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 29, 2001

                                       or

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

                 For the transition period from _____ to _______

                         COMMISSION FILE NUMBER 0-22632

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

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

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

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

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

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

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months  (or for such  shorter  period as the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past ninety days. YES 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
30,  2001,  as  reported  on the  OTC  (Over-the-Counter)  Bulletin  Board,  was
approximately $4,001,272.  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 30, 2001, the  Registrant  had 10,003,181  shares of Common Stock
outstanding.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  sections of the  Registrant's  definitive  Proxy Statement for the 2001
Annual Meeting of  Stockholders  to be held on February 21, 2002 is incorporated
by reference in Part III of this Form 10-K to the extent stated herein.

<PAGE>

                                TABLE OF CONTENTS

                                                                         Page of
                                                                          Report

                                     PART I

ITEM 1.   BUSINESS                                                            1

ITEM 2.   PROPERTIES                                                         15

ITEM 3.   LEGAL PROCEEDINGS                                                  15

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                16
          EXECUTIVE OFFICERS OF THE COMPANY                                  17

                             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                                          19

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

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                        27

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURE                                47

                            PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                 48

ITEM 11.  EXECUTIVE COMPENSATION                                             48

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT                                                         48

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                     48

                             PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K                                                           49

SIGNATURES                                                                   52

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


                                        i
<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.

                                     PART I

ITEM 1. BUSINESS

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

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

In fiscal  2001,  the Company  continued  to focus its  products and services on
providing  high-speed  local area network and  Internet  access  solutions.  The
Company sells to  distributors  and  resellers who serve three primary  customer
markets:  educational,  digital  design,  and small  business  markets  or Small
Office/Home  Office (SOHO).  Additionally,  in fiscal 2001, the Company began to
focus  substantial  efforts in the Multiple Tenant  Unit/Multiple  Dwelling Unit
(MTU/MDU) market, a rapidly emerging, high growth market even during the current
economic recession.  This market segment may be reached through a combination of
partnerships, direct sales, and specialized value added resellers (VAR's).

During fiscal 2001,  the high-tech  industry,  and in particular  the networking
sector,  experienced a significant slowdown in sales. This slowdown in sales was
partially  caused  by the  failure  of a  significant  number  of large  service
providers,  who had been  responsible  for the  purchase  of a major  amount  of
mid-range  switches,  and large scale  network  switches and routers,  broadband
routers  and  modems.  Additionally,  a  large  portion  of the  Internet  based
companies have gone out of business  causing a further  decrease of purchases of
network systems products and services.  This market-wide reduction in demand had
several effects including excess new and used inventories in the market,  excess
inventories at global manufacturers,  and reduced demand for semi-conductors and
electronic components causing component prices to drop significantly and certain
manufacturers  to sell their  products at extremely low margins in an attempt to
reduce inventory levels and increase inventory turnovers.

According  to  Business  Week,  revenues  in  the  high  tech  sector  decreased
approximately  20% in 2001.  It has also been reported  that  networking  sector
revenues  decreased  approximately 30% on average in 2001.  Slowdown in revenues
had global  effects on corporate  spending and has  significantly  affected both
larger and smaller  enterprises.  As such,  the economy has found  itself in its
first recession in more than eleven years.

However,  there are  opportunities in the networking market even in a recession.
The demand for Storage Area Network product appears positive, as does the global
Metropolitan  network and MTU/MDU market. The emergence and increasing  adoption
of broadband  technologies  will continue to create demand for specific products
in these markets.

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

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


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<PAGE>

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

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

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

The increasing availability of streaming audio and video and other digital media
has driven demand in the industry towards formats with substantially larger file
sizes requiring much larger storage  requirements.  MPEG-1,  MPEG-2,  MP-3, TIFF
files are all  examples of  commonly  used  formats,  which have  dominated  the
industry  and user  demand.  Each format  requires  faster  speeds,  and greater
bandwidth  to  transfer  in a  reasonable  time.  This  continued  demand at the
business and home consumer level continues to drive demand for high-speed access
to the Internet.

Additionally, as business and users increasingly develop and use the Internet as
a means  of  communication,  the need  for  increased  speed  and  bandwidth  is
increasing phenomenally.  According to the trade publication Kinetic Strategies,
broadband  subscribers now exceed 9.3 million, and household penetration is 8.2%
in the US. Additionally,  according to Dataquest,  residential gateway access in
the US is expected to grow to 28 million  subscribers  by 2004,  and a report by
Cahner's In-Stat stated that residential  gateways with integrated voice,  video
and data  services  are  expected to grow from $100 million is fiscal 2000 to $5
billion  in  2005.  This  increased   bandwidth  has  enabled  users  previously
connecting  at 28.8 Kbps,  or up to 56Kbps over their  analog  phone  lines,  to
access the Internet at speeds of up to 1.5 Mbps, enabling voice, data, music and
video transfers over the Internet.  Even in the current  economic  climate,  the
number of users and the use of digital  voice,  video,  music and  graphics  has
continued  to increase  due to  affordable  higher  speed  processors,  the cost
effectiveness of Fast Ethernet (10/100,  or 100 Mbps) networking,  the emergence
of affordable Gigabit Ethernet products and the  standardization of the Internet
as a form of communication for businesses and consumers.

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

Innovative technologies.

In fiscal 2001,  the Company  continued to invest in  multi-service  networks to
support converged,  high-speed data, voice and video networks.  The Company also
introduced a wide range of Gigabit Ethernet products for our high-end  IntraCore
and workgroup-oriented FriendlyNet product lines.

The greatly increased  bandwidth and speed has been created primarily due to the
emergence  of  10/100  Ethernet  technology  taking  over  the  desktop  as  the
networking  standard  and to broadband  technologies  continue to lead growth in
internet connectivity.  This increased bandwidth has created much greater demand
and downward pricing pressures as the telephone  companies and larger networking
companies are pressured to deliver  "all-in-one"  Local Area Network (LAN), Wide
Area Network (WAN), phone, fax, and video  communications  centers at attractive
price points.  With this new affordability and the continued  emergence of newer
technologies  such  as  wireless  and  Internet  Protocol  (IP)  telephony,  and
broadband  technologies  allowing easy  connectivity in the home, the reality of
the true home  network is nearing.  Additionally,  small  business can afford to
have the same access to these  resources and digital media  prevously  available
only to large companies.

The  Company  pioneered  integration  of  Internet  technology  into its network
products.  The Company  continues to  incorporate  these  technologies  into its
managed  switches and  Internet  access  products.  The Company was the first to
integrate  Intranet  technology into its new switches in the form of a built-in,
Java-enabled HTTP server. The Company's FriendlyNet routers,  including its 3004
Cable/DSL  routers  and new 3002  wireless  routers  have  attained  significant
recognition,  including 21  different  awards from PC World,  Mac World,  C-NET,
MacHome, Practically Networked, and Amazon.

The Company's  technological  expertise is well  positioned to take advantage of
growing  markets to  introduce  all-in-one  products  to answer the needs of the
converged  network for homes and small


                                       2
<PAGE>

businesses.  Additionally, the Company's products are differentiated through its
strong software expertise.

Strategic sales channels.

By expanding its distribution  channels to meet the emerging Internet consumers,
Asante expects to grow its sales through strategic  partners and businesses that
sell  products  and  services  on  the  Internet,   while  continuing  to  build
traditional  retail channels that provide revenue and profit  opportunities.  In
fiscal  2001,  the  Company  launched  a new VAR  program  aimed  at  attracting
additional  resellers  to carry the  Company's  products  both  focusing  on the
Company's  IntraCore  products  and SOHO  products.  Additionally,  the  Company
re-entered the superstore  retail market in August with the addition of Comp USA
as a customer.

The Company plans to seek additional  business  partners and  alternative  sales
channels  to  increase  its  market  share in its  areas of  expertise  and will
leverage  these  relationships  to expand the markets for its new  products  and
services going forward.


                                       3
<PAGE>

Strategic Partnerships.

In fiscal  2001,  the  Company  successfully  continued  its  process of seeking
strategic partnerships designed to place the Company in a leadership position in
several areas. The Company's  relationship with Apple Computer,  Inc.  continued
during fiscal 2001. The Company  announced several customers and relationship in
the  MTU/MDU   market  with   well-known   service   providers   such  as  Novus
Telecommunications,  and  Solutions,  Inc. The Company has continued its Gigabit
Ethernet  leadership  with  other  technological   partners  including  National
Semiconductor,  IBM, and  Broadcom,  as well as several large  Internet  Service
Providers (ISP's), and corporations.

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

Products

The  Company  offers  both  advanced,  or managed,  systems  products  (hubs and
switches) and simple,  easy to use  unmanaged  systems  products.  The Company's
advanced  switches  and hubs  allow more  sophisticated  users the  ability  for
increased   administration,   system   analysis,   identification   of   network
communication  problems,  and  security  among  other  functions.  Many of these
products offer advanced  management features designed to allow service providers
and other entities  differentiated  software  features highly demanded,  yet now
generally  available on most  competitor's  products  near the price range.  The
Company's  unmanaged products feature easy to use,  Plug-and-Play  operation for
the customer needing convenient  connectivity at a cost-effective price, or just
needing to extend an existing network. The Company's unmanaged, or SOHO products
include Internet  connectivity products (routers),  hubs, switches,  and adapter
cards.

Internet Connectivity Products (Routers)

During fiscal 1999 and 2000, the Company introduced a family of routers designed
to allow multiple SOHO or home users to connect to the Internet at the same time
at increased  speeds.  In fiscal 2000, the Company  introduced a family of award
winning broadband Cable/DSL routers to meet the expanding demands of the rapidly
growing broadband market.  During fiscal 2001, the Company  introduced its first
wireless  Internet  access  products  which have also won  numerous  awards from
Macworld,  Network  Computer  and PC  World.  The  Company  plans  to  introduce
additional  Internet  routers to meet the changing needs of the market.  Current
product development includes additional  wireless,  Digital Subsciber Line (DSL)
modem, an integrated server/router, and other emerging technologies.

The  FriendlyNet  3004 allows up to 12 users to connect to the  Internet via one
Cable  or DSL  modem  and  includes  a  four  port  10/100  switch  for  maximum
performance  and  expandability.  The 3004LC  offers a parallel  printer port in
addition to a serial port for connection to an external  redundant  analog modem
during those times the broadband  connection may be  experiencing  difficulties.
This feature also offers users who have not yet upgraded to broadband an upgrade
path from  analog to  digital.  These  products  have won top honors in PC World
(Best Buy),  MacWorld (4 mice award,  and  recommended  product),  and Macs Only
among other publications.


