spending on tradeshow, advertising, and collateral related expenses.

The increase in sales and marketing expenses from fiscal 1995 to fiscal 1996 was
primarily a result of the addition of direct field sales personnel during fiscal
1995 and fiscal 1996, and to additional  vertical

                                       22
================================================================================

<PAGE>


marketing and PC-related sales and marketing programs, offset partially by lower
outside representative commissions in the second half of fiscal 1996.

The Company expects that its sales and marketing expenses will increase slightly
in fiscal 1998 in absolute dollars.


Research and Development

Research and development  expenses increased by 15.1%  to $7.1 million in fiscal
1997 from $6.2 million in fiscal 1996.  Research and  development  expenses were
$4.5  million  in fiscal  1995.  As a  percentage  of net  sales,  research  and
development  expenses  were 8.6%,  9.3% and 7.3% in fiscal 1997,  1996 and 1995,
respectively.  The $0.9 million  increase in expenses from 1996 to 1997 resulted
from the  Company's  commitment  to focus  additional  resources on research and
development  in order to bring  more  Fast  Ethernet  (100Base-T,  or 100  Mbps)
products,  switching  products,  and software  products to market.  As a result,
salaries and wages increased by $0.3 million,  and expenses related to prototype
materials, tooling and set-up charges increased by approximately $0.5 million as
the Company introduced two new lines of switching products.

Research and development  expenses increased by $1.7 million from fiscal 1995 to
fiscal 1996 due  primarily to the  Company's  focus on bringing  additional  key
switching,  Fast Ethernet,  and software  products to market.  As a result,  the
Company increased  expenses relating to salaries and wages to recruit additional
engineering  personnel,  non-recurring  engineering  expense charges, as well as
other research related expenses.

The Company expects that spending on research and  development  will increase in
the future in order to support the development of new products incorporating the
Fast  Ethernet  standard,   switching  technology,  ASIC  technology,  and  cost
reduction efforts pertaining to current products.


General and Administrative

General and  administrative  expenses  increased 18.9% to $3.5 million in fiscal
1997 from $2.9 million in fiscal 1996. General and administrative  expenses were
$4.0  million  in  fiscal  1995.  As a  percentage  of net  sales,  general  and
administrative  expenses were 4.1%,  4.3%, and 6.6% in fiscal years 1997,  1996,
and 1995,  respectively.  The  increase in general and  administrative  expenses
during fiscal 1997 was primarily due to increased outside service and consulting
related fees and to increased salary and wage related expenses.

The  decrease  in  administrative  expenses  from fiscal 1995 to fiscal 1996 was
related primarily to the settlement and reduction in related defense  litigation
costs associated with the  stockholders'  class action suit and lower salary and
other wage related expenses due to the Company's effort to control expenses.

The Company  expects  that general and  administrative  expenses  will  increase
slightly in fiscal 1998 in absolute dollars.

                                       23
================================================================================

<PAGE>


Income Taxes

The Company's  effective tax rate for fiscal 1997,  1996,  and 1995,  was 36.0%,
37.7%,  and 38.9%,  respectively  of revenue.  Such rates  differ  from  federal
statutory  rates  principally  due to state  taxes and,  in 1997,  research  and
development credits.


Factors Affecting Future Operating Results

The  Company  operates in a rapidly  changing  and  growing  industry,  which is
characterized  by  vigorous  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  high
technology  products.  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 effectively and timely
respond 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 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.  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.

Successfully  addressing  these factors is subject to various risks discussed in
this report and other factors.

The Company is subject to various risks associated with international operations
including  currency  exchange rate  fluctuations,  changes in costs of labor and
material,  reliability of sources of supply and general  economic  conditions in
foreign  countries.  Unexpected  changes in foreign  manufacturing or sources of
supply, fluctuations in monetary exchange rates and changes in the availability,
capability  or pricing  of foreign  suppliers  could  affect the  results of the
Company's operations.

In 1995,  a coalition  of more than one  hundred  companies  (including  Asante)
supplying  adapters,  hubs,  and  other  networking  equipment  developed  a new
standard for increasing the data  transmission  speed over Ethernet  networks by
ten-fold. This standard (100BASE-T,  or "Fast Ethernet") 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  recently  focused its research
and  development   activities  on  introducing  future  products   incorporating
100BASE-T  technology.  The Company  realizes the  importance  of bringing  more
10BASE-T  (10 Mbps)  switching  and  100BASE-T  switching  to market in order to
complement its existing

                                       24
================================================================================

<PAGE>


100BASE-T  shared  products.  In that regard,  the  Company's  future  operating
results may be  dependent on the market  acceptance  and the rate of adoption of
this new technology.

The Company  commits to expense levels,  including  investing in advertising and
promotional  programs,  based in part on  expectations  as to  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.
There  can  be  no  assurance   that  the  Company  will  be  able  to  maintain
profitability on a quarterly or annual basis in the future.

The Company's target markets include  end-users,  value-added  resellers (VARs),
systems  integrators 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

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,   variations  in  the  mix  of  product   sales,
manufacturing   delays  or  disruptions  in  sources  of  supply,  and  economic
conditions  and  seasonal  purchasing  patterns  specific  to the  computer  and
networking industries.  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

The factors discussed above, as well as other factors which generally affect the
market for stocks of high  technology  companies,  will  affect the price of the
Company's  stock and could cause such stock prices to fluctuate over  relatively
short periods of time.


Liquidity and Capital Resources

During 1997, the Company's  operating  activities  provided cash of $1.7 million
compared to net cash  provided of $0.9  million and $3.8  million in fiscal 1996
and 1995,  respectively.  During  fiscal 1997,  the increase in cash provided by
operating  activities  resulted  primarily  from  net  income  of $1.9  million,
decreases in accounts receivable and the Company's income tax receivable and was
offset  by an  increase  in  inventory,  and by the  decrease  in the  Company's
accounts  payable  balances.  The increase in cash during 1996 resulted from the
increase in accounts  payable and  decrease in income tax  receivable  resulting
from a 1995 loss carryback and was partially  offset by the increase in accounts
receivable,  inventory,  and  the  reduction  in  accounts  payable  to a  major
stockholder. Days of sales outstanding decreased to 32 at the end of fiscal 1997
compared to 47 at the end of fiscal 1996 which had the effect of increasing cash
from operations.

