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

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

                                    FORM 10-K

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

                  For the fiscal year ended September 27, 2003

                                       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 February
12,  2004,  as  reported  on the  OTC  (Over-the-Counter)  Bulletin  Board,  was
approximately  $499,426.  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.

Indicated  by check mark whether the  Registrant  is an  accelerated  filler (as
defined in Exchange Act Rule 12b-21). Yes____ No_X__

As of February 12, 2004, the  Registrant  had 10,163,302  shares of Common Stock
outstanding.

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                     Page of
                                                                                     Report

<S>                     <C>                                                              <C>
PART I....................................................................................2
         ITEM 1.        BUSINESS..........................................................2
         ITEM 2.        PROPERTIES.......................................................13
         ITEM 3.        LEGAL PROCEEDINGS................................................14
         ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..............14

PART II..................................................................................15
         ITEM 5.        MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
                        STOCKHOLDER MATTERS..............................................15
         ITEM 6.        SELECTED FINANCIAL DATA..........................................16
         ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                        CONDITION AND RESULTS OF OPERATIONS..............................17
         ITEM 7A.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                        RISK.............................................................29
         ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................30
         ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                        ACCOUNTING AND FINANCIAL DISCLOSURE..............................52
         ITEM 9A.       CONTROLS AND PROCEDURES..........................................52

PART III.................................................................................54
         ITEM 10.       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............54
         ITEM 11.       EXECUTIVE COMPENSATION...........................................61
         ITEM 12.       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                        MANAGEMENT AND RELATED STOCKHOLDER MATTERS.......................65
         ITEM 13.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................67

PART IV..................................................................................68
         ITEM 14        PRINCIPAL ACCOUNTING FEES AND SERVICES...........................68
         ITEM 15.       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
                        FORM 8-K.........................................................68

SIGNATURES...............................................................................71
</TABLE>

                                       i
<PAGE>

Explanatory Note

On January 5, 2004,  the Company filed an amendment to its Annual Report on Form
10-K (the "Form  10-K/A") for the fiscal year ended  September 28, 2002 with the
Securities  and  Exchange  Commission  (the  "SEC").  The Form  10-K/A  includes
restated financial statements of Asante  Technologies,  Inc. as of September 28,
2002 and September 29, 2001 and for each of the three fiscal years in the period
ended September 28, 2002. For additional  information regarding the restatement,
the reader should refer to the Form 10-K/A filed with the SEC.

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

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

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

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


<PAGE>

                                     PART I

ITEM 1. BUSINESS

Recent Acquisition Information

On June 13, 2003, the Company  entered into an Agreement and Plan of Merger with
Oblique,  Inc.  ("Oblique") (the "Merger  Agreement"),  pursuant to which Asante
would  be  merged  with and into  Oblique,  with  Oblique  being  the  surviving
corporation (the "Merger"). The Merger was conditioned upon, among other things,
approval by holders of Asante  capital stock.  The foregoing  description of the
Merger does not  purport to be  complete  and is  qualified  in its  entirety by
reference  to the  complete  text of the Merger  Agreement,  a copy of which was
filed with the SEC in June.

On June 13, 2003,  Asante  issued a press  release,  which was filed on June 23,
2003, with the Securities and Exchange  Commission,  announcing the execution of
the Merger Agreement.

On September 13, 2003, the Company terminated its Merger Agreement with Oblique,
Inc., and entered into a Letter of Intent with Acorn Campus,  a venture  capital
company.  The offer by Acorn Campus was superior to the offer from Oblique,  and
contained proven financing.  However,  without apparent cause, or reason,  Acorn
sent a letter to Management  on November 18, 2003,  informing the Company of its
intent  to  withdraw  its  offer.  Management  is  reviewing  its  alternatives,
including pursuing legal action against Acorn Campus for breach of contract.

Subsequent to the Company's  fiscal year end, on December 18, 2003,  the Company
signed a Letter of Intent with UNETEK,  for the private investment of funds with
the Company for approximately $3.0 million.  Additionally, on December 23, 2003,
the  Company  entered  into a new,  non-binding,  Letter of Intent to merge with
Oblique,  Inc. The Merger is conditioned  upon, among other things, an expedited
due diligence period, and several other factors,  including an expedited process
to arrive at a Definitive Merger Agreement with certain minimum acceptable terms
including a bridge funding of approximately  $1.0 million.  The Company plans on
proceeding  with  only  one of these  transactions,  however,  and the  Board of
Directors is currently evaluating each of these proposals.

Overview

Founded in 1988,  Asante  Technologies,  Inc.  ("Asante" or the  "Company") is a
leading  provider of network  solutions for small and  medium-sized  enterprises
(SME) and home offices (SOHO).  The Company believes that it has been one of the
largest  third-party  providers of networking  solutions for the Apple Macintosh
platform.

                                       2
<PAGE>

Asante's products are designed primarily for Ethernet local area networks (LAN).
Over the years,  the speed of Ethernet has  increased by 100X to 1000 Mbps.  The
Company's key products are designed to function at speeds of 10/100/1000 Mbps to
maintain backwards  compatibility with earlier Ethernet standards plus the newer
Gigabit Ethernet standard.

Another key  technology,  wireless  LAN, is playing a larger role in  connecting
computers and  peripherals in the home and small  businesses.  Through 1993, the
most pervasive standard was the 11 Mbps 802.11b standard established by the IEEE
committee.  As new wireless standards for higher speeds, security and management
become  ratified,   the  Company  expects  customers  to  migrate  some  network
connections from Ethernet to variations of wireless 802.11.

In Fiscal 2003, the high-tech  industry's  networking sector continued to face a
significant  slowdown in sales.  This  market-wide  reduction  in demand  caused
prices to drop significantly as certain manufacturers  attempted to reduce their
inventory  levels at the expense of margins.  Since the Company sells to many of
the same  distributors  and  resellers,  this price  erosion  has  significantly
impacted the Company's business.

As  the  industry  outlook  improves,   Asante  anticipates  many  new  business
opportunities  that will  leverage the  Company's  historical  strengths.  These
include:

     o   Increasing demand for digital content (including information, graphics,
         photos, video, music and voice)

     o   Dramatic growth in storage and communications  requirements as projects
         move from CDs (with a capacity of 550-700 MB) to DVDs (4700-8500 MB)

     o   Continued growth in broadband Internet access

     o   Emerging use of Ethernet in new  technologies in the office  (printers,
         storage) and home  (consumer  electronics,  including game consoles and
         personal video recorders)

As these technologies evolve, Asante's strategy is to capitalize on these trends
with  a  comprehensive  product  and  service  portfolio.   The  combination  of
innovative   technologies,   strategic   sales   channels,   and  major  account
partnerships  provide the optimal  environment for Asante's plans in the growing
SOHO and SME markets.

Innovative Technologies

In fiscal 2003,  Asante began to see the return on its  long-term  investment in
multi-service  networks to support  converged,  high-speed data, voice and video
networks. Major accounts began taking delivery on the company's Gigabit Ethernet
switches,  adapters and routers.  During the year,  the Company's  IntraCore and
FriendlyNET  products  received  over a  dozen  favorable  reviews  by  industry
analysts and publications.

                                       3
<PAGE>

Industry  analysts  anticipate  a  resurgence  in the  market for  Ethernet  and
wireless  networking  products.  In January 2004, the Dell `Oro Group's Ethernet
Switch  Market  forecasted a 7% increase in the Ethernet  switch market for 2004
and  single-digit  revenue  growth  through 2008 as the economy  improves and IT
managers demand cost-effective new products.

The widespread availability of 802.11 wireless adapters,  access points, routers
and  notebook  computers  were the driving  forces in this  market.  In-Stat/MDR
estimated a $1.7B market in 2003, up 140% from 2002.  As Asante builds  momentum
in this  segment,  analysts  caution,  "rapid price  erosion is still a critical
factor in revenue growth within this market." Dell `Oro expects the wireless LAN
market in 2004 will grow to $2.2B.  The  Enterprise  Wireless  LAN  segment is a
driving force, with a 20% CAGR and $1B revenues forecasted in 2008.

The proliferation of broadband  technologies,  combined with the availability of
affordable, feature-rich networking products, has influenced both commercial and
residential  real estate and building  developers to incorporate  networking and
broadband   infrastructure   equipment  at  the   developmental   stage  of  new
construction.  The Company's  technology  development  group spends  substantial
resources  integrating many advanced features into its products to differentiate
its  products  and to offer  features  similar  to those  of  larger  networking
corporations.  The Company pioneered integration of Internet technology into its
network products.  The Company continues to incorporate these  technologies into
its managed switches and Internet access products.