                                       4
<PAGE>

Wireless Internet Connectivity Products

The  FriendlyNet  3002AL  family  of  wireless  routers  allow up to 12 users to
connect  to the  Internet  via one Cable or DSL modem  and  includes  a two port
10/100  switch  for  maximum   flexibility  and  expandability.   This  wireless
connectivity  allow users to connect to the network or internet  without needing
to run wires to multiple locations within range of the router. The 3002's design
allows users to purchase the router at a low price, and upgrade to wireless at a
later date. In addition,  since the router's flexible  architecture allows users
to add their own wireless PCMCIA card (a credit-card sized, removable module for
portable  computers  standardized by Personal Computer Memory Card International
Association), users can upgrade the router as new technologies become available.
The  3002AL  offers a  parallel  port for print  routing  among all users on the
network, a feature generally not available on most competitive products.

The FriendlyNet  AL1011 wireless PCMCIA not only provides wireless  connectivity
for Windows PCs,  but  integrates  perfectly  with the 3002 family of routers to
provide wireless  connectivity on the router. This adapter is sold separately or
bundled with 3002AL routers.

The FriendlyNet  AeroLan 2011 (AL2001) USB adapter offers wireless  connectivity
to any PC  featuring  an  industry  standard  USB port.  The  AL2001  integrates
seamlessly with the 3002 AL family of routers.

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.

Asante's  IntraCore  Series  Switches were  introduced  during fiscal 2000,  and
currrently  consist of three new  families  of  advanced  managed  multi-service
10/100/1000 Mbps switches. Each product offers Asante's built-in HTTP management
server  software  featuring  Java-enabled  features  as well as  other  advanced
features.

The IntraCore 9000 chassis  multi-service  switches are currently  Asante's most
sophisticated  managed  switches  designed to provide maximum  bandwidth for the
network  backbone  and other  high  congestion  situations,  and offer  multiple
services, hot swappable architecture,  as well as power redundancy. Each chassis
may support up to 192 10/100 ports, or 16 Gigabit ports.  These products feature
advanced management  cababilities including Independent Print Media Group (IPMG)
multicast  pruning which allows  Information  System (IS) managers to filter out
unwanted  Internet  broadcast  messages and unwanted  data,  Virtual  Local Area
Network (VLAN ), Remote Monitoring and Management of the Network (RMON),  Simple
Network Management Protocol (SNMP) mangement, as well as prioritization.

The IntraCore 8000 series of stackable switches offer a similar software feature
set to the IntraCore  9000 series of products.  These  switches  offer true wire
speed (full Gigabit operation in full duplex mode, or bi-directionally)  Gigabit
performance,  and in a test by the Tolly  group in March  2000,  the Company was
rated as having the best value for performance available. Each switch comes with
24 built in 10/100 Ethernet  ports,  and can be stacked up to four switches high
to support up to 192 ports of  10/100,  or 96 10/100  ports and up to 12 Gigabit
ports in a single stack configuration.

The  IntraCore  65120  family of  switches,  introduced  in April  2001,  is the
industry's  first 12 Gigabit  port switch in a 1 unit (1U) high  chassis.  These
powerful  switches come in two  varieties.  The 65120-2G  comes with 10 built in
copper Gigabit ports and 2 Gigabit Interface Converter (GBIC) module slots for a
variety of Gigabit Fiber or Copper  connectivity.  The  65120-12G  comes with 12
built-in  GBIC  slots  and  offers  customers  the  high  value,   features  and
flexibility of connection options.

The new IntraCore 3524 series  10/100/1000Mbps  switches and 6548,  replaced the
popular 6524 series and was introduced in October 2001.  This series of switches
offers  maximum   flexibility   to  meet  the  needs  of  all  managed   network
requirements,  as well as offering the best value and functionality of any Layer
2 switch on the market.  The 3524 switch family offers an extremely rich feature
set  including  24 10/100  ports  plus two  modular  slots for the  addition  of
100Fiber,  1000SX (standard fiber),  1000LX (long haul fiber),  GBIC modules for
the addition of standard  fiber  Gigabit,  copper  Gigabit,  GBICs,  and a large
assortment of advanced multi-service  management features. In addition, the 3524
plans offer the power stackability allowing network managers to manage an entire
stack of 8 switches from a single IP address.

The IntraSwitch 6000 series 10/100 switches provide maximum  bandwidth for those
customers  requiring  solutions for high congestion  situations.  These products
feature an integrated HTTP management server with Java-enabled features, as well
as


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<PAGE>

other advanced  functions.  The  IntraSwitch  6000 series of switches  currently
ships in a 24 port  configurations  and are based on the  Company's  proprietary
application   specific   integrated  circuit  (ASIC),  or  multi-function   chip
technology. In addition, these switches offer the customer additional management
features and a migration path for those customers requiring a Gigabit backplane.

The  FriendlyNet  4000/5000/400  series  switch family  features low cost,  high
performance  10/100 Mbps unmanaged switches for smaller networks and other users
with high  bandwidth  needs.  The  switches  feature  NWay  auto-negotiation  to
automatically determine either 10 or 100 Mbps operation and currently come in 5,
8, 16, and 24 port  configurations.  The 4016 and 4024 may be  rack-mounted  for
ease of set-up and placement in the wiring closet.

The Company also offers the FS3208  FriendlyNet  switch family, a 10 Mbps, eight
port unmanaged switch with two 10/100 port uplinks.

Gigabit Adapters and Other Gigabit Products

Gigabit Over Fiber Solutions

The Company shipped its first Gigabit  products in February 1999. These products
included a full-featured  Gigabit card.  Additionally,  in the second quarter of
fiscal 1999,  the Company  introduced  the industry's  first  unmanaged  Gigabit
switches designed to complement its current switch products and provide high-end
solutions at affordable  prices for those customers with large bandwidth  needs.
The Company's 7000 series  switches  feature 8, 16, and 24 port  solutions.  The
Company  will  continue   investing  in  research  and  development  on  Gigabit
technology  to meet the needs of its  customers  requiring  implementation  of a
Gigabit solution to the backbone of their networks.

The Company  compliments  these switches,  with a high performance  Gigabit over
fiber Ethernet card, for incorporation into a server or to a power user.


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<PAGE>

Gigabit Over Copper Solutions

In 2000, the Company led the industry in  introducing  the world's first Gigabit
Ethernet over copper  unmanaged  system  products in  partnership  with Broadcom
Communications,  Inc. In July 2000,  the Company  announced a joint  partnership
with Apple Computer and Broadcom in a drive to bring affordable Gigabit Ethernet
over Copper to the desktop.  The first  switch  product  introduced  was the GX4
Model 400 switch, which delivers over ten times the available bandwidth per port
of a standard 100 Mbps (Fast Ethernet)  connection,  can transmit and receive at
1000 Mbps  simultaneously,  and comes with circuitry which self-corrects for the
most common types of wiring errors.

The GX4-224 includes two copper 100/1000 ports and 24 10/100 ports.  This switch
offers the best value of 10/100  connectivity  along with two Gigabit  ports for
connection  to a high  speed  server,  or for power  users  compared  with other
solutions on the market today.

The GX4 800 GBIC,  introduced in 2001,  includes six copper 100/1000 ports and 2
GBIC expansion  slots for either Gigabit Fiber or Copper  connectivity to a high
speed server,  power users,  or as a backbone in small and medium sized networks
where network  management is not essential.  The fiber  connectivity also allows
network manager's connectivity between local buildings.

In  November   2000,   the  Company   announced  a  partnership   with  National
Semiconductor  to bring a Gigabit over Copper adapter card to market at a target
price of  approximately  $150, less than half the price of current  competition,
and now  selling in the $100 price  range.  The adapter  ships with  drivers for
Windows,  Unix,  Novell,  and Linux operating  systems.  The Company also offers
another  card in this  family  compatible  with  Apple  OS, in  addition  to the
operating  systems  available  above.  The  Company  continues  to be a  leading
manufacturer of Gigabit Ethernet adapters.

10Base-T/100BASE-TX (Fast Ethernet) Shared Systems

In addition to switches, the Company offers a strong family of dual speed 10/100
Fast  Ethernet  systems and  adapters  to allow  customers  to connect  personal
computers  and high  performance  servers over a corporate  Intranet and offer a
cost effective way to transition to 100BASE-T networking.

The Company's  NetStacker II family of  auto-negotiating  10/100  managed shared
hubs replaced the Company's award winning  NetStacker  family of managed 10 Mbps
stackable  hubs.  Asante's 12 and 24 port 10/100  Netstacker  II stackable  hubs
offer easy,  cost  effective  migration  to a managed  solution  via an optional
management  module.  The family  supports  up to eight  unmanaged  12 or 24 port
stacked  units for up to 192 ports and includes one standard  Media  Independent
Interface (MII) slot on each unit for 100Base-FX connectivity options.

The Company  offers a growing  family of 10/100  unmanaged hub solutions for its
customers. The Company's current products, the FriendlyNet 10/100 Dual Speed hub
family, include stand-alone 5, 8,16, and 24 port 10/100 hubs.


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<PAGE>

Fast Ethernet Adapter Cards

The  Company's   AsanteFast  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 "auto-negotiating" 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 move 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. The Company's PCI cards ship with Windows, Linux, UNIX, Macintosh,  and
Power  PC  drivers  for  cross  platform  compatibility  with  most  significant
operating systems.

The Company also offers  FriendlyNet  10/100 PC Fast Ethernet family of adapters
designed to be  price/technology  leaders for Linux,  Unix,  Windows 98/NT,  and
NetWare.

10BASE-T Systems and Adapter Cards

In  fiscal  2001,  the  trend for  sophisticated  users and many new  businesses
continued to move to 10/100  Ethernet  technology.  However,  the demand for low
cost 10 Mbps  Ethernet  hubs and  switches  from more  price-sensitive  and home
customers remained. The trend to 10/100 technology is particularly strong in the
kindergarten  through  grade 12  education  market and the smaller  SOHO user in
which the Company has a strong  reputation  and product  name  recognition.  The
Company expects that sales levels in the 10 Mbps market will continue to decline
more rapidly as pricing for switching technology and 10/100 Mbps shared Ethernet
technology  have made  adoption  of these  standards  more  attractive,  and the
increasing  use of  Internet  traffic and data,  voice,  and video over the same
cabling begins to necessitate the use of faster speeds for some applications.

The  FriendlyNet  10T Hubs in 5-port  and  8-port  product  configurations  also
comprise a family of inexpensive, non-intelligent Ethernet hubs designed to 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  Macintosh  Computers.  The Company sells an Ethernet  adapter
card and  transceiver  product line  supporting all Macintosh  platforms and all
Ethernet cabling options.  The Company also offers AsantePrint that 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 two to
eight devices such as printers to an Ethernet network. In addition,  the Company
offers  FriendlyNet  media  adapters to connect PC and  Macintosh  computers  or
printers with built-in Ethernet support to an Ethernet network.