Net cash used in investing  activities was $2.4 million in fiscal 1997 which was
due  primarily  to  purchases  of  property  and  equipment,  predominately  for
engineering,  totaling  approximately  $2.3 million.  The  Company's  purchasing
activities  consisted primarily of investments in computers,  related equipment,
and direct research and development related equipment. During fiscal 1997, 1996,
and 1995,  the  Company's  purchases  of property  and  equipment  totaled  $2.3
million, $1.3 million, and $0.5 million, respectively.

                                       25
================================================================================

<PAGE>


During fiscal 1997,  1996, and 1995,  the Company  generated cash from financing
activities  of  approximately  $1.0  million.  The proceeds  were  predominately
generated from the exercise of employee stock options.

At September 27, 1997,  the Company had cash,  cash  equivalents  and short-term
investments of $12.9 million as compared to $12.7 million at September 28, 1996.
Working  capital was $26.7  million at  September  27,  1997,  compared to $25.1
million at  September  28,  1996.  The  Company  has a bank line of credit  that
provides for maximum borrowings of $5.0 million, limited to a certain percentage
of eligible accounts receivable, and bears interest at the bank's base rate. The
Company's  ability  to borrow  under this line is  subject  to  compliance  with
covenants  related to financial  performance and condition.  As of September 27,
1997 there were no borrowings  under the line of credit,  and the Company was in
compliance  with all such  covenants.  The line of credit expires on January 31,
1998.

The Company believes that its current cash and cash  equivalents,  together with
cash expected to be generated by operations and existing credit facilities, will
be  sufficient  to fund its  operations  and meet capital  requirements  through
fiscal 1998. However, if additional funds are required there can be no assurance
that such funds will be  available  at all or on terms  favorable to the Company
and its stockholders.

                                       26
================================================================================

<PAGE>


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


<TABLE>
         Index to Financial Statements and Financial Statement Schedule


<CAPTION>
Financial Statements:
<S>                                                                                          <C>
           Report of Independent Accountants                                                 28

           Balance Sheets at September 27, 1997 and September 28, 1996                       29

           Statements of Operations for the years ended September 27, 1997,
                  September 28, 1996 and September 30, 1995                                  30

           Statements of Stockholders' Equity for the years ended
                  September 27, 1997,  September 28, 1996 and September 30, 1995             31

           Statements of Cash Flows for the years ended September 27, 1997,
                  September 28, 1996 and September 30, 1995                                  32

           Notes to Financial Statements                                                     33

           Quarterly Results of Operations (unaudited)                                       43

Financial Statement Schedule:

           Report of Independent Accountants on Financial Statement Schedule                 S-1

           Schedule II - Valuation and Qualifying Accounts and Reserves                      S-2
</TABLE>


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 ACCOUNTANTS


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

In our opinion,  the accompanying  balance sheets and the related  statements of
operations,  of  stockholders'  equity and of cash flows present fairly,  in all
material  respects,  the  financial  position  of Asante  Technologies,  Inc. at
September 27, 1997 and September 28, 1996, and the results of its operations and
its cash flows for each of the three  years in the period  ended  September  27,
1997,  in  conformity  with  generally  accepted  accounting  principles.  These
financial  statements are the  responsibility of the Company's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
generally accepted auditing standards 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 the opinion  expressed
above.


PRICE WATERHOUSE LLP

San Jose, California
October 24, 1997

                                       28
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<PAGE>


<TABLE>
                            ASANTE TECHNOLOGIES, INC.

                                 BALANCE SHEETS
                           (in thousands, except share
                             and per share amounts)

<CAPTION>
                                                                                September 27,    September 28,
                                                                                     1997             1996
                                                                                   -------           -------
<S>                                                                                <C>               <C>    
Assets

Current assets:
        Cash and cash equivalents                                                  $12,931           $12,693
        Accounts receivable, net of allowance for doubtful
                accounts, rebates and sales returns of $4,722 and $3,174             8,313            10,038
        Inventory                                                                   12,080             9,851
        Deferred income tax                                                          3,606             2,972
        Income tax refund receivable                                                  --               1,558
        Prepaid expenses and other                                                     490             1,046
                                                                                   -------           -------
                        Total current assets                                        37,420            38,158

Property and equipment, net                                                          2,768             1,524
Other assets                                                                           379               284
                                                                                   -------           -------
                        Total assets                                               $40,567           $39,966
                                                                                   =======           =======

Liabilities and stockholders' equity

Current liabilities:
        Accounts payable                                                           $ 4,958           $ 7,200
        Accrued expenses                                                             4,858             4,175
        Payable to stockholder                                                         877             1,682
                                                                                   -------           -------
                        Total current liabilities                                   10,693            13,057
                                                                                   -------           -------

Commitments and contingencies (Notes 6 and 7)


Stockholders' equity:
        Preferred stock, $0.001 par value; 2,000,000 shares authorized;
                no shares issued or outstanding                                       --                --   
        Common stock, $0.001 par value; 25,000,000 shares authorized;
                9,121,601 and 8,859,990 shares issued and outstanding                    9                 9
        Additional paid-in capital                                                  26,352            25,313
        Retained earnings                                                            3,513             1,587
                                                                                   -------           -------
                        Total stockholders' equity                                  29,874            26,909
                                                                                   -------           -------
                        Total liabilities and stockholders' equity                 $40,567           $39,966
                                                                                   =======           =======


<FN>
                             The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

                                                                 29

<PAGE>


<TABLE>
                            ASANTE TECHNOLOGIES, INC.
                                                        
                            STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

<CAPTION>
                                                                      Year ended
                                                  ----------------------------------------------------
                                                  September 27,       September 28,      September 30,
                                                      1997                1996                 1995
                                                  ----------------------------------------------------
<S>                                                 <C>                 <C>                  <C>     
Net sales                                           $ 83,279            $ 66,990             $ 60,884
Cost of sales                                         53,040              40,220               40,936
                                                    --------            --------             --------
Gross profit                                          30,239              26,770               19,948
                                                    --------            --------             --------