The market for  Internet  gateways  continues  to grow rapidly as home and small
business  users  migrate to  broadband  Internet.  Factors  driving  this market
include home networking,  awareness and digital content.  In-Stat/MDR forecasted
an overall  annual  growth rate of 15.5% with units  topping 880 million in 2007
for all Internet access devices.

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

Strategic Sales Channels

Through  expansion  of  its  international  distribution  channels  and a  major
corporate  effort  to meet the  needs of  emerging  Internet  consumers,  Asante
expects to grow its sales through  strategic  partners and businesses  that sell
products and services on the Internet,  while continuing to service  traditional
retail channels that provide revenue and profit  opportunities.  In fiscal 2003,
the Company  expanded its Value Added Reseller (VAR) program aimed at attracting
additional resellers to carry the Company's  products--focusing on the Company's
IntraCore  products and SOHO products by adding service to the more  significant
VARs  while  ensuring  that this new level of VARs can  offer  the  service  and
technical  support  that many of the  Company's  end user  customers  need.  The
Company anticipates adding more IntraCore VARs specializing in the Company's key
focus markets: education, MTU/MDU, digital design and Internet Service Providers
(ISPs).

                                       4
<PAGE>

Strategic Partnerships

In fiscal  2003,  the  Company  successfully  continued  its  process of seeking
strategic partnerships designed to place the Company in a leadership position in
several areas. The Company continued its relationship with Apple Computer, Inc.,
National  Semiconductor,  Broadcom,  SwitchCore and other  technology  partners.
Asante  expects to  continue  its  technology  innovations  with new  networking
products being added to the Company's sales channels.

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

Products

Asante  offers  a range  of  products  from  simple,  personal  connectivity  to
sophisticated,  enterprise-grade  network  management.  The FriendlyNET brand is
targeted at consumers, home businesses and small business users. Each product is
optimized  to  deliver   outstanding  value  with  minimal   complexities.   The
FriendlyNET  family includes network  adapters,  routers,  hubs and switches for
Fast Ethernet  (10/100  Mbps) and Gigabit  Ethernet  (1000 Mbps).  The IntraCore
family consists of enterprise-grade Gigabit Ethernet switches that support Layer
2, Layer 3 and Layer 4 switching and routing.

Gigabit Ethernet Switches

During FY 2003,  Asante focused on delivering a comprehensive  Gigabit  Ethernet
solution for a wide range of its customers.  Anchored by the Company's  flagship
IntraCore 35516 Series of Layer 2/3/4 switches,  Asante completed its aggressive
plans to deliver a complete product offering.

At the core, the Company designed and shipped a powerful Layer 2/3/4 switch that
delivers  advanced routing and quality of service (QoS) features to swiftly move
data,  voice  and  video  at  speeds  up  to  1000  Mbps.   Multi-layer   packet
classification and advanced routing algorithms deliver  information  quickly and
efficiently.  By  segmenting a large network into  multiple  subnets,  broadcast
traffic can be  contained  while  limiting  the  security  footprint.  Customers
looking  for  campus-wide   deployment  found  the  IntraCore  platform  secure,
cost-effective and complete.

Beyond the core,  the Company's  IntraCore  35160 Series of Layer 2 switches are
the workhorse in numerous corporations and campuses. Replacing the lower-density
IC35120 with the 16-port IC35160,  Asante provided a powerful switch family that
allowed  Information  Technology (IT) managers to drive Gigabit  technologies to
workgroups,  servers and some desktops. The integrated simple network management
protocol (SNMP)  combined with web and Telnet  services  provide a wide range of
administration  and  oversight  capabilities.  Key features  include

                                       5
<PAGE>

jumbo  frame  support to  efficiently  move large  amounts of data,  virtual LAN
(VLAN) support plus redundant power supply option.

For more  cost-sensitive  users with smaller networks,  the Company's  unmanaged
FriendlyNET GX5 Series  switches are a good complement to the managed  IntraCore
switches.  The eight models in this family span the spectrum  from 2 ports to 24
ports of Gigabit  Ethernet.  Asante's  GigaNIX  adapters for computers using the
Windows,  Macintosh and Linux operating systems provide the necessary  interface
to existing servers and desktop  computers.  In a move to make high-end features
more accessible to value-oriented users, future GX5 models will offer simplified
configuration using any standard web browser.

Wireless Internet Gateways and Adapters

With the rapid acceptance of wireless  networking in home and small  businesses,
Asante has  introduced  a number of products to  seamlessly  integrate  wireless
networks with wired networks. The Company's AeroLAN adapters conform to standard
IEEE 802.11 standards for wireless networking. Earlier products used the 802.11b
standard with bandwidth up to 11 Mbps; later models introduced in late 2003 were
compatible with 802.11b and the newer 802.11g (54 Mbps) standards.

The  Company   anticipates   expanding  its  wireless  product   portfolio  with
enterprise-grade  wireless LAN access points and switches. Some of the Company's
current   IntraCore   switches  may  be  upgraded  to  provide   802.1X   RADIUS
authentication, an enhanced security for wireless clients.

Internet Gateway Products (Routers)

The Company's FriendlyNET routers are designed for SOHO users who share a single
broadband  connection among others in the same home or small office.  Asante has
several routers, ranging from low-cost,  entry-level to more sophisticated units
with virtual private network (VPN) and wireless capabilities.

Additional  products with support for IEEE 802.11 wireless standards are planned
for release during 2004.

Personal Connectivity Products

In  addition to Fast  Ethernet  and Gigabit  Ethernet,  the Company  also offers
personal  connectivity  products  that  utilize the  Universal  Serial Bus (USB)
specification.  Moving data at speeds  ranging  from 12 Mbps to 480 Mbps,  these
desktop devices  frequently  connect a mouse,  keyboard,  video camera,  digital
camera or memory card reader to a single desktop.

Asante offers USB 2.0-compliant  hubs,  adapters and digital memory card readers
for Windows and Macintosh users.

                                       6
<PAGE>

Technology

The  Company's  core  strengths  are  attributed  to its early  dominance in the
Ethernet local area networking industry. By engineering custom chips,  firmware,
software, and systems,  Asante was able to bring feature-rich products to market
sooner than others.

The  Company  differentiates  its  products  with  advanced  features,  enhanced
usability,  personalized  technical support and an established sales channel. By
seeking technical and manufacturing partners, Asante is able to focus on product
design and  development.  In the coming  year,  the Company  expects to grow its
IntraCore line with higher-density Gigabit Ethernet switches,  security routers,
and enterprise-class wireless solutions.

Marketing and Distribution

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

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

From time to time, the Company pursues OEM opportunities  which it believes make
sense based on the Company's  current  business plan.  These  relationships  may
typically cause  fluctuations  in the Company's  business based on the Company's
ability 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 were fairly flat in
fiscal 2003, compared to fiscal 2002.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for  approximately  18%,  20%, and 23% of the  Company's net sales in
fiscal  years 2003,  2002,  and 2001,  respectively.  From fiscal 2002 to fiscal
2003, the Company  experienced reduced sales in all three geographic regions due
to the economic  downturn  affecting a large  portion of the world  economy.  Of
these  decreases  the  greatest  impact  was  in  Europe  where  sales  declined
approximately  34% due to  factors  similar to those  encountered  domestically.
Sales in Asia Pacific decreased  slightly in fiscal 2003,  compared to the prior
year due primarily to competition from Asian  competitors and softness in demand
in Macintosh related products.

                                       7
<PAGE>

The Company  intends to continue to introduce new products  through its existing
distribution  channels.  The Company  encourages  the  marketing  efforts of its
distributors with cooperative advertising allowances and incentive-based rebates
and  promotes  its  products  and  builds  brand  name   recognition   by  trade
advertising, participation in industry trade shows, and other marketing efforts.
As of  September  27,  2003,  the  Company  supported  the sales  efforts of its
distributors  with  14  direct  sales  and  support  related  employees  located
throughout the United States who promote the Company's  products within assigned
territories and with 9 outside sales representatives.

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

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

The  distribution  of  products  such as those  offered by the  Company has been
characterized   by  rapid  change,   including   consolidations   and  financial
difficulties of some distributors and the emergence of alternative  distribution
channels.  In  addition,  there are an  increasing  number of product  suppliers
competing for access to these channels. Distributors may, at their option and at
any time,  cease  marketing the Company's  products  without prior notice to the
Company.  In fiscal 2002, the Company terminated its relationship with Tech Data
domestically on terms mutually  agreed to by both parties.  Although the Company
has increased its business with its other  distributors,  it does not believe it
has  completely  offset the loss of revenues from the cessation of business with
the aforementioned distributor,  however the Company has taken steps to increase
its channels  which it believes has benefited the Company during fiscal 2002 and
2003.  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,  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.