Personal Connectivity: USB products

With the increase of faster PCs and LAN communications  comes the ability in the
SOHO and home  networking  market to support an advanced  environment  including
multiple printers and multimedia devices.  USB (Universal Serial Bus) technology
offers users an inexpensive  method to increase a system's  number of ports,  or
connectivity options. These products offer customers additional  connectivity to
networks,  peripherals,  and other  devices such as digital  cameras,  printers,
scanners and the like. Asante currently carries five products in its USB family,
which is one of the industry's easiest to use and most flexible technologies.

USB Hubs. The Company  currently  offers three  FriendlyNet USB hubs to meet the
needs of its  customers.  The  four and  seven  port  USB hubs are  perfect  for
connecting  a  variety  of  USB  peripheral  devices  to a USB  Macintosh  or PC
computer,  allowing  sound,  controller  devices,  cameras  and  the  like to be
connected  easily.  These  FriendlyNet  USB  hubs  offer  auto-partitioning  for
isolation of malfunctioning devices or ports and support a dual power mode.

USB 2.0 Technologies. The Company currently ships technologies based on the new,
high  bandwidth  USB 2.0  standard to major  customers  and  Original  Equipment
Manufacturer  (OEM) accounts.  The Company plans to introduce  products based on
this standard to the general market in fiscal 2002.


                                       8
<PAGE>

Technology

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

The Company was one of the first to ship fully  integrated  management  software
with its products,  providing powerful  capabilities only found in much costlier
third party software products.

Marketing and Distribution

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

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

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

From time to time, the Company pursues OEM opportunities  which it believes make
sense to the Company's current business plan. These  relationships may typically
cause  fluctuations in the Company's  business based on the Company's ability to
locate,  or maintain various OEM opportunities and the ability of the Company to
offer cutting edge, cost effective  technology of interest to its OEM customers.
The Company  will  continue to focus  resources on  obtaining  additional,  cost
effective  agreements  with  larger  OEM  customers,  although  there  can be no
assurance  that such  agreements  will be  obtained.  OEM sales are  expected to
constitute a larger portion of the Company's total sales in fiscal 2002.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for  approximately  23%,  23%, and 24% of the  Company's net sales in
fiscal  years 2001,  2000,  and 1999,  respectively.  From fiscal 2000 to fiscal
2001, the Company  experienced reduced sales in all three geographic regions due
to the downturn affecting the world economy. Of those the greatest impact was in
Europe where sales declined  approximately  35% due to factors  similar to those
encountered  domestically.  Sales in Asia Pacific  decreased  slightly in fiscal
2001,  compared  to the  prior  year due  primarily  to  competition  from  Asia
manufacturing and softness in demand in Macintosh related products.

The Company  intends to continue to introduce new products  through its existing
distribution  channels.  The Company  encourages  the  marketing  efforts of its
distributors with cooperative advertising allowances and incentive-based rebates
and promotes its products and builds brand name  recognition by extensive  trade
advertising, participation in industry trade shows, and other marketing efforts.
As  of  September,  2001,  the  Company  supported  the  sales  efforts  of  its
distributors  with  21  direct  sales  and  support  related  employees  located
throughout the United States who promote the Company's  products within assigned
territories and with 11 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


                                       9
<PAGE>

returns and price  decreases,  any  product  returns or price  decreases  in the
future that exceed the Company's  reserves will  adversely  affect the Company's
business,   financial   condition  and  results  of  operations.   See  Item  7:
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

The  distribution  of  products  such as those  offered by the  Company has been
characterized   by  rapid  change,   including   consolidations   and  financial
difficulties of some distributors and the emergence of alternative  distribution
channels.  In  addition,  there are an  increasing  number of product  suppliers
competing for access to these channels. Distributors may, at their option and at
any time,  cease  marketing the Company's  products  without prior notice to the
Company.  During fiscal 2000,  the Company took action to eliminate  Pinacor,  a
distributor of the Company,  as a primary distributor due to perceived financial
risk. Subsequently,  Pinacor initiated Chapter 11 bankruptcy proceedings. In the
beginning  of the fourth  quarter of fiscal  2000,  the Company  ceased  product
shipments  to Merisel USA, due to a perceived  risk of financial  exposure.  The
debt write-off to these two distributors did not exceed $265,000 in fiscal 2000.
Although  the Company has  increased  its business  with its other  distribution
channels, it does not believe it has completely offset the loss of revenues from
the cessation of business with the two aforementioned distributors,  however the
Company has taken steps to increase its channels which it believes has benefited
the Company  during  fiscal  2001. A reduction in the sales effort by any of the
Company's other major  distributors or the loss of any one of these distributors
would  have a  material  adverse  effect on the  Company's  business,  financial
condition and results of operations. There can be no assurance that future sales
by the Company's  distributors will remain at current levels or that the Company
will be able to retain its current  distributors on terms that are  commercially
reasonable to the Company.  Although the Company  believes,  except as described
above, that its major distributors are currently adequately  capitalized,  there
can be no assurance  that in the future one or more of these  distributors  will
not experience financial  difficulties.  Such difficulties could have a material
adverse effect on the Company.

In fiscal 1998, the Company adopted a limited warranty of its existing unmanaged
products and new 10/100 6000 series managed and 4000 series unmanaged  switches.
Most new  products  contain  limited  warranties  ranging  from one year to five
years. These limited warranties exclude from lifetime coverage the fan and power
supply  included with its products,  due to the shorter life expectancy of these
parts. The Company has not encountered material warranty claims,  although there
can be no assurance that claims will not increase  substantially  over time as a
result of the  change to a limited  warranty  for a  majority  of the  Company's
products.  Future warranty claims exceeding the Company's  reserves for warranty
expense  could  have an  adverse  effect on the  Company's  business,  financial
condition and results of operations. The Company plans on reviewing its warranty
policy as it brings new  products to market to offer its  customers  competitive
policies while reducing its exposure to adverse warranty claims.

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

Backlog

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

Engineering and Product Development

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

As of September 29, 2001,  the Company had 13 employees  engaged in  engineering
and product  development.  During the fiscal  years 2001,  2000,  and 1999,  the
Company's  engineering and product development  expenses were approximately $2.8
million, $3.0 million, and $3.9 million, respectively.

The Company continues to invest  significant  resources in engineering  projects
and will  continue to focus  additional  resources as needed in order to develop
and bring to market additional high technology,  high demand products supporting
both its network systems and the  Intranet/Internet  markets. In particular,  in
fiscal 2002 and going  forward,  the Company will  continue


                                       10
<PAGE>

to  focus  additional   efforts  in  the  areas  of  embedded  software  design,
development  of  additional  switches  and other  LAN-edge  devices,  WAN router
products,  wireless,  and on system integration.  The Company will also continue
product development efforts to expand its Gigabit product offerings.

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

Manufacturing and Suppliers

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

OSE and the Company's other  subcontract  manufacturers  purchase or manufacture
most components,  assemble printed circuit boards, and test and package products
for Asante on a purchase  order,  turnkey  basis.  In fiscal  2001,  the Company
purchased  $1.3  million of goods from OSE and  purchased  $4.8 million of goods
from Delta  Networks,  Inc. (See Note 4 of Notes to Financial  Statements).  The
Company  does  not  have  a  long-term   supply   agreement   with  any  of  its
subcontractors.  If any one of these  subcontractors  experiences  financial  or
operational  difficulties  that result in a  reduction  or  interruption  in the
supply of products to the Company or otherwise fails to deliver  products to the
Company on a timely basis,  the Company would be required to procure  sufficient
manufacturing  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,  Delta and other offshore
subcontractors  subjects  the Company to certain  risks of  conducting  business
internationally,  including changes in trade policy and regulatory requirements,
tariffs and other trade barriers and restrictions,  and changes in the political
or  economic  environment  in Taiwan  and other  countries  where the  Company's
subcontractors are located.

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


                                       11
<PAGE>

Competition

The markets for the Company's products are highly  competitive,  and the Company
believes that such competition will continue to intensify. Competitive trends in
the Company's markets are continuing declines in average selling prices, coupled
with improvements in product features and performance.  The Company expects such
trends too continue.

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

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

In the Macintosh client access market,  Apple 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,  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  2001,  a smaller  portion  of the  Company's  sales  represented
products  sold to OEMs than in fiscal  2000.  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  acquisition  or loss of a
single large OEM customer or several smaller OEM customers would have a material
effect on the Company's revenues.  Unless the Company signs additional large OEM
agreements in the near future,  the Company expects that OEM sales will increase
slightly as a percentage of total revenue in fiscal 2002.

A significant  percentage of the Company's  sales in fiscal 2001 and fiscal 2000
was derived from  products  designed for use with  Macintosh  Power PC, and iMAC
computers.  Sales of these  products as a percentage of total  Company  revenue,
excluding OEM sales,  have steadily  declined over the last several years due to
Apple's  competition in the Company's  adapter card market and  incorporation of
Ethernet into the  motherboard  of a large portion of its products,  and Apple'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  is  currently  evaluating  several  domestic  and  foreign  patent
applications  relating to its  software and systems  technology.  The Company is
currently filing renewals on several of its existing patents.


                                       12
<PAGE>

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

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

Employees

As of  September  29,  2001,  the  Company  had 74  employees,  including  13 in
engineering  and product  development,  17 in  manufacturing  operations,  30 in
marketing,  sales and support services, and 14 in corporate administration.  The
number reflects a small increase in sales, marketing and support services,  when
compared to fiscal 2000.

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
44,700 square foot facility under a lease that expires on August 31, 2004,  with
an option to extend for an additional five years. During 1999 the Company closed
the majority of its leased sales  offices in connection  with its  restructuring
activities.  The Company currently has leased sales offices in Utah, and Oregon.
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 7 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.

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  sought  unspecified  damages  in  excess  of  $75,000  and  permanent
injunctive  relief.  The  Company  filed a  response  to the  complaint  denying
liability. The case was consolidated, for purposes of claim interpretation, with
similar  cases filed against  several other  defendants,  which  include,  among
others, Intel Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems. On April 16,1998, a Special Master appointed by the court issued a
report agreeing in most material respects with the defendants' interpretation of
the alleged patent claims.  Subsequently,  by order dated November 23,1998,  the
District Court adopted without  modification  the findings of the Special Master
and the  recommendations of the


                                       13
<PAGE>

Magistrate  Judge regarding claim  interpretation  of the  patents-in-suit.  The
Court  ordered  dismissal  of the case,  and  entered  judgment  in favor of all
defendants. Plaintiff has filed an appeal of the judgment to the Federal Circuit
Court of Appeal,  which is now pending.  Oral arguments on the appeal were heard
December 3, 2001, and a decision is expected in the next several weeks.