Operating expenses:
        Sales and marketing                           17,322              19,007               17,784
        Research and development                       7,135               6,198                4,451
        General and administrative                     3,451               2,903                4,037
                                                    --------            --------             --------
                Total operating expenses              27,908              28,108               26,272
                                                    --------            --------             --------

Income (loss) from operations                          2,331              (1,338)              (6,324)
Interest and other income (expense), net                 678                 605                  257
                                                    --------            --------             --------
Income (loss) before income taxes                      3,009                (733)              (6,067)
Provision (benefit) for income taxes                   1,083                (276)              (2,362)
                                                    --------            --------             --------

Net income (loss)                                   $  1,926            $   (457)            $ (3,705)
                                                    ========            ========             ========

Net income (loss) per share                         $   0.21            $  (0.05)            $  (0.45)
                                                    ========            ========             ========

Weighted average common shares and equivalents         9,103               8,997                8,288
                                                    ========            ========             ========

<FN>
               The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

                                       30
<PAGE>


<TABLE>
                                                     ASANTE TECHNOLOGIES, INC.

                                                 STATEMENTS OF STOCKHOLDERS' EQUITY
                                                (in thousands, except share amounts)


<CAPTION>
                                                                                         Additional                        Total
                                                              Common Stock                Paid-in         Retained     Stockholders'
                                                         Shares             Amount        Capital         Earnings        Equity
                                                        ---------         ----------     ----------      ----------      ----------
<S>                                                     <C>                 <C>          <C>             <C>             <C>       
Balances as of September 30, 1994                       7,875,481           $    8       $   22,632      $    5,749      $   28,389

Common Stock issued under stock plans                     736,939                1              953                             954
Repayment of note receivable                                                                    196                             196
Amortization of deferred compensation                                                            17                              17
Tax benefit from employee stock
        transactions                                                                            268                             268
Net loss                                                                                                     (3,705)         (3,705)
                                                        ---------           ------       ----------      ----------      ----------

Balances as of September 30, 1995                       8,612,420                9           24,066           2,044          26,119

Common Stock issued under stock plans                     247,570               --              995                             995
Amortization of deferred compensation                                                             2                               2
Tax benefit from employee stock
        transactions                                                                            250                             250
Net loss                                                                                                      (457)            (457)
                                                        ---------           ------       ----------      ----------      ----------

Balances as of September 28, 1996                       8,859,990                9           25,313           1,587          26,909

Common Stock issued under stock plans                     256,963               --              996                             996
Compensation expense upon issuance
of common stock                                             4,648               --               20                              20
Tax benefit from employee stock
        transactions                                                                             23                              23
Net income                                                                                                   1,926            1,926
                                                        ---------           ------       ----------      ----------      ----------
Balances as of September 27, 1997                       9,121,601           $    9       $   26,352      $    3,513      $   29,874
                                                        =========           ======       ==========      ==========      ==========


<FN>
                             The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

                                                                 31

<PAGE>


<TABLE>
                                                     ASANTE TECHNOLOGIES, INC.

                                                      STATEMENTS OF CASH FLOWS
                                                           (in thousands)

<CAPTION>
                                                                                                       Year ended
                                                                                        -------------------------------------------
                                                                                        September 27,  September 28,  September 30,
                                                                                            1997          1996          1995
                                                                                        -------------------------------------------
<S>                                                                                       <C>           <C>           <C>      
Cash flows from operating activities:
        Net income (loss)                                                                 $  1,926      $   (457)     $ (3,705)
        Adjustments to reconcile net income to
                   net cash provided by operating activities:
                Depreciation and amortization                                                1,062         1,092         1,182
                Write-off of purchased technology                                             --            --             289
                Compensation expense upon issuance of common stock                              20
                Deferred income taxes                                                         (634)          719          (753)
        Changes in operating assets and liabilities:
                Accounts receivable                                                          1,725        (1,534)        6,719
                Inventory                                                                   (2,229)       (2,842)        2,492
                Income tax refund receivable                                                 1,860           839        (1,879)
                Prepaid expenses and other current assets                                      603           659         1,351
                Accounts payable                                                            (2,242)        3,983        (1,881)
                Accrued expenses and other                                                     435          (651)         (384)
                Payable to stockholder                                                        (805)         (865)          348
                                                                                          --------      --------      --------
                           Net cash provided by operating activities                         1,721           943         3,779
                                                                                          --------      --------      --------

Cash flows from investing activities:
        Purchases of property and equipment                                                 (2,305)       (1,252)         (473)
        Purchases of marketable securities                                                    --            --            (985)
        Maturities of marketable securities                                                   --           1,700         4,285
        Other                                                                                 (142)           (6)          (71)
                                                                                          --------      --------      --------
                           Net cash provided by (used in) investing activities              (2,447)          442         2,756
                                                                                          --------      --------      --------

Cash flows from financing activities:
        Payment on note receivable from stockholder                                           --            --             196
        Proceeds from stock options exercised                                                  996           995           954
        Other                                                                                  (32)          (58)          (54)
                                                                                          --------      --------      --------
                           Net cash provided by financing activities                           964           937         1,096
                                                                                          --------      --------      --------

Net increase in cash and cash equivalents                                                      238         2,322         7,631
Cash and cash equivalents at beginning of year                                              12,693        10,371         2,740
                                                                                          --------      --------      --------
Cash and cash equivalents at end of year                                                  $ 12,931      $ 12,693      $ 10,371
                                                                                          ========      ========      ========


Supplemental disclosures of cash flow information:
        Interest paid during the year                                                     $      7      $     11      $     22
                                                                                          ========      ========      ========
        Income taxes paid (refunded) during the year                                      $   (143)     $ (1,835)     $    759
                                                                                          ========      ========      ========


<FN>
                             The accompanying notes are an integral part of these financial statements
</FN>
</TABLE>

                                                                 32

<PAGE>


                            ASANTE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS


Note 1.         The Company and Summary of Significant Accounting Policies

Asante  Technologies,  Inc. (the "Company") designs,  manufactures and markets a
broad family of 10BASE-T  and  100BASE-T  ("Fast  Ethernet")  client  access and
network system products.  Asante's client access products (which include adapter
cards and media  access  adapters)  connect  PCs,  Macintoshes,  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,  and network management software for Macintoshes and PCs,  interconnect
users within and between departmental networks.