                                       8
<PAGE>

Although some prior products contained lifetime, or limited lifetime warranties,
most new  products  contain  limited  warranties  ranging  from one year to five
years.  The lifetime and limited lifetime  warranties  exclude from coverage the
fan and power supply  included with the Company's  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 27, 2003, the Company had 8 employees engaged in engineering and
product development. During the fiscal years 2003, 2002, and 2001, the Company's
engineering and product  development  expenses were  approximately $2.1 million,
$2.6 million, and $2.8 million, respectively.

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

                                       9
<PAGE>

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

Manufacturing and Suppliers

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

OSE and the Company's other  subcontract  manufacturers  purchase or manufacture
most  components,  assemble printed circuit boards and test and package products
for Asante on a purchase  order,  turnkey  basis.  In fiscal  2003,  the Company
purchased  $0.1  million of goods from OSE and  purchased  $2.7 million of goods
from Delta  Networks,  Inc. (See Note 5 of Notes to Financial  Statements).  The
Company  does  not  have  a  long-term   supply   agreement   with  any  of  its
subcontractors.  If any one of these  subcontractors  experiences  financial  or
operational  difficulties  that result in a  reduction  or  interruption  in the
supply of products to the Company or otherwise fails to deliver  products to the
Company on a timely basis,  the Company would be required to procure  sufficient
manufacturing  services  from  alternative  sources.  The Company  believes that
alternative  manufacturers  are available;  however,  the  qualification of such
alternative  sources  and  the  commencement  of  volume  manufacturing  of  the
Company's  products could take a significant  period of time.  Accordingly,  any
reduction  or  interruption  of 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.

                                       10
<PAGE>

Although  the Company  generally  uses  standard  parts and  components  for its
products,  certain key components  used in the Company's  products are available
from only one source,  and others are  available  from only a limited  number of
sources.  Components  currently  available from only one source  include,  among
others,  custom integrated  circuits used in the Company's  intelligent hubs and
certain  ASICs used in the  Company's  Gigabit  switching  products,  as well as
ASIC's  used in several of the  Company's  other  products  including  its 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  many of its  subcontractors  to  procure  many of the
components  used in the Company's  products.  These  subcontractors  procure and
stock components and subassemblies based on the Company's purchase orders.

Competition

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

The Company competes with Cisco Systems, Nortel, 3Com, Intel, Netgear,  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.

                                       11
<PAGE>

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

The Company's sales to OEMs represented 8% and 9% of its total revenue in fiscal
2003 and fiscal  2002  respectively.  While the  Company  has  pursued  and will
continue to pursue additional OEM agreements with larger companies, there can be
no assurance that existing OEM  agreements  will continue or that new agreements
will be obtained. In addition, since the Company intends to seek additional high
volume  product  arrangements,  the  acquisition  or loss of a single  large OEM
customer or several  smaller OEM customers  would have a material  effect on the
Company's revenues.  Unless the Company signs additional large OEM agreements in
the near future, the Company expects that OEM sales will remain fairly flat as a
percentage of total revenue in fiscal 2004.

A significant  percentage of the Company's  sales in fiscal 2003 and fiscal 2002
were derived from products  designed for use with Macintosh G series  Computers,
Power PC, and iMAC  computers.  Sales of these products as a percentage of total
Company  revenue,  excluding  OEM sales,  have  steadily  declined over the last
several years due to Apple(R)'s competition in the Company's adapter card market
and  incorporation  of Ethernet into the  motherboard  of a large portion of its
products,  and Apple(R)'s decline in market share.  However, the Company expects
that sales of such products will continue to represent a substantial  portion of
its net sales for the  foreseeable  future.  There can be no assurance that unit
sales of these products will continue at their present levels or increase in the
future.  Any material adverse  developments in Apple(R)'s  business could have a
material adverse effect on sales of the Company's client access products,  which
would  materially  and  adversely  affect  the  Company's  business,   financial
condition and results of  operations.  See Item 7:  Management's  Discussion and
Analysis of Financial Condition and Results of Operations.

Proprietary Rights

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

                                       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  27,  2003,  the  Company  had  45  employees,  including  8 in
engineering  and  product  development,  9 in  manufacturing  operations,  18 in
marketing,  sales and support services, and 10 in corporate administration.  The
number  reflects  a  decrease  in  all  areas.  In  2003,  the  Company  reduced
approximately  29% of its regular and  contractor  headcount as part of its cost
reduction efforts.

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

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


ITEM 2. PROPERTIES

The  Company's  headquarters,  including  its  executive  offices and  corporate
administration,   manufacturing,   marketing,   sales  and   technical   support
facilities,  are located in San Jose, California.  The Company occupies a 44,700
square foot  facility  under a lease that  expires on August 31,  2004,  with an
option to extend for an  additional  five  years.  In fiscal  2002,  the

                                       13
<PAGE>

Company  closed its  leased  sales  office in Oregon and moved its inside  sales
activities into its San Jose location.  The Company currently has a leased sales
office in Utah with an original  lease  expiration of January 2004.  The Company
has recently signed a one-year lease extension on its Utah facility. The Company
believes  that its  existing  facilities  are  more  than  adequate  to meet its
requirements for the foreseeable future and believes that suitable additional or
substitute  space will be available as needed.  See Note 9 of Notes to Financial
Statements.


ITEM 3. LEGAL PROCEEDINGS

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

In September 1999, certain inventory having a cost of approximately $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL").  In March
2003,  the US Attorney  and the Company  entered into a final  settlement  under
which the seized  inventory  was  returned  to the  Company  and the Company was
obligated to pay $57,000 and remove improper marks from the product.


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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of fiscal 2003.

                                       14
<PAGE>

                                     PART II


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

The Company's Common Stock traded on the NASDAQ National Market System under the
trading symbol ASNT until September 30, 1999 at which time the Company's  Common
Stock commenced trading on the  Over-the-Counter  (OTC) Bulletin Board under the
trading  symbol  ASNT.OB.  Due to the  restatement  of  fiscal  2002  and  prior
financial  statements,  the Company was late in filing its fiscal 2003 10-K, and
therefore had been trading  under the trading  symbol  ASNT.PK.  Upon filing its
fiscal 2003 10-K,  the Company  expects its trading  symbol to be ASNT.OB  going
forward and for the foreseeable future.

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

Fiscal 2003                         High                      Low
---------------------------------------------------------------------

First quarter                      $    2/16                $    1/16
Second quarter                     $    2/16                $    1/16
Third quarter                      $    5/16                $    2/16
Fourth quarter                     $    7/16                $    4/16


Fiscal 2002                         High                      Low
---------------------------------------------------------------------

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


As of November 22, 2003,  there were 98  stockholders of record of the Company's
Common  Stock.  This  number does not include  shares held in street  name.  The
Company has not paid cash dividends on its Common Stock and does not plan to pay
cash dividends in the foreseeable future.

Factors such as announcements  of  technological  innovations or new products by
the  Company,  its  competitors  and other third  parties,  as well as quarterly
variations  in the Company's  anticipated  or actual  results of operations  and
market conditions in high technology  industries  generally may cause the market
price of the Company's Common Stock to fluctuate significantly. The stock market
has on occasion  experienced extreme price and volume  fluctuations,  which have
particularly  affected the market prices of many high  technology

                                       15
<PAGE>

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.

Asante Equity Compensation Plan Information

As of  September 27, 2003


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

                                     (a)                      (b)                         (c)
<S>                                <C>                     <C>                     <C>
Equity compensation plans          54,400 (1)              0.4722 (1)                945,600 (1)
approved by security holders      195,000 (2)              1.0320 (2)                 50,474 (2)
                                  185,000 (3)              2.8242 (3)                      0 (3)
                                1,036,793 (5)              1.2846 (5)                      0 (5)

Equity compensation plans          20,150 (4)              0.8125 (4)                129,850 (4)
not approved by security
holders

Total                           1,491,343                                          1,125,924
</TABLE>

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


ITEM 6. SELECTED FINANCIAL DATA

On January 5, 2004,  the Company  filed an amendment to its Form 10-K (the "Form
10-K/A")  for the fiscal year ended  September  28, 2002 with the SEC.  The Form
10-K/A includes restated

                                       16
<PAGE>

financial statements of Asante  Technologies,  Inc. as of September 28, 2002 and
September  29, 2001 and for each of the three  fiscal  years in the period ended
September 28, 2002. The Five Year Financial  Summary in this Item 6 includes the
effects of such restatement on fiscal 2002 and prior periods.