In September 1999 certain inventory having a cost of approximately  $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL"). It is the
Company's  position that the alleged improper use was simply a mistake or error.
The  Company  may  obtain  the  return  of  the  inventory  through   settlement
negotiations  with either the United States Customs or United States  Attorney's
Office,  obtaining  permission from UL to use the certification  marks, or being
successful in trial proceedings.  To contest the seizure, the Company determined
to seek a review with the United States  Attorney's Office and filed a claim for
the inventory.  It is now incumbent upon the United States  Attorney's Office to
file in court seeking  forfeiture  of the  inventory  and allow the Company,  as
claimant, to challenge such proceeding. The Company also expects that the United
States  Customs may issue a penalty  separate  from the seizure  under 19 U.S.C.
section 1526(f),  which provides for a penalty ranging in amount from the retail
value of the seized  inventory had the inventory been UL approved,  to twice the
retail value. The Company asserts this is a first time offense. For a first time
offense,  the United States Customs may mitigate the penalties  when  challenged
administratively,  with such mitigation  being as low as 10% of the value of the
inventory.   The  Company   intends  to  contest  any  penalty   action  through
administrative  and/or  judicial  procedures.  On April 28,  2000,  the  Company
submitted a settlement  proposal to the United States Attorney's Office offering
settlement  of the  case.  The  Company  has not  yet  received  a reply  to its
settlement proposal.  Despite a recent federal case which upheld the US. Customs
authority to seize and penalize for improper use of the UL  certification  mark,
the U.S. Attorney recently stated that he would still consider settlement of the
Company's case in the near future due to factual differences.

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of fiscal 2001.

EXECUTIVE OFFICERS OF THE COMPANY

The executive  officers of the Company,  their ages as of December 10, 2001, and
certain information regarding each of them are as follows:

       Name               Age              Position with the Company

Wilson Wong               54        President and Chief Executive Officer
Rusty Callihan            52        Vice President of Sales
Anthony Contos            38        Vice President of Finance and Administration
Jim Hsia                  39        Vice President of Marketing
Chiu K. Fung              54        Vice President of Operations
Robert Young*             57        Vice President of Operations

* Mr Robert Young resigned as Vice President of Operations in April 2001.

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

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

Mr.  Anthony  Contos  joined the  Company  in June 1994,  and has served as Vice
President of Finance and  Administration,  and corporate  Secretary since August
1999.  From  October  1997 to August 1999 he served as the  Company's  Corporate


                                       14
<PAGE>

Controller/Director  of Finance.  Prior to joining the Company Mr.  Contos was a
financial  consultant for Electronic Arts, Inc. where he was responsible for the
international  consolidation activities.  Prior to that he was the financial and
operations analyst with Ross Stores.

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

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


                                       15
<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.  The Company's  Common Stock traded on the NASDAQ  National Market
System under the trading symbol ASNT until  September 30, 1999 at which time the
Company's Common Stock commenced trading on the Over-the-Counter  (OTC) Bulletin
Board under the trading symbol ASNT.OB.

Fiscal 2001                         High                      Low

First quarter                      $1 5/16                $   7/16
Second quarter                     $1 1/8                 $   1/2
Third quarter                      $  7/8                 $   1/12
Fourth quarter                     $  5/8                 $   1/8

Fiscal 2000                         High                      Low

First quarter                      $5 1/8                 $  11/16
Second quarter                     $3 3/8                 $1 11/16
Third quarter                      $2 5/8                 $   7/8
Fourth quarter                     $2 1/8                 $   7/8

As of November 30, 2001,  there were 99  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 market price of the Company's  Common Stock may
not be indicative of current or future performance.

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

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
(In thousands, except per share data)                                          Year ended
                                                      2001             2000           1999             1998            1997
<S>                                          <C>              <C>             <C>               <C>             <C>
Statement of Operations Data:

Net sales                                    $      22,074    $     29,280    $    37,488       $    51,433     $    83,279

Income (loss) from operations                $     (1,177)    $        200    $   (13,863)      $  (12,450)     $     2,331

Net income (loss)                            $       (949)    $        392    $   (14,161)      $  (14,435)     $     1,926

Diluted net income (loss) per share          $      (0.10)    $       0.04    $    (1.53)       $    (1.57)     $      0.21

Balance Sheet Data:

Working Capital                              $     2,483      $     3,251     $       751       $   13,645      $    26,727

Total assets                                 $     9,366      $    13,222     $    13,345       $   30,359      $    40,567

Stockholders' equity                         $     2,772      $     3,679     $     1,682       $   15,850      $    29,874
</TABLE>


                                       16
<PAGE>

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

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

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

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  29, 2001,
September 30, 2000, and October 2, 1999, respectively:

                                             2001          2000          1999
Net sales                                    100.0 %        100.0 %      100.0 %
Cost of sales                                 64.0           63.4         86.8
Gross profit                                  36.0           36.6         13.2
Operating expenses:
   Sales and marketing                        22.2           20.2         33.6
   Research and development                   12.5           10.4         10.4
   General and administrative                  6.6            5.3          6.1
     Total operating expenses                 41.3           35.9         50.1
Income (loss) from operations                 (5.3)           0.7        (37.0)
Interest and other income (expense), net       1.0            0.6         (0.8)
Income (loss) before income taxes             (4.3)           1.3        (37.8)
Provision (benefit) for income taxes            --             --           --
Net income (loss)                             (4.3) %         1.3 %      (37.8)%

Net Sales

Net sales decreased 24.6% to $22.1 million in fiscal 2001, from $29.3 million in
fiscal 2000.  Net sales were $37.5  million in fiscal 1999.  The decrease in net
sales from fiscal 2000 to fiscal 2001 was due to several  factors  including the
economic  downturn in the high tech industry and network industry in particular.
Additionally,  heavy competitive  pressures for unmanaged 10/100 products and to
some extent,  the continued  incorporation  of Ethernet onto the  motherboard of
Apple's newer computers,  has negatively affected the Company's results.  During
fiscal 2001,  sales of unmanaged hubs decreased $2.9 million,  from $5.6 million
in fiscal 2000 to $2.6 million in 2001,  reflecting  slower economic  conditions
and the continued  transition from shared systems  products to switches.  During
this same period,  sales of 10/100 unmanaged  switches remained constant at $3.4
million.

In fiscal 2001, 2000, and 1999, one customer,  Ingram Micro, Inc.,  distributor,
accounted for 43%, 48%, and 42%, respectively, of the Company's total sales.

The  decrease  in net sales from  fiscal  1999 to fiscal 2000 was due to several
factors including heavy competitive pressures and the continued incorporation of
Ethernet onto the  motherboard  of Apple's newer  computers  causing a continued
decline  in  older  connectivity  products  of  approximately  $4.7  million,  a
reduction in unmangaged hubs of $2.1 million due to price declines and reduction
in sales of 10 Mbps products, a reduction in managed systems of $2.2 million due
to the continuing  decline in shared


                                       17
<PAGE>

systems,  and the late  introduction  of the Company's  IntraCore  8000 and 9000
switches due to delays in availability  of certain ASIC's.  These decreases were
partially  offset  by  introduction  of  the  Company's  new  unmanaged  Gigabit
products, Cable/DSL routers, and USB products.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for 23%,  23%, and 24% of net sales in fiscal 2001,  2000,  and 1999,
respectively  as  a  percentage  of  total  sales.  International  revenue  as a
percentage remained constant during fiscal 2001, compared to fiscal 2000, as the
economic  downturn has affected the  networking  industry  internationally.  The
Company  believes that the demand in the MTU, and the MDU market is  particulary
strong  in Asia and to some  extent  in  Europe.  Therefore,  the  Company  will
continue to focus its efforts on increasing sales  internationally over the next
several  quarters  but there  cannot be any  assurance  that its efforts will be
successful.

The decline in  international  sales in fiscal 2000, from fiscal 1999 was caused
by reduced sales in Europe due primarily to price decreases and competition from
Asian manufacturers.

The Company  believes that the economic down turn beginning just prior to fiscal
2001,  will  continue  during  fiscal  2002.  Although  the Company  experienced
significant  unit  sales  increases  in  certain  products  such as its  Gigabit
Ethernet  Products,  and  Internet  routers,  price  declines  partially  offset
increases in sales quantities.  The Company believes that the competition in the
markets in which it competes has  intensified  and will continue to intensify as
existing and potential competitors  introduce competing products.  Consequently,
the Company  anticipates  that the selling prices of its existing  products will
continue to decline and that sales of older  managed  products and adapter cards
as a percent of total sales will continue to decline in fiscal 2002. The Company
will continue to focus on those markets it believes it can increase its revenues
and will continue to seek to increase its OEM revenues, compared to fiscal 2001.

Cost of Sales and Gross Profit

The Company's gross profit as a percentage of net sales decreased  marginally to
36.0%,  in fiscal 2001,  from 36.6% in fiscal 2000.  The decrease in fiscal 2001
compared  to fiscal 2000 was  primarily  due to reduced  selling  prices for its
products, which was substantialy offset by the stronger inventory and purchasing
controls.  During  fiscal 2001,  sales prices  continued to be affected by heavy
competitive  pricing pressures.  In response to this, the Company has brought to
market and plans to continue to bring to market lower cost replacement products.
Although the Company  believes it is in a competitive  position at present,  the
Company will continue to take additional  measures going forward to maintain its
competitiveness in the market place.

The increase in fiscal 2000 compared to fiscal 1999 was primarily due to tighter
controls over inventories, improved management of product life cycles leading to
reduced write-offs of obsolete products,  reduced channel discounts, and reduced
price  protection  activities  resulting from reduced levels of inventory in the
distributor  channel.  Additionally,  the Company has realized overhead benefits
from moving its manufacturing offshore.

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

Sales and Marketing

Sales and  marketing  expenses were $4.9 million in fiscal 2001 compared to $5.9
million in fiscal 2000,  or a decrease of 17%.  Fiscal 2000 sales and  marketing
expenses decreased $6.7 million,  or 53.0%,  compared to $12.6 million in fiscal
1999.  As a percentage of net sales,  sales and  marketing  expenses were 22.2%,
20.2%,  and 33.6%,  in fiscal 2001,  2000, and 1999,  respectively.  The reduced
fiscal 2001  expenditures  reflect  reduced sales levels during fiscal 2001. The
reduced fiscal 2000  expenditures,  reflect tighter  controls over  advertising,
Co-operative   advertising  programs,   and  mail  order  related  expenditures,
reduction of unprofitable channels, reduced personnel and related costs, and the
effect of lower revenue levels.

The Company expects that its sales and marketing expenses will remain at current
levels,  or increase  slightly in fiscal  2002 in absolute  dollars,  but should
remain fairly constant as a percentage of total sales.