Management estimates and assumptions
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported  amounts of assets and liabilities  disclosure of contingent
assets and liabilities, at the date of the financial statements and the reported
amounts of revenue and expenses  during the  reporting  period.  Actual  results
could differ from those estimates.

Revenue recognition
Revenue from product sales to customers  other than  distributors  is recognized
upon  shipment  and  reserves  are  provided  for  estimated  returns.  Sales to
distributors  are generally  subject to 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 a reserve for incentive rebates to
distributors,  warranty obligations and cooperative  advertising at the time the
related revenue is recorded.

Sales to  historically  major  distributors/customers  whose  revenue  equals or
exceeds 10% of net sales in any  particular  fiscal year as a percentage  of net
sales were as follows:

                                    1997              1996             1995
                                    ----              ----             ----
Distributor/customer A                22%               27%              21%
Distributor/customer B                --                --               17%
Distributor/customer C                --                10%              --
Corporate/customer D                  22%               --               --

                                       33
================================================================================

<PAGE>


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

                                    1997              1996             1995
                                    ----              ----             ----

United States                         82%               77%              72%
Europe                                10                11               16
Canada and Asia Pacific                8                12               12
                                     ----              ----             ----
                                     100%              100%             100%
                                     ====              ====             ====


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 periods
of greater than 90 days to be short-term  investments.  The Company accounts for
short-term investments in accordance with the provisions of Financial Accounting
Standard  No.  115,  "Accounting  for  Certain  Investments  in Debt  or  Equity
Securities"  ("FAS 115").  At September 27, 1997,  and  September 28, 1996,  the
Company did not hold any short-term investments.

Concentration of credit risk
Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally of cash  equivalents and accounts  receivables.
Accounts  receivable  are  typically  unsecured  and are derived from  worldwide
distributor  revenues.  The Company performs  ongoing credit  evaluations of its
customers and maintains reserves for potential credit losses; historically, such
losses  have  been  insignificant  and  within  management's  expectations.   At
September 27, 1997 and September 28, 1996, four customers  accounted for 54% and
41%, respectively, of the accounts receivable balance.

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  values 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 capitalized leases is amortized over its useful life and
included in depreciation expense.

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.

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

                                       34
================================================================================

<PAGE>


essentially  completed  concurrently  with the  establishment  of  technological
feasibility;  accordingly,  software costs incurred after the  establishment  of
technological feasibility have not been material to date and therefore have been
expensed.

Net income (loss) per share
Net income  (loss) per share is computed  using the weighted  average  number of
common and common  equivalent  shares  outstanding  during  the  period.  Common
equivalent  shares  include  common  stock  issuable  upon the exercise of stock
options using the treasury stock method, except when antidilutive.

<TABLE>
In February 1997,  Financial  Accounting Standards Board (FASB) issued Statement
of  Financial  Standards  No. 128  ("SFAS  128"),  "Earnings  per  share".  This
statement is effective  for the  Company's  fiscal year ending  October 3, 1998.
Under the new standard, primary earnings per share is replaced by basic earnings
per share and fully diluted  earnings per share is replaced by diluted  earnings
per share.  If the Company had adopted this Statement for three and twelve month
periods ended September 27, 1997 and September 28, 1996, the Company's  earnings
(loss) per share using the treasury stock method would have been as follows:


<CAPTION>
                                     Three Months Ended            Twelve Months Ended
                               -----------------------------  ------------------------------
                               September 27,   September 28,  September 27,    September 28,
                                  1997             1996           1997             1996
                               -------------------------------------------------------------
<S>                              <C>               <C>            <C>             <C>    
Basic income (loss)
   per share                     $0.08             $0.05          $0.21           ($0.05)
Diluted income (loss)
   per share                     $0.08             $0.04          $0.21           ($0.05)
</TABLE>


Reclassification
Certain  prior period  balances have been  reclassified  to conform with current
period presentation.

Foreign currency
The Company's transactions with foreign suppliers and purchasers are denominated
in U.S. dollars.  As a result,  the Company's exposure to foreign currency gains
and losses is minimal.

Fair value of financial instruments
For  certain  of the  Company's  financial  instruments,  including  cash,  cash
equivalents, trade accounts receivable,  receivable from related party, accounts
payable and capitalized lease obligations, the carrying amounts approximate fair
value due to the relatively short maturity of these instruments.

Recently issued accounting pronouncements
In February  1997, the FASB issued SFAS 129,  "Disclosure  of Information  about
Capital Structure",  which requires disclosure of certain information related to
the Company's capital structure.  SFAS 129 is not anticipated to have a material
impact on the Company's financial position or results of operations.

                                       35
================================================================================

<PAGE>


In June 1997, the FASB issued SFAS 130, "Reporting  Comprehensive  Income." SFAS
130 establishes standards for reporting  comprehensive income and its components
in a financial  statement.  Comprehensive income as defined includes all changes
in equity (net assets) during a period from non-owner sources. Examples of items
to be included in  comprehensive  income,  which are  excluded  from net income,
include  foreign  currency  translation  adjustment and unrealized  gain/loss on
available for sale  securities.  The disclosure  prescribed by SFAS must be made
beginning with the first quarter of fiscal 1999 and is not anticipated to have a
material impact on the Company's financial position or results of operations.

In June 1997,  the FASB  issued  SFAS 131,  "Disclosures  about  Segments  of an
Enterprise and Related  Information." This statement  establishes  standards for
the  way  companies  report  information  about  operating  segments  in  annual
financial  statements.  It also  establishes  standards for related  disclosures
about products and services,  geographic areas, and major customers. The Company
has not yet  determined the impact,  if any, of adopting this new standard.  The
disclosures prescribed by SFAS 131 are effective in fiscal 1999.