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


<TABLE>
<CAPTION>
(In thousands, except per share data)                                                   Year ended
                                                       ----------------------------------------------------------------------------
                                                         2003             2002             2001             2000             1999
                                                       --------         --------         --------         --------         --------
<S>                                                    <C>              <C>              <C>              <C>              <C>
Statement of Operations:

Net sales                                              $ 12,008         $ 15,237         $ 21,732         $ 29,001         $ 39,555

Loss from operations                                   $ (2,170)        $ (2,219)        $ (2,087)        $   (517)        $(10,638)

Net loss                                               $ (2,245)        $ (2,208)        $ (1,859)        $   (325)        $(10,936)

Basic and diluted net loss per share                   $  (0.22)        $  (0.22)        $  (0.19)        $  (0.03)        $  (1.18)

Balance Sheet Data:

Working Capital                                        $  1,610         $  3,811         $  5,982         $  7,660         $  5,877

Total assets                                           $  4,662         $  8,021         $ 10,711         $ 14,674         $ 15,332

Stockholders' equity                                   $  1,833         $  4,073         $  6,271         $  8,088         $  6,808
</TABLE>


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 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.

                                       17
<PAGE>

Recent Developments

On January 5, 2004,  the Company filed an amendment to its Annual Report on Form
10-K (the "Form  10-K/A") for the fiscal year ended  September 28, 2002 with the
SEC.  The  Form  10-K/A  includes  restated   financial   statements  of  Asante
Technologies,  Inc. as of September 28, 2002 and September 29, 2001 and for each
of the three fiscal years in the period ended September 28, 2002. For additional
information regarding the restatement the reader should refer to the Form 10-K/A
previously filed with the SEC.

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

Results of Operations

The following table sets forth certain selected financial  information expressed
as a  percentage  of net sales for the fiscal  years ended  September  27, 2003,
September 28, 2002, and September 29, 2001, respectively:

                                                    2003       2002       2001
                                                   -----      -----      -----
Net sales                                          100.0%     100.0%     100.0%
Cost of sales                                       64.5       64.0       65.2
Gross profit                                        35.5       36.0       34.8
Operating expenses:
         Sales and marketing                        26.2       25.5       23.2
         Research and development                   17.4       16.7       12.7
         General and administrative                  9.7        8.4        8.5
                                                   -----      -----      -----
         Total operating expenses                   53.3       50.6       44.4
                                                   -----      -----      -----
Loss from operations                               (17.8)     (14.6)      (9.6)
Interest and other income (expense), net            (0.6)       0.1        1.0
                                                   -----      -----      -----
Loss before income taxes                           (18.4)     (14.5)      (8.6)
Provision (benefit) for income taxes                --         --         --
Net loss                                           (18.4)%    (14.5)%     (8.6)%
                                                   =====      =====      =====

Net Sales

Net sales decreased 21.2% to $12.0 million in fiscal 2003, from $15.2 million in
fiscal 2002.  Net sales were $21.7  million in fiscal 2001.  The decrease in net
sales in  fiscal  2003  compared  to fiscal  2002,  was due to  several  factors
including the continued  economic downturn in the high tech industry and network
industry,  heavy  competitive  pressures  particularly  for unmanaged  products,
continued  incorporation  of  Ethernet  onto the  motherboard  of Apple's  newer
computers  and to a  reduction  in revenues in some  previously  stronger  sales
channels in which the Company  sells many of its  products.  During fiscal 2003,
sales of unmanaged products decreased across most existing product lines, except
for unmanaged  Gigabit switch sales,  which  increased to $1.5

                                       18
<PAGE>

million from $0.8 million.  In addition,  a significant portion of the Company's
OEM sales were of unmanaged Gigabit products.

The  decrease  in net sales in fiscal  2002  compared  to fiscal 2001 was due to
several  factors  including  the  economic  downturn in the high tech  industry.
Additionally,   heavy  competitive   pressures  for  unmanaged  10/100  products
including cable/DSL routers and, to some extent, the continued  incorporation of
Ethernet onto the motherboard of Apple's newer computers negatively affected the
Company's   results.   This  continued   incorporation   of  Ethernet  onto  the
motherboard,  has caused a reduction  in revenues and volume of product sold for
Apple specific applications. Mac(R) specific products are expected to comprise a
much smaller  portion of the Company's  revenues  going  forward.  During fiscal
2002,  the Company  experienced  a decrease in sales across most product  lines,
except for  Gigabit  switch  products,  which  increased  both due to the recent
transition of some customers to Gigabit  product and to sales of Gigabit product
to OEM and major customer accounts.

In fiscal 2003, 2002, and 2001, one customer, a US based distributor,  accounted
for 33%, 40%, and 43%, respectively, of the Company's total sales.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for 18%,  20%, and 23% of net sales in fiscal 2003,  2002,  and 2001,
respectively.  The reduction in international sales during fiscal 2003, compared
to fiscal 2002,  was due  primarily to  financial  issues  related to one of the
Company's  primary  distributors  in  Germany  and  decreased  sales in  Canada.
International  revenue as a percentage of net sales declined during fiscal 2002,
compared to fiscal 2001, due partially to the  elimination of Merisel as a major
distributor  in the US and Canada.  The Company  continues  to believe  there is
potential demand in certain of the Company's  foreign target markets,  including
broadband,  digital media,  and medical  equipment  providers.  To that end, the
Company has focused its sales efforts in these areas to strengthen its channels.
However, there cannot be any assurance that its efforts will be successful.

The Company believes that the economic  downturn  beginning just prior to fiscal
2001, will continue during fiscal 2004, and that any improvement  will be minor.
The Company's declines in revenues have been offset partially by increased sales
of the Company's managed and unmanaged  Gigabit  switches.  The Company believes
that the  competition  in the markets in which it competes has  intensified  and
will  continue to  intensify  as existing and  potential  competitors  introduce
competing  products.  Consequently,  the  Company  anticipates  that the selling
prices of its existing products will continue to decline and that sales of older
systems  products and adapter cards as a percentage of total sales will continue
to decline in fiscal 2004.  The Company has  continued  to focus on  introducing
newer managed  systems  products such as its new IntraCore  35516 Layer 3/4+ and
35160 Layer 2/4 switches,  which it believes  should help offset the declines in
revenues of its older  systems  products.  The Company will continue to focus on
those  markets  in which it  believes  it can  increase  its  revenues  and will
continue to seek to increase its OEM revenues, compared to fiscal 2002.

                                       19
<PAGE>

Cost of Sales and Gross Profit

Cost of sales in fiscal 2003  decreased by 20% to $7.7 million  compared to $9.7
million in fiscal 2002 and $14.2 million in fiscal 2001. The decreasing  cost of
sales generally reflect the decreased sales revenue.

The Company's gross profit as a percentage of net sales decreased  marginally to
35.5% in fiscal 2003,  from 36.0%,  in fiscal 2002. The decrease in fiscal 2003,
compared to fiscal 2002 was due primarily to steep pricing declines of broadband
and  wireless  products  during the year,  which the Company was not  completely
successful offsetting by reducing manufacturing costs. During fiscal 2003, sales
prices  continued  to be affected by heavy  competitive  pricing  pressures  and
reduced volumes for many of the Company's  products.  The Company has brought to
market and plans to continue to bring to market lower cost replacement  products
and is  focusing  its  product  development  efforts on  introducing  additional
unmanaged Gigabit products and managed  IntraCore  products to help offset those
products which are under the most significant margin pressure.  The Company will
continue  to  take   additional   measures   going   forward  to  maintain   its
competitiveness in the market place.

The  increase  in gross  margin in fiscal  2002  compared  to fiscal  2001,  was
primarily due to reduced  write downs of  inventories  due to tighter  inventory
controls and  successful  cost  reductions  of a large  portion of the Company's
products.  During  fiscal 2002,  sales prices  continued to be affected by heavy
competitive pricing pressures.

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

Sales and Marketing

Sales and  marketing  expenses were $3.1 million in fiscal 2003 compared to $3.9
million in fiscal 2002,  or a decrease of 20%.  Fiscal 2002 sales and  marketing
expenses  decreased  $1.2  million,  or 23%,  compared to $5.0 million in fiscal
2001.  As a percentage of net sales,  sales and  marketing  expenses were 26.2%,
25.5%,  and 23.2%,  in fiscal 2003,  2002, and 2001,  respectively.  The reduced
fiscal 2003  expenditures  in absolute  dollars and increase as of percentage of
sales reflect  reduced sales levels during fiscal 2003 and reduced  expenditures
for outside representative  commissions,  personnel related costs,  co-operative
advertising,   and  trade  advertising  activities.   The  reduced  fiscal  2002
expenditures  as compared to fiscal 2001 primarily  reflect reduced sales levels
and related sales based activity expenditures.