                                       18
<PAGE>

Research and Development

Research and  development  expenses  decreased by 9.4% to $2.8 million in fiscal
2001, from $3.0 million in fiscal 2000.  Research and development  expenses were
$3.9  million  in fiscal  1999.  As a  percentage  of net  sales,  research  and
development  expenses were 12.5%,  10.4%,  and 10.4%, in fiscal 2001,  2000, and
1999,  respectively.  The decrease in research  and  development  expenses  from
fiscal  2000  to  fiscal  2001  was  due  to  decreases  in  personnel   related
expenditures as a result of lower staffing levels, and depreciation expense. The
decrease in research and  development  expenses  from fiscal 1999 to fiscal 2000
was also due to decreases in personnel related expenditures as a result of lower
staffing levels, and depreciation expense.

The Company  expects that  spending on research and  development  in fiscal 2002
will  increase  in  comparison  to fiscal 2001 in  absolute  dollars,  while the
Company will  continue to leverage the  engineering  expertise of its  strategic
partners.

General and Administrative

General and  administrative  expenses  decreased  to $1.5 million in fiscal 2001
from $1.6 million in fiscal 2000. General and administrative  expenses were $2.3
million in fiscal 1999. As a percentage of net sales, general and administrative
expenses  were  6.6%,  5.3%,  and 6.1% in fiscal  years  2001,  2000,  and 1999,
respectively.  The decrease in general and  administrative  expenses in absolute
dollars in fiscal  2001 is  primarily  related to  reduced  legal and  personnel
related  expenditures.  The decrease in general and  administrative  expenses in
absolute dollars in fiscal 2000,  compared to fiscal 1999, is primarily  related
to reduced consulting, personnel and outside service related expenditures.

The  Company  expects  that  general  and  administrative  expenses  will remain
constant in fiscal 2002 in absolute dollars.

Income Taxes

The Company  recorded no provision for federal and state income taxes for fiscal
2001,  2000, or 1999 due  principally  to a valuation  allowance on deferred tax
assets being  recorded and the Company's net operating loss carry forwards being
sufficient to offset any significant  tax liability.  The Company has recorded a
full  valuation  allowance on its deferred tax assets as sufficient  uncertainty
exists regarding its  recoverability.  The Company's effective tax rate was 0.0%
for fiscal 2001, 2000, and 1999, respectively.


                                       19
<PAGE>

Liquidity and Capital Resources

During  fiscal  2001,  the  Company's  operating  activities  used  cash of $1.4
million. During fiscal 2000, the Company's operating activities provided cash of
$0.1 million. During fiscal 1999 the Company's operating activities used cash of
$3.9 million.

During fiscal 2001,  net cash used in  operations  resulted  primarily  from the
Company's net loss of $0.9 million,  and a decrease in both accounts payable and
accrued expenses of $1.3 million.  These uses were partially offset primarily by
decreases  in  accounts  receivable  and  inventories  of $1.3  million and $0.8
million, respectively.

During fiscal 2000, net cash provided by operating activities resulted primarily
from the net income of $0.4  million and a reduction in accounts  receivable  of
$1.2 million.  Such cash provided was partially offset by reductions in accounts
payable and shareholder payable of $1.3 million and $0.6 million,  respectively.
Depreciation  and  amortization  and provisions for losses of inventory  totaled
$2.6 million.  Days of sales outstanding in accounts receivable,  net, decreased
to 30 days at the end of fiscal  2000  compared  to 45 days at the end of fiscal
1999.

Net cash  used in  investing  activities  in  fiscal  2001 and  fiscal  2000 was
insignificant.  In  fiscal  2001,  purchases  of  property  and  equipment  were
insignificant.  In fiscal 2000 and 1999,  purchases  of property  and  equipment
totaled $0.1 and $0.1 million,  respectively.  In fiscal 2001, net cash provided
by financing activities was insignificant.  In fiscal 2000, net cash provided by
financing  activities  amounted  to  $1.6  million,  due  primarily  to  private
placement  equity  amounting  to $1.5  million.  In  fiscal  1999,  cash used in
financing activities was insignificant.

At September 29, 2001,  the Company had cash,  cash  equivalents  and short-term
investments  of $5.1 million  compared to $6.4  million at  September  30, 2000.
Working capital was $2.5 million at September 29, 2001, compared to $3.3 million
at September 30, 2000. As of December 1, 2001,  the Company had renewed its line
of credit for $3.0  million,  which will  expire on  December 1, 2002 and covers
eligible receivables. The Company's ability to borrow under this line is subject
to compliance with covenants related to financial performance and condition,  as
well as the amount of eligible receivables.

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

The Company  operates in a highly  competitive  market  characterized by rapidly
changing  technology,  together  with  competitors  and  distributors  that have
significantly  greater financial  resources than Asante.  The Company intends to
incur  significant  expenses to develop  and promote new  products as well as to
support existing product sales. Failure to generate sufficient revenues from new
and  existing  products,   raise  additional  capital  or  reduce  discretionary
expenditures  would have a material  adverse affect on the Company's  ability to
achieve its intended business objectives.

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 2002. However, the Company has incurred  substantial  operating losses in
the past and may seek  additional  financing.  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.

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


                                       20
<PAGE>

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.  The job market in the San  Francisco Bay
Area is characterized by fierce competition, rapidly changing salary structures,
and a shortage of the workforce in general.  These  conditions  could affect the
Company's ability to retain and recruit a sufficiently qualified workforce.

The Company's current  manufacturing and sales structure is particularly subject
to various risks associated with  international  operations  including  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  adversely  affect the Company's  business,
financial  condition  and results of  operations.  The  networking  industry and
technology  markets in general have been  affected by a widespread  reduction in
demand for products  due to  financial  problems  experienced  by many  Internet
Service  Provider's  (ISP's),  and the failure of many Internet  companies.  The
duration,  or  long-term  effect on the  Company's  operations  is  difficult to
measure,  but the inability to alter its  structure,  or react  properly to this
slowdown could have an adverse effect on the Company's financial position.

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

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

The  Company  commits  to  expense  levels,  including  manufacturing  costs and
advertising  and promotional  programs,  based in part on expectations of future
net sales levels. If future net sales levels in a particular quarter do not meet
the Company's  expectations or the Company does not bring new products timely to
market,  the Company may not be able to reduce or reallocate such expense levels
on a timely basis, which could adversely affect the Company's operating results.
There can be no assurance that the Company will be able to achieve profitability
on a quarterly or annual basis in the future.

The Company's target markets include end-users,  value-added resellers,  systems
integrators,  retailers,  and OEMs. Due to the relative size of the customers in
some of these  markets,  particularly  the OEM  market,  sales in any one market
could fluctuate dramatically on a quarter to quarter basis.  Fluctuations in the
OEM market could materially  adversely affect the Company's business,  financial
condition and results of operations.

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,  the current economic
recession  and  seasonal  purchasing  patterns  specific  to  the  computer  and
networking industries as discussed above. The Company's future operating results
will depend,  to a large extent,  on its ability to anticipate and  successfully
react to these and other factors.  Failure to anticipate and successfully  react
to these and other  factors  could  adversely  affect  the  Company's  business,
financial condition and results of operations.


                                       21
<PAGE>

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

Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations."
SFAS 141 requires the purchase  method of accounting  for business  combinations
initiated  after June 30, 2001 and eliminates the  pooling-of-interests  method.
The Company  believes  that the adoption of SFAS 141 will not have a significant
impact on the  Company's  financial  position,  results of  operations  and cash
flows.

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is effective for
fiscal years beginning after March 15, 2001. SFAS 142 changes the accounting for
goodwill  from  an  amortization  method  to an  impairment  only  approach.  In
addition,   the   standard   includes   provisions   upon   adoption   for   the
reclassification  of  certain  existing  recognized   intangibles  as  goodwill,
reassessment   of  the  useful   lives  of  existing   recognized   intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the testing for  impairment  of existing  goodwill  and other  intangibles.  The
Company is currently assessing but has not yet determined the impact of SFAS 142
on the Company's financial position, results of operations and cash flows.

In June 2001, the FASB Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-25 ("EITF 00-25"), "Vendor Income Statement Characterization of Consideration
Paid to a  Reseller  of the  Vendor's  Products."  EITF  00-25  establishes  the
treatment  in the income  statement  of vendor  consideration  to resellers of a
vendor's products.  EITF 00-25 is effective for the interim and year end periods
beginning after December 15, 2001. The Company has not yet determined the impact
that  adoption of this issue will have on the Company's  consolidated  financial
position, results of operations and cash flows.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS  144"),  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets," which is effective for fiscal years  beginning  after December 15, 2001
and interim  periods  within  those fiscal  periods.  SFAS 144  supersedes  FASB
Statement No. 121 and APB Opinion No. 30, however, it retains the requirement of
Opinion No. 30 to report  discontinued  operations  separately  from  continuing
operations  and extends  that  reporting to a component of an entity that either
has been disposed of (by sale, by  abandonment,  or in a distribution to owners)
or is classified as held for sale. SFAS 144 addresses  financial  accounting and
reporting for the  impairment of certain  long-lived  assets and for  long-lived
assets to be  disposed  of. The Company  believes  that SFAS 144 will not have a
material  impact on the  financial  position  or  results of  operations  of the
Company.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk. As of September 29, 2001,  the Company's cash and investment
portfolio  comprised  primarily  money  market  securities,  and did not include
fixed-income  securities.   Due  to  the  short-term  nature  of  the  Company's
investment portfolio, an immediate 10% change in interest rates would not have a
material effect on the fair market value of the Company's  portfolio.  Since the
Company  has the ability to  liquidate  this  portfolio,  it does not expect its
operating  results or cash flows to be  materially  affected to any  significant
degree  by the  effect  of a  sudden  change  in  market  interest  rates on its
investment portfolio.

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


                                       22
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         Index to Financial Statements and Financial Statement Schedule

Financial Statements:

<TABLE>
<S>                                                                                                                        <C>
           Report of Independent Accountants                                                                               24

           Balance Sheets at September 29, 2001, and September 30, 2000                                                    25

           Statements of Operations for the years ended September 29, 2001,
                  September 30, 2000, and October 2, 1999                                                                  26

           Statements of Stockholders' Equity for the years ended
                  September 29, 2001, September 30, 2000, and October 2, 1999                                              27

           Statements of Cash Flows for the years ended September 29, 2001, September 30, 2000,
                  and October 2, 1999                                                                                      28

           Notes to Financial Statements                                                                                   29

           Quarterly Results of Operations (unaudited)                                                                     40

Financial Statement Schedule:

           Schedule II - Valuation and Qualifying Accounts and Reserves                                                    46
</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.