Note 2.           Balance Sheet Components

                                                           1997          1996
                                                         --------      --------
                                                             (in thousands)
Inventory:
         Raw materials and component parts               $  3,065      $  3,298
         Work-in-process                                    2,220         1,630
         Finished goods                                     6,795         4,923
                                                         --------      --------
                                                         $ 12,080      $  9,851
                                                         ========      ========

Property and equipment:
         Computers and R&D equipment                     $  7,161      $  5,112
         Furniture and Fixtures                             1,456         1,200
                                                         --------      --------
                                                            8,617         6,312
         Accumulated depreciation                          (5,849)       (4,788)
                                                         --------      --------
                                                         $  2,768      $  1,524
                                                         ========      ========

Accrued expenses:
         Payroll-related expenses                        $  1,197      $  1,239
         Sales promotion expenses                           1,469         1,077
         Warranty                                             572           572
         Other                                              1,620         1,287
                                                         --------      --------
                                                         $  4,858      $  4,175
                                                         ========      ========


Note 3.           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 14% of the


                                       36
================================================================================

<PAGE>


Company's  Common Stock as of September 27, 1997.  Under the OSE Agreement,  the
Company  purchases from and sells to OSE certain  component  parts, at cost. The
Company is  obligated  to  purchase  goods only to the extent it has signed firm
purchase commitments with OSE. At September 27, 1997 and September 28, 1996, the
Company had firm purchase  commitments  under the OSE Agreement of approximately
$1.7 million and $3.5 million, respectively.

In  connection  with the OSE  Agreement  for fiscal 1997,  1996,  and 1995,  the
Company  sold,  at cost,  approximately  $3.3  million,  $5.5  million  and $1.8
million,  respectively,  of component  parts to OSE and purchased $16.8 million,
$17.9 million and $16.0 million, respectively, of goods from OSE.

In June 1993,  the Company sold  166,666  shares of its common stock to its then
president in consideration for a promissory note in the amount of $500,000.  The
note was secured by a pledge of the Common Stock purchased with no interest due.
In 1994,  $111,000 was paid on the note and the Company  repurchased  the 64,583
unvested shares  following the resignation of the president.  The balance of the
note of approximately $196,000 was paid in July 1995.


Note 4.           Income Taxes

The provision for income taxes is comprised of the following (in thousands):



                                             1997           1996          1995
                                            -------       -------       -------
Current tax expense (benefit)
         Federal                            $ 1,389       $  (995)      $(1,609)
         State                                  328          --            --
                                            -------       -------       -------
                                              1,717          (995)       (1,609)
                                            -------       -------       -------

Deferred tax benefit
         Federal                               (574)          780          (681)
         State                                  (60)          (61)          (72)
                                            -------       -------       -------
                                               (634)          719          (753)
                                            -------       -------       -------
                                            $ 1,083       $  (276)      $(2,362)
                                            =======       =======       =======


Deferred tax assets comprise the following (in thousands):

                                                               1997        1996
                                                              ------      ------
Deferred tax assets
         Receivable- and sales-related reserves               $1,837      $1,235
         Inventory-related reserves                              453         572
         Compensation accruals                                   322         227
         Depreciation                                           --            43
         Other                                                   994         895
                                                              ------      ------
Total deferred tax assets                                     $3,606      $2,972
                                                              ======      ======

                                       37
================================================================================

<PAGE>


The  Company  was able to carry  back tax  losses in fiscal  1996 and 1995 which
resulted in federal tax refunds of $1.2 million and $1.6 million, respectively.

The Company has not  recorded a valuation  allowance  against its  deferred  tax
assets  because  management  believes  that it is more  likely than not that its
deferred tax assets will be  realized.  Realization  is dependent on  generating
sufficient  taxable  income.  The  amount  of  deferred  tax  assets  considered
realizable  could be  reduced  in the near  term,  resulting  in a charge to net
income,  if estimates of future  taxable income in the  carryforward  period are
reduced.

A reconciliation of the income tax provisions  computed at the federal statutory
rate to the effective  rate for the recorded  provisions  for income taxes is as
follows:


                                                    1997       1996       1995
                                                    ----      -----      -----  
Federal income tax statutory rate                   34.0%     (34.0)%    (34.0)%
State taxes, net of federal tax benefit              5.9       (6.1)      (6.1)
Research and development credit                     (8.8)       --         --
Other                                                4.9        2.4        1.2
                                                    ----      -----      -----  
Effective income tax rate                           36.0%     (37.7)%    (38.9)%
                                                    ====      =====      =====  


Note 5.           Stockholders' Equity


Preferred Stock
There  are  2,000,000  shares  of  Preferred  Stock  authorized  by the Board of
Directors.  No such  shares of  Preferred  Stock were issued or  outstanding  at
September 27, 1997, or have been outstanding since the Company's public offering
in December 1993.

Stock Based Compensation Plans
As of September 27, 1997, the Company had four  stock-based  compensation  plans
which are  described  below.  The  Company  applies  APB  Opinion 25 and related
Interpretations  in accounting  for its plans and complies  with the  disclosure
provisions of SFAS 123 "Accounting for Stock-Based Compensation".

The 1990  Stock  Option  Plan  allows  for the  issuance  of  options to Company
employees and  consultants  to purchase a maximum of 4,597,333  shares of common
stock.   This  amount  includes   1,000,000  shares  authorized  by  a  vote  of
shareholders at the Company's 1997 annual stockholders meeting.

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

                                       38
================================================================================

<PAGE>


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 Plans unless the option's price 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 shall be issued at no
less than fair market value per share on the date of grant and with  expirations
to not  exceed  ten years  from the grant  date.  Under the terms of the  Plans,
options  issued are  granted at prices of 100% of the fair  market  value of the
common  stock at the date of grant and with  expirations  of ten years  from the
date of grant.  Initial options granted 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 will terminate three months
after such  Optionee's  termination  of all  service  with the  Company  and its
affiliates.