The Company expects that its sales and marketing expenses will remain at current
levels, or increase slightly in fiscal 2004 in absolute dollars. As a percent of
total sales, the Company believes these  expenditures  should decrease  slightly
compared to fiscal 2003.

                                       20
<PAGE>

Research and Development

Research  and  development  expenses  decreased by 19% to $2.1 million in fiscal
2003, from $2.6 million in fiscal 2002.  Research and development  expenses were
$2.8  million  in fiscal  2001.  As a  percentage  of net  sales,  research  and
development  expenses were 17.7%,  16.7%,  and 12.7%, in fiscal 2003,  2002, and
2001,  respectively.  The  decrease  in  research  and  development  expenses in
absolute  dollars in fiscal 2003  compared to fiscal 2002 was due  primarily  to
decreases in personnel related  expenditures as a result of salary and headcount
reductions  implemented by the Company. The increase in research and development
expenses  as a  percentage  of sales  was due to the  decline  in  revenue.  The
decrease in research and  development  expenses  from fiscal 2001 to fiscal 2002
was due to  decreases in personnel  related  expenditures  as a result of salary
reductions and lower depreciation expense during fiscal 2002.

The Company  expects that  spending on research and  development  in fiscal 2004
will remain  fairly flat or decrease  slightly in  comparison  to fiscal 2003 in
absolute  dollars,  while the  Company  continues  to leverage  the  engineering
expertise of its strategic partners.

General and Administrative

General and  administrative  expenses  decreased  to $1.2 million in fiscal 2003
from $1.3 million in fiscal 2002. General and administrative  expenses were $1.8
million in fiscal 2001. As a percentage of net sales, general and administrative
expenses  were  9.7%,  8.4%,  and 8.5% in fiscal  years  2003,  2002,  and 2001,
respectively.  The decrease in general and  administrative  expenses in absolute
dollars  in fiscal  2003 is  primarily  related  to  reduced  personnel  related
expenditures.  The  increase  in  general  and  administrative  expenses  as  of
percentage  of sales was due to the decline in revenue.  The decrease in general
and  administrative  expenses  in absolute  dollars in fiscal  2002  compared to
fiscal 2001, was primarily related to reduced personnel related expenditures.

The  Company  expects  that  general  and  administrative  expenses  will remain
constant or decrease somewhat in fiscal 2004 in absolute dollars.

Off-Balance Sheet Arrangements

During  fiscal  year 2003 the Company  did not engage in any  off-balance  sheet
arrangements as defined in Item 303 (a) (4) of the SEC's Regulation S-K.

Income Taxes

The Company  recorded no provision or benefit for federal and state income taxes
for fiscal  2003,  2002,  or 2001 due  principally  to the fact that the Company
incurred  losses  and a  full  valuation  allowance  was  recorded  against  net
operating losses and other tax credits generated in those

                                       21
<PAGE>

years.  The Company has recorded a full valuation  allowance on its deferred tax
assets as it is more likely than not that these assets will not be realized.

Liquidity and Capital Resources

During  fiscal  2003,  the  Company's  operating  activities  used  cash of $1.5
million.  During fiscal 2002, the Company's  operating  activities  used cash of
$1.7 million.  During fiscal 2001, the Company's operating  activities used cash
of $1.4 million.

During fiscal 2003,  net cash used in  operations  resulted  primarily  from the
Company's net operating  loss of $2.2 million and decreases in accounts  payable
and accrued expenses of $1.0 million and $0.2 million, respectively.  These uses
were offset primarily by decreases in accounts  receivable and inventory of $1.1
million and $0.6 million, respectively.

During fiscal 2002,  net cash used in  operations  resulted  primarily  from the
Company's net operating  loss of $2.2 million,  and a combined  decrease in both
accounts payable and accrued expenses of $0.4 million. These uses were partially
offset by decreases of $0.3 million in each of accounts  receivable,  inventory,
and prepaid expenses. Days of sales outstanding in accounts receivable, net, was
53 at the end of fiscal 2003.

Net cash used in  investing  activities,  including  purchases  of property  and
equipment, in fiscal 2003, fiscal 2002 and fiscal 2001 was insignificant.

In fiscal  2003,  fiscal 2002 and fiscal  2001,  net cash  provided by financing
activities was insignificant.

At September 27, 2003, the Company had cash and cash equivalents of $1.7 million
compared to $3.3 million at September 28, 2002,  which represents a 48% decline.
Working capital was $1.6 million at September 27, 2003, compared to $3.8 million
at September 28, 2002.

The Company has a bank line of credit that provides for maximum borrowings of up
to $2.0  million  and is  limited  to a  certain  percentage  (60%) of  eligible
accounts receivable.  The Company has not drawn on this line of credit. The line
of credit is subject to certain  covenant  requirements,  including  maintaining
certain net tangible  worth  amounts.  The line of credit  agreement  was set to
expire in November  2003.  However,  the parties  entered  into an  amendment to
extend the line of credit term to January 31, 2004 during which time the Company
negotiated a renewal of the line of credit with the bank.  On February 11, 2004,
the line of credit was renewed with a new maturity  date of January 30, 2005. As
of February  11,  2004,  approximately  $500,000  was  available on this line of
credit and the  Company  was in  compliance  with the  covenants  of the line of
credit agreement.

On September  30, 1999,  the  Company's  stock ceased to be traded on the NASDAQ
National  Market  System and was moved to the  Over-The-Counter  (OTC)  Bulletin
Board.  During fiscal 2000,  the Company  successfully  completed a $1.5 million
private  placement  of 500,000  shares

                                       22
<PAGE>

of common stock,  however the Company's access to further equity financing could
be affected by the level of the Company's share price and the Company's  listing
status.

The Company has an operating  lease for its main facility that expires on August
31, 2004.  Future  minimum lease payments under all leases at September 27, 2003
are as follows (in thousands):

         Year
         ----
         2004          821
         2005            9
                      -----
                     $ 830

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.

For the fiscal year ended  September 27, 2003, the Company  recorded a loss from
operations  of $2.2.  million  and cash used in  operating  activities  was $1.5
million.  In  the  fiscal  years  2002  and  2001,  the  Company  also  incurred
substantial losses and negative cash flows from operations.  As of September 27,
2003,  the Company had an accumulated  deficit of $26.6 million.  Based upon the
Company's  operating  budget and cash flow  projections  the Company  expects to
continue to experience  negative cash flows from operations  through fiscal year
2004.

The Company is currently  pursuing  additional  equity financing and has renewed
its line of credit  agreement  through  January  30,  2005.  The Company is also
considering  other  corporate  transactions  as a means of providing  additional
financing.  Failure  to  raise  additional  capital,  secure  other  sources  of
financing or enter into a corporate  transaction  in the near-term  would have a
material  adverse  effect on the  Company's  ability  to  achieve  its  intended
business  objectives and raises  substantial doubt about its ability to continue
as a going concern.

Factors Affecting Future Operating Results

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

                                       23
<PAGE>

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

The  Company's   success  also  depends  to  a   significant   extent  upon  the
contributions  of  key  sales,  marketing,   engineering,   manufacturing,   and
administrative  employees,  and on the  Company's  ability to attract and retain
highly qualified  personnel,  who are in great demand. None of the Company's key
employees  are subject to a  non-competition  agreement  with the Company.  High
employee  turnover in the technology  industry is typical.  Although the Company
has reduced its workforce  during fiscal 2002 and fiscal 2003,  vacancies in the
workforce must be promptly filled,  because the loss of current key employees or
the Company's  inability to attract and retain other qualified  employees in the
future could have a material adverse effect on the Company's business, financial
condition and results of operations.

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

The 10/100 Mbps and 100 Mbps Ethernet technology (100BASE-T, or "Fast-Ethernet")
has  become a  standard  networking  topology  in the  networking  and  computer
industries.  This standard has been adopted widely by end-user customers because
of its ability to  increase  the  efficiency  of LANs and because of its ease of
integration  into  existing  10BASE-T  networks.  Over the  years,  the speed of
Ethernet has  increased  by 100X to 1000 Mbps.  The  company's  key products are
designed  to  function  at  speeds of  10/100/1000  Mbps to  maintain  backwards
compatibility  with earlier  Ethernet  standards plus the newer Gigabit Ethernet
standard. In addition, Gigabit (1000BASE-T,  or 1000Mbps) Ethernet technology is
increasingly  being adopted in the backbone of large enterprises and educational
institutions.  In that regard,  the Company's  future  operating  results may be
dependent  on  the  market   acceptance  and  the  rate  of  adoption  of  these
technologies, as well as timely product releases. There can be no assurance that
the market will accept,  adopt,  or continue to use this new  technology or that
the Company can meet market demand in a timely manner.