                                       23
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

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

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all material  respects,  the  financial  position of Asante
Technologies, Inc. at September 29, 2001 and September 30, 2000, and the results
of its  operations  and its cash flows for each of the three years in the period
ended  September 29, 2001 in conformity  with  accounting  principles  generally
accepted in the United  States of America.  In  addition,  in our  opinion,  the
financial statement schedule listed in the accompanying index present fairly, in
all  material  respects,   the  information  set  forth  therein  when  read  in
conjunction with the related financial  statements.  These financial  statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statement  schedule based on our audits.  We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
San Jose, California
November 2, 2001, except for note 9,
as to which the date is December 1, 2001


                                       24
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

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

<TABLE>
<CAPTION>
                                                                       September 29,   September 30,
                                                                            2001            2000
                                                                       --------------  --------------
<S>                                                                        <C>              <C>
Assets

Current assets:
     Cash and cash equivalents                                             $ 5,065          $ 6,433
     Accounts receivable, net of allowance for doubtful accounts,
       rebates and sales returns of $3,572 and $4,193 in 2001
       and 2000, respectively                                                1,764            3,233
     Inventory                                                               1,848            2,605
     Prepaid expenses and other current assets                                 400              523

                                                                           -------          -------
          Total current assets                                               9,077           12,794

Property and equipment, net                                                    117              261
Other assets                                                                   172              167

                                                                           -------          -------
          Total assets                                                     $ 9,366          $13,222
                                                                           =======          =======

Liabilities and stockholders' equity

Current liabilities:
     Accounts payable                                                      $ 2,469          $ 3,776
     Accrued expenses                                                        4,117            5,437
     Payable to stockholder                                                      8              330

                                                                           -------          -------
          Total current liabilities                                          6,594            9,543
                                                                           -------          -------

Commitments and contingencies (Notes 7 and 8)

Stockholders' equity:
     Preferred stock, $0.001 par value; 2,000,000 shares authorized;
       no shares issued or outstanding in 2001 and 2000                         --               --
     Common stock, $0.001 par value; 25,000,000 shares authorized;
       10,003,181 and 9,912,463  shares issued and outstanding in
       2001 and 2000, respectively                                              10               10
     Additional paid-in capital                                             28,402           28,360
     Accumulated deficit                                                   (25,640)         (24,691)

                                                                          --------         --------
          Total stockholders' equity                                         2,772            3,679
                                                                          --------         --------

          Total liabilities and stockholders' equity                      $  9,366         $ 13,222
                                                                          ========         ========
</TABLE>


    The accompanying notes are an integral part of these financial statements


                                       25
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                            STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                       Year ended
                                                  -------------------------------------------------------
                                                    September 29,      September 30,       October 2,
                                                        2001               2000               1999
                                                  -----------------  -----------------  -----------------
<S>                                                       <C>                <C>                <C>
Net sales                                                 $ 22,074           $ 29,280           $ 37,488
Cost of sales                                               14,134             18,555             32,557

                                                  -----------------  -----------------  -----------------
Gross profit                                                 7,940             10,725              4,931
                                                  -----------------  -----------------  -----------------

Operating expenses:
     Sales and marketing                                     4,897              5,930             12,609
     Research and development                                2,756              3,042              3,883
     General and administrative                              1,464              1,553              2,302
                                                  -----------------  -----------------  -----------------
          Total operating expenses                           9,117             10,525             18,794
                                                  -----------------  -----------------  -----------------

Income (loss) from operations                               (1,177)               200            (13,863)
Interest and other income (expense), net                       228                192               (298)
                                                  -----------------  -----------------  -----------------

Net income (loss)                                           $ (949)             $ 392          $ (14,161)
                                                  =================  =================  =================


Basic income (loss) per share                              $ (0.10)            $ 0.04            $ (1.53)
                                                  =================  =================  =================
Diluted income (loss) per share                            $ (0.10)            $ 0.04            $ (1.53)
                                                  =================  =================  =================

Shares used in per
     share calculation

     Basic                                                   9,948              9,620              9,282
                                                  =================  =================  =================
     Diluted                                                 9,948             10,014              9,282
                                                  =================  =================  =================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       26
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

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

<TABLE>
<CAPTION>
                                                                    Additional                                    Total
                                                Common Stock         Paid-in      Treasury     Accumulated     Stockholders'
                                             Shares       Amount     Capital       Stock         Deficit          Equity
                                        ----------------  --------  ----------  ------------- ---------------  -------------
<S>                                          <C>             <C>     <C>               <C>         <C>              <C>
Balances as of October 3, 1998                9,270,393         9      26,791            (28)        (10,922)        15,850

Common stock issued under stock plans            82,379        --          82                                            82

Repurchase of common stock                      (51,500)       --                        (89)                           (89)

Net loss                                                                                             (14,161)       (14,161)
                                         --------------- --------- ----------- ------------------------------ --------------

Balances as of October 2, 1999                9,301,272         9      26,873           (117)        (25,083)         1,682

Common stock issued under stock plans           111,191        --         (13)           117                            104

Issuance of common stock
     in private placement                       500,000         1       1,500             --                          1,501

Net income                                                                                               392            392
                                         --------------- --------- ----------- ------------------------------ --------------

Balances as of September 30, 2000             9,912,463        10      28,360             --         (24,691)         3,679
                                         --------------- --------- ----------- ------------------------------ --------------

Common stock issued under stock plans            90,718        --          42             --                             42

Net loss                                                                                                (949)          (949)
                                         --------------- --------- ----------- ------------------------------ --------------

Balances as of September 29, 2001            10,003,181      $ 10    $ 28,402          $  --       $ (25,640)       $ 2,772
                                          ==============  ========  ==========  ============= ===============  =============
</TABLE>


                                       27
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                           Year ended
                                                                      ------------------------------------------------------
                                                                       September 29,      September 30,       October 2,
                                                                           2001               2000               1999
                                                                      ----------------   ----------------   ----------------
<S>                                                                           <C>                <C>                <C>
Cash flows from operating activities:

     Net income (loss)                                                         $ (949)             $ 392          $ (14,161)
     Adjustments to reconcile net income (loss) to
       net cash provided by (used in) operating activities:
         Depreciation and amortization                                            184                563                986
         Provision for doubtful accounts receivable                               138                 19                341
         Loss due to write-off of idle assets                                       -                  4                425
     Changes in operating assets and liabilities:

         Accounts receivable                                                    1,331              1,162              3,573
         Inventory                                                                757                 58              5,010
         Prepaid expenses and other current assets                                123                  6              2,755
         Accounts payable                                                      (1,307)            (1,251)            (2,687)
         Accrued expenses and other                                            (1,320)              (268)               906
         Payable to stockholder                                                  (322)              (601)            (1,065)
                                                                      ----------------   ----------------   ----------------
                 Net cash provided by (used in) operating activities           (1,365)                84             (3,917)
                                                                      ----------------   ----------------   ----------------

Cash flows from investing activities:

     Purchases of property and equipment                                          (40)              (115)              (120)
     Other                                                                         (5)                51                  -
                                                                      ----------------   ----------------   ----------------
                 Net cash used in investing activities                            (45)               (64)              (120)
                                                                      ----------------   ----------------   ----------------

Cash flows from financing activities:

     Issuance of common stock                                                      42              1,605                 82
     Repurchase of common stock                                                                        -                (89)
                                                                      ----------------   ----------------   ----------------
                 Net cash provided by (used in) financing activities               42              1,605                 (7)
                                                                      ----------------   ----------------   ----------------

Net increase (decrease) in cash and cash equivalents                           (1,368)             1,625             (4,044)
Cash and cash equivalents at beginning of year                                  6,433              4,808              8,852
                                                                      ----------------   ----------------   ----------------
Cash and cash equivalents at end of year                                      $ 5,065            $ 6,433            $ 4,808
                                                                      ================   ================   ================
</TABLE>

    The accompanying notes are an integral part of these financial statements


                                       28
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS

Note 1. The Company and Summary of Significant Accounting Policies

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

In fiscal  years 2001 and 1999,  the  Company  incurred  substantial  losses and
negative cash flows from  operations  and as of September 29, 2001,  the Company
had an accumulated  deficit of $25.6 million.  For the year ended  September 29,
2001, the Company  recorded a loss from  operations of $1.2 million and had cash
used from operating activities of $1.4 million.

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

The Company  operates in a highly  competitive  market  characterized by rapidly
changing  technology,  together  with  competitors  and  distributors  that have
significantly  greater financial  resources than Asante.  The Company intends to
incur  significant  expenses to develop  and promote new  products as well as to
support existing product sales. Failure to generate sufficient revenues from new
and  existing  products,   raise  additional  capital  or  reduce  discretionary
expenditures  would have a material  adverse effect on the Company's  ability to
achieve its intended business objectives.

The Company  historically  has been heavily  associated with Apple and therefore
had focused its business 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, iMACs, and Power PCs, further incorporation by
Apple of networking connectivity into their products, 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.


                                       29
<PAGE>

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  and  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  is  recognized,  including  freight
charges, when a definite arrangement exists, upon shipment to the customer, upon
fulfillment  of  acceptance  terms,  if  any,  when no  significant  contractual
obligations remain  outstanding,  price is fixed and determinable and collection
is considered  probable.  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.

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 or
purchase  periods  of  greater  than 90 days to be  short-term  investments.  At
September  29,  2001  and  September  30,  2000,  the  Company  did not hold any
short-term investments.

Concentration of credit risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  principally of cash  equivalents  and accounts  receivable.
Accounts  receivable  are  typically  unsecured  and are derived from  worldwide
distributor  and  customer   revenues.   The  Company  performs  ongoing  credit
evaluations of its customers and maintains reserves for potential credit losses;
historically,  such  losses  have  been  within  management's  expectations.  At
September 29, 2001 and September 30, 2000 four customers  accounted for 64%, and
62%,  respectively,  of the accounts  receivable  balance.  In fiscal 2001,  one
customer  accounted for 46% of the Company's  sales. In fiscal 2000 and 1999 one
customer accounted for 48% and 42%, respectively, of the Company's sales.

Inventory

Inventory is stated at the lower of standard  cost,  which  approximates  actual
cost (on a first-in, first-out basis), or market. Appropriate adjustments of the
inventory  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  capital  leases is  amortized  over the shorter of its
estimated useful life or lease term and included in depreciation expense.

Long-lived assets

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

Income taxes

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

Research and development costs

Research  and  development   costs  are  expensed  as  incurred.   Research  and
development  of new software  products  and  enhancements  to existing  software
products  are  expensed as incurred  until  technological  feasibility  has been
established. The Company believes its current process for developing software is
essentially  completed  concurrently  with the  establishment  of


                                       30
<PAGE>

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

Stock-based compensation

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

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

Fair value of financial instruments

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

Comprehensive income (loss)

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

Reclassifications

Certain  previously  reported  amounts in the fiscal 2000 and 1999 statements of
operations have been reclassified to conform to the 2001 presentation.

Segment information

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

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

                                       2001          2000         1999

         United States                   77%           77 %         76%
         Europe                          12            15           18
         Other                           11             8            6
                                        100%          100%         100%

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

Recently issued accounting pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations."
SFAS 141 requires the purchase  method of accounting  for business  combinations
initiated  after June 30, 2001 and eliminates the  pooling-of-interests  method.
The Company  believes  that the adoption of SFAS 141 will not have a significant
impact on the  Company's  financial  position,  results of  operations  and cash
flows.