<TABLE>
The number of shares for which options under these three plans were  exercisable
was approximately 872,666,  603,918 and 260,247 at September 27, 1997, September
28, 1996,  and September 30, 1995,  respectively.  Activity under the 1990 Stock
Option Plan,  Directors  Stock Option Plan and the Key Employee  Option Plan are
summarized as follows:

<CAPTION>
                                       1997                                1996                               1995
                                              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            1,955,786         $ 5.58            1,532,608         $ 4.77             1,639,880        $ 3.38
                                                              
Granted                        606,296         $ 5.81            1,048,938         $ 6.47             1,404,334        $ 4.39
                                                              
Exercised                     (138,776)        $ 3.81             (165,983)        $ 3.76              (670,319)       $ 1.08
                                                              
Canceled                      (503,699)        $ 5.80             (459,777)        $ 5.37              (841,287)       $ 4.32
                             ---------                           ---------                            ---------
                                                              
Ending Balance               1,919,607         $ 5.72            1,955,786         $ 5.58             1,532,608        $ 4.77
                             =========                           =========                            =========
</TABLE>                                                   


Under SFAS No. 123, the fair value of each option grant is estimated on the date
of grant using the Black-Scholes  model with the following  assumptions used for
grants during fiscal 1997 and 1996:  risk free interest rates ranging from 5.29%
to 6.79%  respective  of grant  date;  expected  average  volatility  of 60%; an
expected option life of 4 years, and no expected dividends. The weighted average
fair value of stock options granted under the plans for fiscal 1997and 1996, was
$3.02 and $3.35, respectively.

<TABLE>
The following table summarizes information about fixed stock options outstanding
at September 27, 1997:

                                       39
================================================================================

<PAGE>

<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>
$0.1050 - $0.1050                  1,000            3.50           $0.1050             1,000            $0.1050
$0.1650 - $0.1650                  1,000            3.74           $0.1650             1,000            $0.1650
$2.2500 - $3.0000                 10,952            5.48           $2.5992            10,952            $2.5992
$3.8750 - $5.6250              1,005,808            7.96           $4.6900           515,290            $4.7086
$5.8750 - $8.0000                860,847            8.63           $6.8265           305,258            $7.1226
$9.0000 - $9.0000                 40,000            6.00           $9.0000            39,166            $9.0000
                               ---------                                             -------

$0.1050 - $9.0000              1,919,607            8.20           $5.7213           872,666            $5.7087
                               =========                                             =======
</TABLE>


In 1993,  the Company  adopted the Employee  Stock  Purchase Plan (the "Purchase
Plan")  covering  an  aggregate  of 500,000  shares of common  stock.  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 1997, 1996 and 1995 were 118,187, 81,587
and 66,620 shares of common stock,  respectively,  at an average price of $3.85,
$4.68 and $3.45,  respectively.  At September 27, 1997, 195,293 shares of common
stock were available for future purchase.

Compensation  cost for the Purchase  Plan  (included in pro forma net income and
net income per share amounts) is recognized for the fair value of the employee's
purchase  rights,  which was estimated  using the  Black-Scholes  model with the
following  assumptions  used for grants during  fiscal 1997 and 1996:  risk free
interest rates ranging from 5.2% to 6.4%, respective of commencement date of the
offering period, expected volatility of 60%, an expected option life of 6 months
for both years,  and no expected  dividends.  The weighted average fair value of
stock purchased under the Purchase Plan for fiscal 1997, and 1996, was $3.85 and
$4.68, respectively.

The Company  applies the  provisions  of APB 25 and related  Interpretations  in
accounting  for  compensation  expense  under the 1990 Stock  Option  Plan,  the
Director's  Stock Option Plan,  the Key  Executive  Option Plan and the Employee
Stock Purchase Plan.

Had compensation  expense under these plans been determined pursuant to SFAS No.
123,  the  Company's  net income  and net  income per share for the years  ended
September  27, 1997,  and  September  30,  1996,  would have been as follows (in
thousands except per share amounts):

                                       40
================================================================================

<PAGE>


                                          1997               1996
                                          ----               ----
Net income:
         As reported                     $1,926           $  (457)
         Pro forma                       $  891           $(1,165)


Net income per share
         As reported                     $ 0.21           $ (0.05)
         Pro forma                       $ 0.10           $ (0.13)


The pro forma amounts  include  compensation  expense related to fiscal 1997 and
1996 stock option grants and sales of common stock under the Purchase Plan only.
In future years, the annual  compensation  expense will increase relative to the
fair value of stock options granted in those future years.


Note 6.           Debt Obligations, Commitments and Contingencies

The Company has a bank line of credit that provides for maximum borrowings of $5
million,  limited to a certain percentage of eligible accounts  receivable,  and
bears  interest at the bank's base rate.  The Company's  ability to borrow under
this  line  is  subject  to  compliance  with  covenants  related  to  financial
performance  and  condition.  As of September  27, 1997 there were no borrowings
under the line of credit and the Company was in  compliance  with all  financial
covenants. The line of credit expires on January 31, 1998

The Company has entered into an operating  lease for its main  facilities  which
expires on August 31,  1999.  Various  other  leases  for sales  offices  expire
throughout  1998 and  1999.  Rent  expense  under  operating  leases  aggregated
approximately $912,000,  $901,000, and $784,000 for fiscal 1997, 1996, and 1995,
respectively.  Certain  leases  require the Company to pay a portion of facility
operating expenses.

In September  1995, the Company  entered into an agreement to sublease a portion
of its headquarters  building for a period of two years.  The Company  collected
approximately  $217,000  during fiscal 1997 under this  agreement and expects to
collect approximately $183,000 during fiscal 1998.

Following are minimum lease payments under non-cancelable  operating leases, net
of sub-lease amounts, for the given fiscal years (in thousands):



1998                                                 $710
1999                                                  873
                                                   ------

Total minimum lease payments                       $1,583
                                                   ======


Note 7.           Litigation

                                       41
================================================================================

<PAGE>


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  1995, the Company entered into an agreement in principle to settle
the securities class action lawsuits initiated against the Company in July 1994.
As part of the agreement, a settlement fund of $2.6 million was established with
the  Company   contributing   $520,000  and  the  Company's  insurance  carriers
contributing  the balance.  The Company's  portion was accrued for during fiscal
1995. On November 18, 1996,  the Court  entered an order  finally  approving the
settlement and dismissing the action against all defendants with prejudice.

On September  13, 1996, a complaint was filed by Datapoint  Corporation  against
the   Company   and  six  other   companies   individually   and  as   purported
representatives of a defendant class of all manufacturers,  vendors and users of
Fast Ethernet-compliant,  dual protocol local-area network products, for alleged
infringement  of  certain  patents.  The  Company  has filed a  response  to the
Complaint  and some minimal  discovery  has been taken.  The Company  intends to
defend the action vigorously. The Company does not believe this suit will have a
material effect on its financial condition or results of operations.