The Company's success will depend in part on its ability to accurately  forecast
its future sales due to the lead time required to order  components and assemble
products.  If the  Company's

                                       24
<PAGE>

product sales forecasts are below actual product demand,  there may be delays in
fulfilling  product  orders;  consequently,  the Company  could lose current and
future sales to  competitors.  Alternatively,  if the  Company's  product  sales
forecasts are above actual product  demand,  this may result in excess orders of
components  or  assembled  products  and a  build-up  of  inventory  that  would
adversely affect working capital.

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

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

The Company has incurred  net losses  during its last three fiscal years and has
an accumulated  deficit at September 27, 2003 of $26.6 million.  These recurring
losses and  accumulated  deficit  raise  substantial  doubts about the Company's
ability to  continue  as a going  concern.  The  Company is  currently  pursuing
additional  equity  financing and has renewed its line of credit  agreement that
expired  January 31,  2004.  The  Company is also  considering  other  corporate
transactions as a means of providing additional financing.  The Company believes
it must be current with its filings with the Securities and Exchange  Commission
at the earliest  opportunity  to complete such a  transaction.  Failure to raise
additional capital,  secure other sources of financing or enter into a corporate
transaction  would have a material  adverse  effect on the Company's  ability to
achieve its  intended  business  objectives  and  sustain its desired  levels of
operation.

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  by  the  Company  or its
competitors,  changes in product pricing,  material costs or customer discounts,
the size and timing of customer  orders,  distributor  and  end-user  purchasing
cycles,  fluctuations  in channel  inventory  levels,  variations  in the mix of
product sales,  manufacturing  delays or  disruptions in sources of supply,  the
current  economic  downturn and  seasonal  purchasing  patterns  specific to the
computer and networking industries.  The Company's future operating results will
depend, to a large extent,  on its ability to anticipate and

                                       25
<PAGE>

successfully  react to these  and  other  factors.  Failure  to  anticipate  and
successfully  react to these  and  other  factors  could  adversely  affect  the
Company's business, financial condition and results of operations.

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

Due to the time  required to  determine  the restated  balances  included in the
Company's recent Amended Annual Report on Form 10-K (Form 10-K/A) for the fiscal
year ended  September 28, 2002 which included a restatement of each of the three
fiscal years then ended, the Company recently filed its Form 10-Q for the period
ended June 28, 2003 on January 28, 2004. The Company believes that once it files
this report on Form 10-K and its Form 10-Q for the quarter  ended  December  27,
2003,  it will be current in its SEC  filings and in  compliance  with the OTCBB
listing requirements. However, the Company has no assurances this would occur

Critical Accounting Policies and Estimates

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

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

                                       26
<PAGE>

action to increase promotional  programs resulting in incremental  reductions in
revenue at the time the  incentive is offered based on our estimate of inventory
in the channel that is subject to such pricing actions.

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

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

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

Recent Accounting Pronouncements

In November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-21, "Revenue  Arrangements with Multiple  Deliverables." EITF Issue
No. 00-21 provides  guidance on how to account for arrangements that involve the
delivery or  performance  of multiple  products,  services  and/or rights to use
assets.   The  provisions  of  EITF  Issue  No.  00-21  will  apply  to  revenue
arrangements  entered into in fiscal periods  beginning after June 15, 2003. The
Company is currently  evaluating  the effect that the adoption of EITF Issue No.
00-21  will have on its  results of  operations,  financial  condition  and cash
flows.

In November  2002, the Financial  Accounting  Standards  Board  ("FASB")  issued
Interpretation No. 45, "Guarantor's  Accounting and Disclosure  Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 requires  certain  guarantees to be recorded at fair value and requires a
guarantor to make  disclosures,  even when the likelihood of making any payments
under the guarantee is remote. For those guarantees and indemnifications that do
not fall within initial recognition and measurement  requirements of FIN 45, the
Company  must  continue  to  monitor  the  conditions  that are  subject  to the
guarantees and  indemnifications,  as required under existing generally accepted
accounting  principles,  to identify if a loss has been incurred. If the Company
determines that it is probable that a loss has been incurred, any such estimable
loss would be recognized.  The initial recognition and measurement  requirements
do not apply to the Company's product warranties or to the provisions  contained
in the majority of the Company's  software  license  agreements  that  indemnify
licensees of the Company's software from damages and costs resulting from claims
alleging that the Company's software infringes the intellectual  property rights
of a third  party.  The Company has  adopted  the  provisions  of FIN 45 for the
fiscal year ended September 27, 2003.

                                       27
<PAGE>

In  January  2003,  the FASB  issued  FASB  Interpretation  No.  46 ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated  financial  support  from  other  parties.  FIN  46  is
effective immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to  February  1, 2003,  the  provisions  of FIN 46 must be applied for the first
interim or annual  period  beginning  after June 15, 2003.  However,  in October
2003,  the FASB  deferred the  effective  date of FIN 46 to the end of the first
interim or annual period ending after  December 15, 2003 for those  arrangements
entered  into prior to February  1, 2003.  In December  2003,  the FASB  further
deferred the effective  date of FIN 46 to the end of the first interim or annual
reporting  period  ending  after  March 15, 2004 for those  non-special  purpose
entity arrangements created prior to February 1, 2003. The Company believes that
the  adoption of this  standard  will have no material  impact on its  financial
statements.

In April 2003,  the FASB issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 149,  "Amendment  of Statement 133 on  Derivative  Instruments  and
Hedging  Activities."  SFAS 149 amends and clarifies  accounting  for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for  hedging  activities  under SFAS 133.  In  particular,  this
Statement  clarifies  under what  circumstances  a contract  with an initial net
investment  meets  the  characteristic  of a  derivative  and when a  derivative
contains a financing  component that warrants special reporting in the statement
of cash flows. This Statement is generally  effective for contracts entered into
or modified after June 30, 2003 and is not expected to have a material impact on
the Company's financial statements.

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics of both Liabilities and Equity." The Statement
improves the accounting for certain  financial  instruments that, under previous
guidance,  issuers could account for as equity.  The new Statement requires that
those  instruments  be  classified  as  liabilities  in  statements of financial
position.  This statement is effective for interim periods  beginning after June
15, 2003.  The Company does not expect that the adoption of SFAS 150 will have a
material effect on its financial position.

In December  2003, the Financial  Accounting  Standard Board issued SFAS No. 132
(Revised 2003),  Employers'  Disclosures about Pensions and Other Postretirement
Benefits.  This Statement amends  Statements No. 87,  Employers'  Accounting for
Pensions,  No. 88,  Employers'  Accounting for Settlements  and  Curtailments of
Defined  Benefit  Pension  Plans  and for  Termination  Benefits,  and No.  106,
Employers' Accounting for Postretirement Benefits Other Than Pensions.  However,
the Statement does not change the recognition  and  measurement  requirements of
those Statements.  This Statement retains the disclosure  requirements contained
in SFAS No. 132, Employers'  Disclosures about Pensions and Other Postretirement
Benefits,  which it replaces and requires additional disclosure.  Additional new
disclosure  includes  actual mix of plan assets by category,  a  description  of
investment  strategies and policies  used, a

                                       28
<PAGE>

narrative  description  of  the  basis  for  determining  the  overall  expected
long-term   rate  of  return  on  asset   assumption   and  aggregate   expected
contributions.  The Company  does not expect that the  adoption of SFAS 132 will
have a material affect on its financial statements.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk. As of September 27, 2003,  the Company's cash and investment
portfolio did not include fixed-income securities.  Due to the short-term nature
of the Company's investment portfolio,  an immediate 10% increase or decrease in
interest rates would not have a material  effect on the fair market value of the
Company's  portfolio.  Since the  Company  has the  ability  to  liquidate  this
portfolio,  it does  not  expect  its  operating  results  or cash  flows  to be
materially  affected to any significant  degree by the effect of a sudden change
in market interest rates on its investment portfolio.

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

                                       29
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         Index to Financial Statements and Financial Statement Schedule

Financial Statements:

       Report of Independent Registered Public Accounting Firm               31

       Report of Independent Accountants                                     32

       Balance Sheets at September 27, 2003 and September 28, 2002           33

       Statements of Operations for the years ended September 27, 2003,
         September 28, 2002 and September 29, 2001                           34

       Statements of Stockholders' Equity for the years ended
         September 27, 2003, September 28, 2002, and September 29, 2001      35

       Statements of Cash Flows for the years ended September 27, 2003,
         September 28, 2002 and September 29, 2001                           36

       Notes to Financial Statements                                         37

Financial Statement Schedule:

       Schedule II - Valuation and Qualifying Accounts                       63

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

                                       30
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

January 26, 2004, except for Note 7,
    which is as of February 11, 2004


The Board of Directors and Stockholders of

    Asante Technologies, Inc.