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which is effective for
fiscal years beginning after March 15, 2001. SFAS 142 changes the accounting for
goodwill  from  an  amortization  method  to an  impairment  only  approach.  In
addition,   the   standard   includes   provisions   upon   adoption   for   the
reclassification  of  certain  existing  recognized   intangibles  as  goodwill,
reassessment   of  the  useful   lives  of  existing   recognized   intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the testing for  impairment  of existing  goodwill  and other  intangibles.  The
Company is currently assessing but has not yet determined the


                                       31
<PAGE>

impact of SFAS 142 on the Company's  financial  position,  results of operations
and cash flows.

In June 2001, the FASB Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-25 ("EITF 00-25"), "Vendor Income Statement Characterization of Consideration
Paid to a  Reseller  of the  Vendor's  Products."  EITF  00-25  establishes  the
treatment  in the income  statement  of vendor  consideration  to resellers of a
vendor's products.  EITF 00-25 is effective for the interim and year end periods
beginning after December 15, 2001. The Company has not yet determined the impact
that  adoption of this issue will have on the Company's  consolidated  financial
position, results of operations and cash flows.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144 ("SFAS  144"),  "Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets," which is effective for fiscal years  beginning  after December 15, 2001
and interim  periods  within  those fiscal  periods.  SFAS 144  supersedes  FASB
Statement No. 121 and APB Opinion No. 30, however, it retains the requirement of
Opinion No. 30 to report  discontinued  operations  separately  from  continuing
operations  and extends  that  reporting to a component of an entity that either
has been disposed of (by sale, by  abandonment,  or in a distribution to owners)
or is classified as held for sale. SFAS 144 addresses  financial  accounting and
reporting for the  impairment of certain  long-lived  assets and for  long-lived
assets to be  disposed  of. The Company  believes  that SFAS 144 will not have a
material  impact on the  financial  position  or  results of  operations  of the
Company.

Note 2. Basic and Diluted Net Income (Loss) Per Share

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

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and  diluted  net income  (loss) per share  computations  for the  periods
presented below (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                              2001              2000              1999
<S>                                                        <C>               <C>                <C>
Net income (loss)                                          $      (949)      $       392        $(14,161)

Weighted average common stock outstanding (basic)                9,948             9,620           9,282
Dilutive effect of warrants and options                              -               394               -
Weighted average common stock outstanding (diluted)              9,948            10,014           9,282

Net income (loss) per share:

     Basic                                                 $     (0.10)      $      0.04        $  (1.53)
     Diluted                                               $     (0.10)      $      0.04        $  (1.53)
</TABLE>

Diluted net loss per share for the year ended  September 29, 2001 and October 2,
1999,  excludes  all  dilutive  potential  common  shares  as  their  effect  is
antidilutive. At September 29, 2001 and October 2, 1999, 1,613,058 and 1,762,512
outstanding options and warrants, respectively, were excluded since their effect
was antidilutive. As of September 30, 2000, all excercisable options were issued
at prices above the market value of common shares and are therefore  included in
diluted shares.


                                       32
<PAGE>

Note 3. Balance Sheet Components

                                                       2001                2000
                                                           (in thousands)
Inventory:
     Raw materials and component parts               $   154            $   449
     Work-in-process                                     130                154
     Finished goods                                    1,564              2,002
                                                     $ 1,848            $ 2,605
Property and equipment:
     Computers and R&D equipment                     $ 6,221            $ 6,183
     Furnitureand Fixtures                             1,494              1,492
                                                       7,715              7,675
     Accumulated depreciation                         (7,598)            (7,414)
                                                     $   117            $   261
Accruedexpenses:
     Payroll-related expenses                        $   789            $ 1,079
     Sales promotion expenses                          1,727              2,205
     Legal and professional fees                         539                811
     Warranty                                            470                570
     Other                                               592                772
                                                     $ 4,117            $ 5,437

Note 4. Related Party Transactions

The  Company  has  a  supply   agreement  (the  "OSE   Agreement")  with  Orient
Semiconductor  Electronics,   Ltd.,  ("OSE").  OSE  and  one  of  its  principal
shareholders  own, in aggregate,  approximately  12.2% of the  Company's  Common
Stock as of September 29, 2001. Under the OSE Agreement,  the Company  purchases
from and sells at cost to OSE certain  component parts. The Company is obligated
to  purchase  goods only to the extent it has signed firm  purchase  commitments
with OSE. At September 29, 2001, the Company's firm purchase  commitments  under
the OSE Agreement were insignificant.

For fiscal 2001,  2000, and 1999 the Company sold, at cost,  approximately  $0.1
million, $0.2 million, and $0.8 million, respectively, of component parts to OSE
and purchased $1.3 million,  $3.7 million,  and $8.4 million,  respectively,  of
goods  from  OSE.  Amounts   classified  as  "payable  to  stockholder"  in  the
accompanying  balance  sheets are solely  related to the  purchases of inventory
from OSE.

On March 16, 2000,  the Company  signed a Stock  Purchase  Agreement  with Delta
Networks.  Inc and Delta International  Holdings Ltd. The Company issued 500,000
shares at $3.00 per  share,  amounting  to  $500,000  from Delta  Networks,  and
$1,000,000  from Delta  International  Holdings Ltd. During fiscal year 2001 and
2000, the Company purchased  approximately  $4.8 and $7.9 millions of goods from
Delta  and  sold  approximately  $0.08  and  $0.4  million  at  cost  to  Delta,
respectively.  At September 29, 2001 the Company had approximately  $0.9 million
in accounts payable to Delta and approximately $7,000 receivable from Delta, and
at  September  30, 2000 the Company had  approximately  $2.3 million in accounts
payable to Delta and approximately $0.2 million receivable from Delta.

Note 5. Income Taxes

There was no  provision  for income taxes made in fiscal  years 2001,  2000,  or
1999.


                                       33
<PAGE>

Deferred  tax assets,  net,  comprise the  following  at September  29, 2001 and
September 30, 2000 (in thousands):

                                                          2001            2000
Deferred tax assets :
     Net operating losses                            $   6,512        $   5,346
     Research and development credits                    2,340            2,230
     Receivable and sales-related reserves               1,352            2,085
     Inventory-related reserves                          2,386            2,232
     Compensation accruals                                 113              228
     Depreciation                                          211              204
     Other reserves and accruals                         1,278            1,500
         Total deferred tax assets                      14,192           13,825
         Valuation allowance                           (14,192)         (13,825)
                                                     $      --       $       --

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

At September  29,  2001,  the Company had federal and state net  operating  loss
carryforwards of  approximately  $17.8 million and  approximately  $9.9 million,
respectively,  available to offset future taxable income which expire  beginning
in 2018 and 2003,  respectively.  In  addition,  as of September  29, 2001,  the
Company had approximately $1.4 million and approximately $1.0 million of federal
and state research and development  credits,  respectively.  The federal credits
will expire beginning in 2012 if not utilized.

Under  the Tax  Reform  Act of 1986,  the  amount  of and the  benefit  from net
operating  losses  that  can be  carried  forward  may be  impaired  in  certain
circumstances. Events which may cause changes include, but are not limited to, a
cumulative ownership change of more than 50% over a three year period.

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

<TABLE>
<CAPTION>
                                                   2001         2000         1999
<S>                                              <C>          <C>          <C>
Tax expense/(benefit) at U.S. statutory rate     $  (327)     $    14      $(4,815)

State taxes, net of federal benefits                 (47)          --         (776)
Research and development credits                      --           --          (25)
Other                                                  6           96          366
Valuation allowance                                  368         (110)       5,250
                                                 $    --      $    --      $    --
</TABLE>

Note 6. Stockholders' Equity

Preferred Stock

There  are  2,000,000  shares  of  Preferred  Stock  authorized  by the Board of
Directors.  No  shares  of  Preferred  Stock  have  been  outstanding  since the
Company's public offering in December 1993.

Stock Based Compensation Plans

As  of  September  29,  2001,  the  Company  had  granted  options  under  three
stock-based compensation plans that are described below.

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


                                       34
<PAGE>

allows for  issuance  of options to the Company  employees  and  consultants  to
purchase a maximum of 120,000 shares of common stock.

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

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

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

On November  16, 1998,  the Board of Directors  approved a repricing of its then
outstanding  options  issued  pursuant to the 1990 Stock Option Plan and the Key
Executive Option Plan. The repricing  includes a new four-year  vesting schedule
commencing  on November 23, 1998 for those who elected to reprice.  Such options
were repriced to the closing price on November 20, 1998.

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

<TABLE>
<CAPTION>
                                     2001                           2000                          1999
                                          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           1,576,971       $1.91         1,762,512      $2.03         1,584,539        $4.93
Granted                       125,500       $0.81           257,866      $1.48         1,663,005        $1.45
Exercised                      (2,516)      $0.87           (29,643)     $0.94                --           --
Canceled                      (86,897)      $1.74          (413,764)     $2.24        (1,485,032)       $4.48
Ending Balance              1,613,058       $1.82         1,576,971      $1.91         1,762,512        $2.03
</TABLE>


                                       35
<PAGE>

The following table summarizes  information  about stock options  outstanding at
September 29, 2001:

<TABLE>
<CAPTION>
                                    Options Outstanding                  Options Exercisable
                                          Weighted
                                           Average      Weighted                      Weighted
                                          Remaining      Average                       Average
       Range of           Number         Contractual    Exercise        Number        Exercise
    Exercise Prices    Outstanding      Life in Years     Price       Exercisable       Price
<S>                      <C>                 <C>         <C>            <C>            <C>
$0.6400 - $0.8125           72,550           9.40        $0.7715           17,725      $0.7647
$0.8750 - $0.8750          250,100           7.81        $0.8750          190,327      $0.8750
$0.9000 - $1.000           106,900           8.34        $0.9337           46,568      $0.9426
$1.0320 - $1.0320          600,000           7.84        $1.0320          399,999      $1.0320
$1.6250 - $1.9375          192,168           8.03        $1.8949           94,950      $1.8675
$1.9380 - $2.5000          192,435           6.09        $2.4585          149,414      $2.4743
$4.0000 - $6.3125          151,705           4.05        $5.0437          151,673      $5.0437
$6.5000 - $6.5000            1,000           4.78        $6.5000            1,000      $6.5000
$6.8750 - $6.8750            6,200           5.07        $6.8750            6,200      $6.8750
$7.5000 - $7.5000           40,000           1.94        $7.5000           40,000      $7.5000

$0.6400 - $7.5000        1,613,058           7.24        $1.8240        1,097,856      $2.0931
</TABLE>

Under SFAS No. 123, the fair value of each option grant is estimated on the date
of grant  using  the  Black-Scholes  option  pricing  model  with the  following
assumptions  used for grants  during  fiscal  2001,  2000,  and 1999,  risk free
interest  rates  ranging  from  4.54% to 6.79%  as the date of  grant;  expected
average volatility of 119%, 65%, and 57%, respectively;  an expected option life
of four years,  and no expected  dividends.  The weighted  average fair value of
stock options granted under the plans for fiscal 2001, 2000, and 1999 was $0.69,
$0.74, and $0.73, respectively.