                                       42
================================================================================

<PAGE>


Quarterly Results of Operations (in thousands, unaudited):

Fiscal 1997                                        Quarter Ended
--------------------------------------------------------------------------------
                                  9/27/97      6/28/97      3/29/97     12/28/96
                                  -------      -------      -------      -------
Net sales                         $22,010      $22,602      $21,187      $17,480
Gross profit                      $ 8,123      $ 7,826      $ 7,533      $ 6,757
Net income                        $   710      $   617      $   448      $   151
Net income per share              $  0.08      $  0.07      $  0.05      $  0.02


Fiscal 1996                                       Quarter Ended
--------------------------------------------------------------------------------
                                  9/28/96      6/29/96      3/30/96     12/30/95
                                  -------      -------      -------      -------
Net sales                         $ 19,576     $ 16,102     $ 14,808    $ 16,504
Gross profit                      $  7,622     $  6,590     $  5,779    $  6,779
Net income (loss)                 $    402     $   (664)    $   (520)   $    325
Net income (loss) per share       $   0.04     $  (0.08)    $  (0.06)   $   0.03


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

Not applicable.

                                       43
================================================================================

<PAGE>


                                    PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General  Instruction G(3) to Form 10-K, 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 1998 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 27,
1997.

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.

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, 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, 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, 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.

                                       44
================================================================================

<PAGE>


                                     PART IV

ITEM 14.        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.
                (2) Financial Statement  Schedules  -  See  Index  to  Financial
                       Statements and Financial Statement Schedule at page 27 of
                       this Form 10-K.
                (3) Exhibits  - See  Exhibit  Index at page  46-47 of this  Form
                       10-K.

      b)        The  Registrant  did not file or amend any  reports  on Form 8-K
                    during the last  quarter of the fiscal year ended  September
                    27,  1997.  However,  subsequent  to the  fiscal  year ended
                    September  27,  1997  the  Company  filed a Form  8-K  dated
                    November 24, 1997  reporting  Mr. Tommy  Leung's death under
                    Item 5.

     (c)        See Exhibit Index at page 46-47 of this Form 10-K.

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

                                       45
================================================================================

<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*         Employment Agreement between Registrant and Ralph S. Dormitzer
                     dated June 2, 1993.(1)
    10.5A         Option and Note  Extension  Agreement  between  Registrant and
                     Ralph S. Dormitzer dated August 22, 1994.(5)
    10.6          Form  of   Indemnification   Agreement  entered  into  between
                     Registrant and its directors and officers.(1)
    10.7          Registration  Rights  Agreement  dated July 10,  1992  between
                     Registrant and certain holders of Common Stock and Series E
                     Preferred Stock.(1)
    10.8          Lease  dated July 16, 1992 for  facilities  located at 821 Fox
                     Lane in San Jose, California.(1)
    10.9          Loan Agreement between Registrant and Comerica Bank California
                     for  $10,000,000  line of credit  dated July 20,  1993,  as
                     amended as of July 20, 1993.(1)
    10.9A         First  Modification  dated  February 15, 1994, to the Loan and
                     Security Agreement dated July 20, 1993.(2)
    10.9B         Third Modification,  dated September 30, 1994, to the Loan and
                     Security Agreement dated July 20, 1993.(5)
    10.9C         Fourth Modification, dated September 30, 1994, to the Loan and
                     Security Agreement dated July 20, 1993.(4)
    10.9D         Sixth   Modification   Agreement  to  the  Loan  and  Security
                     Agreement dated July 10, 1993.(6)
    10.9E         Seventh  Modification  Agreement  to  the  Loan  and  Security
                     Agreement dated July 20, 1993.(6)
    10.10         Manufacturing  Payment Agreement dated October 1, 1990 between
                     Registrant and Orient Semiconductor Electronics, Ltd.(1)
    10.11         Distribution   Agreement   dated   November  2,  1989  between
                     Registrant and Ingram Micro, Inc., as amended.(1)(3)
    10.12         Distribution  Agreement dated June 19, 1989 between Registrant
                     and Merisel, Inc. (formerly Macamerica), as amended.(1)(3)

                                       46
================================================================================

<PAGE>


    10.13         Distribution   Agreement   dated   August  30,  1990   between
                     Registrant and TechData Corporation, as amended.(1)(3)
    10.14         Volume  Purchase   Agreement  dated  April  15,  1992  between
                     Registrant and National Semiconductor Corporation.(1)(3)
    10.15         Sublease  agreement  dated  August  21,  1995  for  facilities
                     located  at 821  Fox  Lane  in San  Jose,  California,  and
                     amendments pertaining thereto.(1)(3)
    10.16         Extension of Sublease Agreement dated June 10, 1997 (3)
    10.17         Distribution  Agreement dated 09/30/92 between  Registrant and
                     MicroWarehouse
    11.1          Calculation of Earnings per Share.
    23.1a         Consent of Independent Accountants.
    23.1b         Consent of Independent Accountants on Form S-8.
    27.1          Financial Data Schedule.

                  * 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) Previously   filed  as  an  Exhibit  to  the  Registrant's
                      Quarterly  Report  on Form 10-Q for the  quarterly  period
                      ended March 31, 1994.
                  (3) Confidential  treatment  granted as to certain portions of
                      these exhibits.
                  (4) Previously   filed  as  an  Exhibit  to  the  Registrant's
                      Quarterly  Report  on Form 10-Q for the  quarterly  period
                      ended April 1, 1995.
                  (5) Previously  filed as an Exhibit to the  Registrant's  Form
                      10-K for the fiscal year ended September 30, 1994.
                  (6) Previously   filed  as  an  exhibit  to  the  Registrant's
                      Quarterly  Report  on Form 10-Q for the  quarterly  period
                      ended March 30, 1996.

                                       47
================================================================================

<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 to be
signed on its behalf by the undersigned, thereunto duly authorized.


       December 20, 1997

                                      ASANTE TECHNOLOGIES, INC.