We have audited the accompanying balance sheet of Asante  Technologies,  Inc. at
September  27, 2003,  and the related  statements of  operations,  stockholders'
equity,  and cash flows for the fiscal year then ended.  Our audit also included
the  accompanying  financial  statement  schedule  for  the  fiscal  year  ended
September 27, 2003.  These  financial  statements  and the  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 audit.

We  conducted  our audit in  accordance  with  standards  of the Public  Company
Accounting Oversight Board. Those standards 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.  An
audit also includes  assessing the accounting  principles  used and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

In our opinion,  the financial  statements  audited by us present fairly, in all
material  respects,  the  financial  position  of Asante  Technologies,  Inc. at
September 27, 2003, and the results of its operations and its cash flows for the
fiscal  year then  ended in  conformity  with  accounting  principles  generally
accepted in the United  States of America.  Also,  in our opinion,  based on our
audit, the financial  statement  schedule  referred to in the first paragraph of
our report, presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related financial statements.

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

ODENBERG, ULLAKKO, MURANISHI & CO. LLP
San Francisco, California

                                       31
<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 under
Item 8 present  fairly,  in all material  respects,  the  financial  position of
Asante  Technologies,  Inc.  at  September  28,  2002,  and the  results  of its
operations  and its cash  flows  for each of the two years in the  period  ended
September 28, 2002 in conformity with accounting  principles  generally accepted
in the United  States of America.  In addition,  in our opinion,  the  financial
statement  schedule  listed in the  accompanying  index  under  Item 8  presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related financial  statements.  These financial  statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  and  the  financial  statement  schedule  based  on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

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

PricewaterhouseCoopers LLP
San Jose, California
November 1, 2002, except for Note 10,
as to which the date is March 13, 2003,
Note 7, as to which the date is November 30, 2003
and Note 1, as to which the date is
December 30, 2003

                                       32
<PAGE>

                            ASANTE TECHNOLOGIES, INC

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

<TABLE>
<CAPTION>
                                                                                                September 27,       September 28,
                                                                                                    2003                2002
                                                                                                  --------            --------
<S>                                                                                               <C>                 <C>
Assets

Current assets:
      Cash and cash equivalents                                                                   $  1,723            $  3,282
      Accounts receivable, net of allowance for doubtful accounts,
          rebates and sales returns of $1,196 and $1,770 in 2003
          and 2002, respectively                                                                     1,759               2,821
      Inventory                                                                                        930               1,515
      Prepaid expenses and other current assets                                                         27                 141
                                                                                                  --------            --------
             Total current assets                                                                    4,439               7,759

Property and equipment, net                                                                             51                  90
Other assets                                                                                           172                 172
                                                                                                  --------            --------
             Total assets                                                                         $  4,662            $  8,021
                                                                                                  ========            ========

Liabilities and stockholders' equity
Current liabilities:
      Accounts payable                                                                            $  1,050            $  2,016
      Accrued expenses                                                                               1,779               1,932
                                                                                                  --------            --------
             Total current liabilities                                                               2,829               3,948
                                                                                                  --------            --------

Commitments (Note 9)
Stockholders' equity:
      Preferred stock, $0.001 par value; 2,000,000 shares authorized;
          no shares issued or outstanding in 2003 and 2002                                            --                  --
      Common stock, $0.001 par value; 25,000,000 shares authorized;
          10,149,521 and 10,066,020 shares issued and outstanding in
          2003 and 2002, respectively                                                                   10                  10
      Additional paid-in capital                                                                    28,417              28,412
      Accumulated deficit                                                                          (26,594)            (24,349)
                                                                                                  --------            --------
             Total stockholders' equity                                                              1,833               4,073
                                                                                                  --------            --------
             Total liabilities and stockholders' equity                                           $  4,662            $  8,021
                                                                                                  ========            ========
</TABLE>

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

                                       33
<PAGE>

                            ASANTE TECHNOLOGIES, INC.

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


<TABLE>
<CAPTION>
                                                                                             Fiscal Year Ended
                                                                          ----------------------------------------------------------
                                                                          September 27,         September 28,          September 29,
                                                                              2003                  2002                  2001
                                                                            --------              --------              --------
<S>                                                                         <C>                   <C>                   <C>
Net sales                                                                   $ 12,008              $ 15,237              $ 21,732
Cost of sales                                                                  7,757                 9,750                14,177
                                                                            --------              --------              --------
Gross profit                                                                   4,251                 5,487                 7,555
                                                                            --------              --------              --------

Operating expenses:
      Sales and marketing                                                      3,154                 3,873                 5,040
      Research and development                                                 2,099                 2,552                 2,756
      General and administrative                                               1,168                 1,281                 1,846
                                                                            --------              --------              --------
           Total operating expenses                                            6,421                 7,706                 9,642
                                                                            --------              --------              --------

Loss from operations                                                          (2,170)               (2,219)               (2,087)
Interest and other income (expense), net                                         (75)                   11                   228
                                                                            --------              --------              --------

Net loss                                                                    $ (2,245)             $ (2,208)             $ (1,859)
                                                                            ========              ========              ========

Basic and diluted loss per share                                            $  (0.22)             $  (0.22)             $  (0.19)
                                                                            ========              ========              ========

Shares used in per share calculation
      Basic and diluted                                                       10,138                10,024                 9,948
                                                                            ========              ========              ========
</TABLE>

    The accompanying notes are an integral part of these financial statements

                                       34
<PAGE>

                            ASANTE TECHNOLOGIES, INC

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

<TABLE>
<CAPTION>
                                                              Common Stock            Additional
                                                      --------------------------        Paid-in       Accumulated     Stockholders'
                                                         Shares         Amount          Capital         Deficit          Equity
                                                      ----------      ----------      ----------      ----------       ----------
<S>                                                    <C>            <C>             <C>             <C>              <C>
Balances as of September 30, 2000,                     9,912,463      $       10      $   28,360      $  (20,282)      $    8,088

Common stock issued under stock plans                     90,718            --                42            --                 42
Net loss                                                    --              --              --            (1,859)          (1,859)
                                                      ----------      ----------      ----------      ----------       ----------

Balances as of September 29, 2001                     10,003,181              10          28,402         (22,141)           6,271


Common stock issued under stock plans                     62,839            --                10            --                 10
Net loss                                                    --              --              --            (2,208)          (2,208)
                                                      ----------      ----------      ----------      ----------       ----------

Balances as of September 28, 2002                     10,066,020              10          28,412         (24,349)           4,073

Common stock issued under stock plans                     83,501            --                 5            --                  5
Net loss                                                    --              --              --            (2,245)          (2,245)
                                                      ----------      ----------      ----------      ----------       ----------

Balances as of September 27, 2003                     10,149,521      $       10      $   28,417      $  (26,594)      $    1,833
                                                      ==========      ==========      ==========      ==========       ==========
</TABLE>

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

                                       35
<PAGE>

                            ASANTE TECHNOLOGIES, INC

                            STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                                Fiscal Year ended
                                                                                  ----------------------------------------------
                                                                                  September 27,    September 28,   September 29,
                                                                                      2003             2002             2001
                                                                                    -------          -------          -------
<S>                                                                                 <C>              <C>              <C>
Cash flows from operating activities:
       Net loss                                                                     $(2,245)         $(2,208)         $(1,859)
       Adjustments to reconcile net  loss to
         net cash used in operating activities:
           Depreciation and amortization                                                 56               88              184
           Provision for doubtful accounts receivable,
             rebates and sales returns                                                1,257              939            1,010
       Changes in operating assets and liabilities:
           Accounts receivable                                                         (196)            (651)             696
           Inventory                                                                    585              333              627
           Prepaid expenses and other current assets                                    114              259              123
           Accounts payable                                                            (968)            (171)          (1,178)
           Accrued expenses                                                            (152)            (313)            (646)
           Payable to stockholder                                                      --                 (8)            (322)
                                                                                    -------          -------          -------
                    Net cash used in operating activities                            (1,547)          (1,732)          (1,365)
                                                                                    -------          -------          -------

   Cash flows from investing activities:
          Purchases of property and equipment                                           (17)             (61)             (40)
           Other                                                                       --               --                 (5)
                                                                                    -------          -------          -------
                       Net cash used in investing activities                            (17)             (61)             (45)
                                                                                    -------          -------          -------
   Cash flows from financing activities:
            Issuance of common stock                                                      5               10               42
                                                                                    -------          -------          -------
                 Net cash provided by financing activities                                5               10               42
                                                                                    -------          -------          -------
   Net decrease in cash and cash equivalents                                         (1,559)          (1,783)          (1,368)

   Cash and cash equivalents at beginning of fiscal year                              3,282            5,065            6,433
                                                                                    -------          -------          -------
   Cash and cash equivalents at end of fiscal year                                  $ 1,723          $ 3,282          $ 5,065
                                                                                    =======          =======          =======
</TABLE>

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

                                       36
<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.