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

Sales  under the  Purchase  Plan in fiscal  2001,  2000,  and 1999 were  88,202,
81,548, and 82,379 shares of common stock, respectively,  at an average price of
$0.64,  $0.99,  and $1.00,  respectively.  At the 2001 Meeting of  Stockholders,
500,000  additional  shares were approved for grant under the Purchase  Plan. On
September  29, 2001,  406,850  shares of common stock were  available for future
purchase.

The fair value of the employee's  purchase  rights under SFAS No. 123, which was
estimated using the Black-Scholes model with the following  assumptions used for
grants during fiscal 2001, 2000, and 1999: risk free interest rates ranging from
4.54% to 6.73%, respective of commencement date of the offering period, expected
volatility of 119%, 65%, and 57%,  respectively,  an expected option life of six
months for both years,  and no expected  dividends.  The  weighted  average fair
value of stock  purchased  under the Purchase  Plan for fiscal 2001,  2000,  and
1999, was $0.72, $0.99, and $1.00, respectively.

If  compensation  expense  under these plans had been  recorded in the Company's
financial  statements  pursuant to SFAS No. 123, the Company's net income (loss)
and net income (loss) per share for fiscal 2001,  2000, and 1999 would have been
as follows (in thousands, except per share amounts):


                                       36
<PAGE>

                                          2001            2000            1999
Net income (loss):
     As reported                      $     (949)     $      392     $  (14,161)
     Pro forma                        $   (1,174)     $       43     $  (14,614)

Net income (loss) per share
     As reported

         Basic                        $    (0.10)     $     0.04     $    (1.53)
         Diluted                      $    (0.10)     $     0.04     $    (1.53)
     Pro forma

         Basic                        $    (0.12)     $     0.00     $    (1.57)
         Diluted                      $    (0.12)     $     0.00     $    (1.57)

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

Note 7. Commitments and Contingencies

The Company has an operating  lease for its main facility that expires on August
31, 2004.  Various other leases for sales  offices  expire  through  2004.  Rent
expense under such operating leases aggregated approximately $692,000, $705,000,
and $970,800 for fiscal  2001,  2000,  and 1999,  respectively.  Certain  leases
require the Company to pay a portion of facility operating expenses.


                                       37
<PAGE>

Future  minimum lease  payments  under these leases at September 29, 2001 are as
follows (in thousands):

             Year
             2002                                         976
             2003                                         989
             2004                                         909
                                                    $   2,874

The Company recorded income of approximately  $150,800 during fiscal 1999, under
sublease agreements, the last of which expired in June 1999. As of September 29,
2001, none of the Company's existing facilities are being subleased.

The Company has available a $5.0 million bank  revolving line of credit under an
agreement  with a bank.  Borrowings  under  the line are  secured  by  Company's
inventory,  equipment  and accounts  receivable  and bear interest at the bank's
prime rate plus 1.75%  (approximately  7.75% to 8.00%,  depending on the term of
the borrowings at September 29, 2001) . Borrowings under the line are subject to
certain  financial  covenants  and  restrictions  on  liquidity,   indebtedness,
financial  guarantees,  business  combinations,  profitability levels, and other
related items.  As of September 29, 2001 the Company was not in compliance  with
one financial  covenant to keep tangible net worth at no less than $3 million at
the end of fiscal  year,  and the Company  obtained a waiver of default from the
bank. The line expires on December 1, 2001 but may be renewed by the Company for
an additional year so long as certain liquidity  measures are met at the time of
renewal (See subsequent event note no. 9). There was no balances outstanding for
the above mentioned line of credit for the period presented.

Note 8. Litigation

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

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  sought  unspecified  damages  in  excess  of  $75,000  and  permanent
injunctive  relief.  The  Company  filed a  response  to the  complaint  denying
liability. The case was consolidated, for purposes of claim interpretation, with
similar  cases filed against  several other  defendants,  which  include,  among
others, Intel Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems. On April 16,1998, a Special Master appointed by the court issued a
report agreeing in most material respects with the defendants' interpretation of
the alleged patent claims.  Subsequently,  by order dated November 23,1998,  the
District Court adopted without  modification  the findings of the Special Master
and the  recommendations of the Magistrate Judge regarding claim  interpretation
of the  patents-in-suit.  The Court ordered  dismissal of the case,  and entered
judgment  in favor of all  defendants.  Plaintiff  has  filed an  appeal  of the
judgment to the Federal  Circuit  Court of Appeal,  which is now  pending.  Oral
arguments on the appeal were heard  December 3, 2001, and a decision is expected
in the next several weeks.

In September 1999 certain inventory having a cost of approximately  $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL"). It is the
Company's  position that the alleged improper use was simply a mistake or error.
The  Company  may  obtain  the  return  of  the  inventory  through   settlement
negotiations  with either the United States Customs or United States  Attorney's
Office,  obtaining  permission from UL to use the certification  marks, or being
successful in trial proceedings.  To contest the seizure, the Company determined
to seek a review with the United States  Attorney's Office and filed a claim for
the inventory.  It is now incumbent upon the United States  Attorney's Office to
file in court seeking  forfeiture  of the  inventory  and allow the Company,  as
claimant, to challenge such proceeding. The Company also expects that the United
States  Customs may issue a penalty  separate  from the seizure  under 19 U.S.C.
section 1526(f),  which provides for a penalty ranging in amount from the retail
value of the seized  inventory had the inventory been UL approved,  to twice the
retail value. The Company asserts this is a first time offense. For a first time
offense,  the United States Customs may mitigate the penalties  when  challenged
administratively,  with such mitigation  being as low as 10% of the value of the
inventory.   The  Company   intends  to  contest  any  penalty   action  through
administrative  and/or  judicial  procedures.  On April 28,  2000,  the  Company
submitted a settlement  proposal to the United States Attorney's Office offering
settlement  of the  case.  The  Company  has not  yet  received  a reply  to its
settlement proposal.  Despite a recent federal case which upheld the US. Customs
authority to seize and penalize for improper use of the UL


                                       38
<PAGE>

certification  mark,  the U.S.  Attorney  recently  stated  that he would  still
consider  settlement  of the  Company's  case in the near  future due to factual
differences.

Note 9. Subsequent Event

On  November  20,  2001,  the  Company's  line of credit with an  expiration  of
December 6, 2002 was renewed with substantially similar terms, and an expiration
date of December 1, 2002.


                                       39
<PAGE>

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

<TABLE>
<CAPTION>
Fiscal 2001                                                            Quarter Ended

                                       September 29              June 30            March 31           December 31
<S>                                    <C>                    <C>              <C>                  <C>
Net sales                              $     5,187            $   4,919        $     5,016          $    6,952
Gross profit                           $     1,911            $   1,698        $     1,801          $    2,530
Net income (loss)                      $      (126)           $    (557)       $      (498)         $      232
Net income (loss) per share            $     (0.01)           $   (0.06)       $     (0.05)         $     0.02
</TABLE>

<TABLE>
<CAPTION>
Fiscal 2000                                                            Quarter Ended

                                       September 30              July 1              April 1            January 1
<S>                                    <C>                    <C>                <C>                  <C>
Net sales                              $     7,539            $     6,688        $     5,987          $    9,065
Gross profit                           $     2,483            $     2,463        $     2,247          $    3,531
Net income (loss)                      $       412            $       (60)       $      (149)         $      189
Net income (loss) per share            $      0.04            $     (0.00)       $     (0.02)         $     0.02
</TABLE>

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

Not applicable.


                                       40
<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 2001 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 29,
2001.

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.


                                       41
<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 Schedule - See Index to Financial  Statements
               and Financial Statement Schedule at page 27 of this Form 10-K.

          (3)  Exhibits - See Exhibit Index at page 48 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  30,
               2000.

      (c)      See Exhibit Index at page 48 of this Form 10-K.

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


                                       42
<PAGE>

EXHIBIT INDEX

        Number      Description of Document

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

          3.1       Certificate of Incorporation of Registrant. (1)

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

          3.1B      Certificate of Retirement of Stock of Registrant.

          3.2       By Laws of Registrant. (1)

          4.1       Form of Common Stock certificate.(1)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          23.1      Consent of Independent Accountants.

                    *         The item listed is a compensatory plan.

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

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

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

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


                                       43
<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 21, 2001

                                       ASANTE TECHNOLOGIES, INC.


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


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


                                       44
<PAGE>

                                POWER OF ATTORNEY

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

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

<TABLE>
<CAPTION>
                  Signature                                        Title                                         Dates
<S>                                            <C>                                                        <C>
/s/ WILSON WONG                                President, and Chief Executive Officer                     December 21, 2001
     (Wilson Wong)                             (Principal Executive Officer) and Director

/s/ ANTHONY CONTOS                             Vice President of Finance and Administration               December 21, 2001
     (Anthony Contos)                          (Principal Finance and Accounting Officer)

/s/ MICHAEL KAUFMAN                            (Director)                                                 December 21, 2001
     (Michael Kaufman)

/s/ EDMOND TSENG                               (Director)                                                 December 21, 2001
     (Edmond Tseng)

/s/ JEFF YUAN KAI LIN                          (Director)                                                 December 21, 2001
     (Jeff Yuan Kai Lin)
</TABLE>


                                       45
<PAGE>

SCHEDULE II

                            ASANTE TECHNOLOGIES, INC.

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                  Additions
                                                                Balance at        Charge to                         Balance at
                                                                Beginning         Costs and                           End of
Description                                                     of Period          Expenses         Deductions        Period
<S>                                                             <C>               <C>             <C>              <C>
Year ended October 2, 1999:
     Allowance for doubtful accounts,
       price protection and distributor rebates                 $   2,985         $  3,128        $   (1,506)      $  4,607

     Allowance for sales returns                                    1,159              927              (922)         1,164
                                                                $   4,144         $  4,055        $   (2,428)      $  5,771

Year ended September 30, 2000:
     Allowance for doubtful accounts,
       price protection and distributor rebates                 $   4,607         $    805        $   (2,327)      $  3,085

     Allowance for sales returns                                    1,164              267              (323)         1,108
                                                                $   5,771         $  1,072        $   (2,650)      $  4,193

Year ended September 29, 2001:
     Allowance for doubtful accounts,
       price protection and distributor rebates                 $   3,085         $    529        $   (1,147)      $  2,467

     Allowance for sales returns                                    1,108               36               (39)         1,105
                                                                $   4,193         $    565        $   (1,186)      $  3,572
</TABLE>

                                       46