                                      By: /s/ JEFF YUAN-KAI LIN
                                         ---------------------------------------
                                         Jeff Yuan-Kai Lin,
                                         President and Chief Executive Officer


                                      By: /s/ ROBERT SHEFFIELD
                                         ---------------------------------------
                                          Robert Sheffield
                                          Vice President of Finance,
                                          Chief Financial Officer, and Secretary

                                       48
================================================================================

<PAGE>


                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Jeff Yuan-Kai Lin and Robert Sheffield,  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 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.

<TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
on Form 10-K has been signed by the following  persons in the  capacities and on
the dates indicated:

<CAPTION>
       Signature                                  Title                                       Dates
       ---------                                  -----                                       -----
<S>                                <C>                                                  <C>
/s/ JEFF YUAN-KAI LIN              President, and Chief Executive Officer               December 22, 1997
--------------------------         (Principal Executive Officer) and Director
    (Jeff Yuan-Kai Lin)   


/s/ ROBERT SHEFFIELD               Vice President of Finance, and                       December 22, 1997
--------------------------         Chief Financial Officer (Principal Financial
    (Robert Sheffield)             and Accounting Officer)


/s/ MICHAEL KAUFMAN                (Director)                                           December 22, 1997
--------------------------
    (Michael Kaufman)


/s/ DAVID LAM                      (Director)                                           December 22, 1997
--------------------------
    (David Lam)


/s/ EDMOND TSENG                   (Director)                                           December 22, 1997
--------------------------
    (Edmond Tseng)


/s/ CYRUS TSUI                     (Director)                                           December 22, 1997
--------------------------
    (Cyrus Tsui)


/s/ WILSON WONG                    (Director)                                           December 22, 1997
--------------------------
    (Wilson Wong)

</TABLE>
                                       49
================================================================================

<PAGE>


<TABLE>
                                                         S-1

                                              ASANTE TECHNOLOGIES, INC.

                           SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

(in thousands)

<CAPTION>
                                                            Balance at    Charged to                       Balance
                                                            Beginning     Costs and                       at End of
               Description                                  of Period      Expenses       Deductions        Period
               -----------                                  ---------      --------       ----------        ------
<S>                                                          <C>            <C>             <C>             <C>    
Year ended September 30, 1995:
   Allowance for doubtful accounts, price protection
         and distributor rebates                             $ 1,557        $ 3,566         $(3,340)        $ 1,783
   Allowance for sales return                                  1,346          1,055          (1,493)            908
                                                             -------        -------         -------         -------
                                                             $ 2,903        $ 4,621         $(4,833)        $ 2,691
                                                             =======        =======         =======         =======

Year ended September 28, 1996:
   Allowance for doubtful accounts, price protection
         and distributor rebates                             $ 1,783        $ 2,406         $(2,032)        $ 2,157
   Allowance for sales return                                    908            242            (133)          1,017
                                                             -------        -------         -------         -------
                                                             $ 2,691        $ 2,648         $(2,165)        $ 3,174
                                                             =======        =======         =======         =======
Year ended September 27, 1997:
   Allowance for doubtful accounts, price protection
         and distributor rebates                             $ 2,157        $ 3,056         $(1,896)        $ 3,317
   Allowance for sales return                                  1,017            754            (366)          1,405
                                                             -------        -------         -------         -------
                                                             $ 3,174        $ 3,810         $(2,262)        $ 4,722
                                                             =======        =======         =======         =======
</TABLE>



<PAGE>


                     GAMMA BUILDING ASSOCIATES JOINT VENTURE
                            c/o Lehman Brothers Inc.
                    Three World Financial Center - 29th floor
                            New York, New York 10285

                                  June 10, 1997


VIA FACSIMILE AND OVERNIGHT MAIL

Mr. Cesar Simoniak
Facilities Manager
Asante Technologies, Inc.
821 Fox Lane
San Jose, CA  95131

                           Re: Single  Tenant  Industrial  Space  Lease  by  and
                               between Gamma Building  Associates Joint Venture,
                               as Landlord  and Asante  Technologies,  Inc.,  as
                               Tenant, dated July 16, 1992 (the "Lease")

Dear Mr. Simoniak:

         I am in receipt of your letters dated October 15, 1996 and November 20,
1996  regarding  the exercise of the option set forth in  paragraph  18.1 of the
Lease.

         Landlord  acknowledges the proper exercise of the option. In accordance
with the terms of paragraph 18.1.2 of the Lease,  Tenant has the right to extend
the Lease in  accordance  with the  terms of the  option so long as it is not in
default  beyond any  applicable  cure period as of the date the Lease would have
been terminated, but for said exercise.

         Provided  Tenant is not in default beyond any applicable cure period as
of the date of the end of the original  term,  the Lease will be extended for an
additional  two (2) years (the "Option  Period") at the rental rate set forth in
the Lease.

         Attached as Exhibit "A" is the excess rent  calculation  for the Option
Period by and  between  Megatest  (Teradyne  Inc.) and  Tenant.  Pursuant to the
Lease,  the



<PAGE>


Landlord is entitled to $3,574.98 per month which represents fifty (50%) percent
of the excess rents  collected by Tenant under its sublease with Megatest.  This
letter is to formalize the agreement between the Landlord and Tenant relating to
Tenant's  obligation  to pay  the  adjusted  excess  rents  effective  with  the
commencement  of the option period on September 1, 1997 and  continuing  for the
duration of the Option  Period,  unless the sublease is sooner  terminated.  The
amounts due from Tenant and shown on Exhibit "A" shall be fixed for the duration
of the Option Period, unless the sublease is sooner terminated.  If Asante is in
agreement  with the  foregoing,  please  execute and return this letter to me at
your earliest convenience.

                                         Very truly yours,
                                         Gamma Building Associates Joint Venture
                                         By: Commercial Properties 2, L.P.,
                                             Managing Venturer

                                         By: Real Estate Services VII, Inc.
                                             General Partner


                                         By: /s/ Michael T. Marron
                                             -----------------------------------
                                             Michael T. Marron, Vice President


THE FOREGOING IS AGREED TO AND ACCEPTED:

Asante Technologies, Inc.


By:  /s/ William C. Leung
   ---------------------------------
Title:  V.P. of Operations  6/24/97
        ---------------------------


CC:      Monica Land
         Roger D. Wintle