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.

For the fiscal year ended  September 27, 2003, the Company  incurred a loss from
operations  of $2.2  million  and cash  used in  operating  activities  was $1.5
million.  In fiscal years 2002 and 2001,  the Company also incurred  substantial
operating  losses and negative cash flows from  operations.  As of September 27,
2003,  the Company had an accumulated  deficit of $26.6 million.  Based upon the
Company's  operating  budget and cash flow  projections,  the Company expects to
continue to experience  negative cash flows from operations  through fiscal year
2004.

At September 27, 2003, the Company had cash and cash equivalents of $1.7 million
compared to $3.3 million at September 28, 2002,  which represents a 48% decline.
Working capital was $1.6 million at September 27, 2003, compared to $3.8 million
at September 28, 2002. On February 11, 2004,  the Company  renewed its bank line
of credit  agreement  which provides for  borrowings of up to $2.0 million.  The
renewed line of credit expires on January 30, 2005.  However,  borrowings  under
the line of credit are subject to compliance  with certain  financial  covenants
and are limited to a specified percentage of eligible accounts receivable.

The recurring  losses,  accumulated  deficit and expect continued  negative cash
flows from operations  raise  substantial  doubt about the Company's  ability to
continue as a going concern.

On December 18, 2003, the Company signed a Letter of Intent with UNETEK, for the
private  investment  of funds with the Company for  approximately  $3.0 million.
Additionally,  on December 23,  2003,  the Company  entered  into a  non-binding
Letter of Intent to merge with  Oblique,  Inc. The merger is  conditioned  upon,
among other  things,  an  expedited  due  diligence  period,  and several  other
factors,  including  an  expedited  process  to  arrive at a  Definitive  Merger

                                       37
<PAGE>

Agreement with certain  minimum  acceptable  terms including a bridge funding of
approximately  $1.0 million.  The Company  plans on proceeding  with only one of
these transactions,  however, and the Board of Directors is currently evaluating
each of these proposals.

Should the Company be unable to complete  the merger or to obtain the $3 million
private  investment  of funds in the Company,  it will need to raise  additional
capital, secure other sources of financing or enter into a corporate transaction
in order to finance its operations through fiscal 2004. If required, the Company
may not be able to complete any of these alternative  transactions on acceptable
terms, or at all.

Management estimates and assumptions

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the use of estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of contingent  assets and  contingent  liabilities at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. The most significant assumptions are employed in estimates
used in determining accruals for sales rebates and returns,  legal contingencies
and the valuation of deferred income tax assets and  liabilities,  as well as in
estimates used in applying the revenue recognition policy.  Actual results could
differ from estimated results.

Revenue recognition

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

Cash and cash equivalents

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.

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

                                       38
<PAGE>

September 27, 2003 and September 28, 2002 four  customers  accounted for 59% and
66%, respectively,  of the accounts receivable balance. In fiscal 2003, 2002 and
2001 one customer accounted for 33%, 40% and 46%, 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.

Long-lived assets

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

Income taxes

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

Research and development costs

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

Stock-based compensation

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

The Company  accounts for stock issued to  non-employees  in accordance with the
provisions  of  SFAS  123  and  Emerging  Issues  Task  Force  Issue  No.  96-18
"Accounting for Equity  Instruments

                                       39
<PAGE>

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  cash  equivalents,  accounts
receivable  and accounts  payable  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 2002 and 2001 statements of
operations have been reclassified to conform to current period presentation.

Segment information

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

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

                                             2003           2002           2001
                                             ----           ----           ----
United States                                  82%            80%            76%
Europe                                         12             14             14
Other                                           6              6             10
                                              ---            ---            ---
                                              100%           100%           100%
                                              ===            ===            ===

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

Recently issued accounting pronouncements

In November 2002, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 00-21, "Revenue  Arrangements with Multiple  Deliverables." EITF Issue
No. 00-21 provides  guidance on how to account for arrangements that involve the
delivery or  performance  of multiple  products,  services  and/or rights to use
assets.   The  provisions  of  EITF  Issue  No.  00-21  will  apply  to  revenue
arrangements  entered into in fiscal periods  beginning after June 15, 2003. The
Company is currently  evaluating  the effect that the adoption of EITF Issue No.
00-21  will have on its  results of  operations,  financial  condition  and cash
flows.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure  Requirements for Guarantees,  Including  Indirect  Guarantees of
Indebtedness  of Other" ("FIN 45").  FIN 45 requires  certain  guarantees  to be
recorded at fair value and requires a

                                       40
<PAGE>

guarantor to make  disclosures,  even when the likelihood of making any payments
under the guarantee is remote. For those guarantees and indemnifications that do
not fall within initial recognition and measurement  requirements of FIN 45, the
Company  must  continue  to  monitor  the  conditions  that are  subject  to the
guarantees and  indemnifications,  as required under existing generally accepted
accounting  principles,  to identify if a loss has been incurred. If the Company
determines that it is probable that a loss has been incurred, any such estimable
loss would be recognized.  The initial recognition and measurement  requirements
do not apply to the Company's product warranties or to the provisions  contained
in the majority of the Company's  software  license  agreements  that  indemnify
licensees of the Company's software from damages and costs resulting from claims
alleging that the Company's software infringes the intellectual  property rights
of a third party. The Company has adopted the provisions of FIN45 for the fiscal
year ended September 27, 2003.

In  January  2003,  the FASB  issued  FASB  Interpretation  No.  46 ("FIN  46"),
"Consolidation of Variable Interest Entities,  an Interpretation of ARB No. 51."
FIN 46 requires  certain  variable  interest  entities to be consolidated by the
primary  beneficiary of the entity if the equity  investors in the entity do not
have the  characteristics  of a  controlling  financial  interest or do not have
sufficient  equity at risk for the  entity to  finance  its  activities  without
additional  subordinated  financial  support  from  other  parties.  FIN  46  is
effective immediately for all new variable interest entities created or acquired
after January 31, 2003. For variable interest entities created or acquired prior
to  February  1, 2003,  the  provisions  of FIN 46 must be applied for the first
interim or annual  period  beginning  after June 15, 2003.  However,  in October
2003,  the FASB  deferred the  effective  date of FIN 46 to the end of the first
interim or annual period ending after  December 15, 2003 for those  arrangements
entered  into prior to February  1, 2003.  In December  2003,  the FASB  further
deferred the effective  date of FIN 46 to the end of the first interim or annual
reporting  period  ending  after  March 15, 2004 for those  non-special  purpose
entity arrangements created prior to February 1, 2003. The Company believes that
the  adoption of this  standard  will have no material  impact on its  financial
statements.

In April 2003,  the FASB issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 149,  "Amendment  of Statement 133 on  Derivative  Instruments  and
Hedging  Activities."  SFAS 149 amends and clarifies  accounting  for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for  hedging  activities  under SFAS 133.  In  particular,  this
Statement  clarifies  under what  circumstances  a contract  with an initial net
investment  meets  the  characteristic  of a  derivative  and when a  derivative
contains a financing  component that warrants special reporting in the statement
of cash flows. This Statement is generally  effective for contracts entered into
or modified after June 30, 2003 and is not expected to have a material impact on
the Company's financial statements.

In May 2003, the FASB has issued SFAS No. 150, "Accounting for Certain Financial
Instruments with  Characteristics of both Liabilities and Equity." The Statement
improves the accounting for certain  financial  instruments that, under previous
guidance,  issuers could account for as equity.  The new Statement requires that
those  instruments  be  classified  as  liabilities  in  statements of financial
position.  This statement is effective for interim periods  beginning after

                                       41
<PAGE>

June 15,  2003.  The Company  does not expect that the adoption of SFAS 150 will
have a material effect on its financial positions.

In December  2003, the Financial  Accounting  Standard Board issued SFAS No. 132
(Revised 2003),  Employers'  Disclosures about Pensions and Other Postretirement
Benefits.  This Statement amends  Statements No. 87,  Employers'  Accounting for
Pensions,  No. 88,  Employers'  Accounting for Settlements  and  Curtailments of
Defined  Benefit  Pension  Plans  and for  Termination  Benefits,  and No.  106,
Employers' Accounting for Postretirement Benefits Other Than Pensions.  However,
the Statement does not change the recognition  and  measurement  requirements of
those Statements.  This Statement retains the disclosure  requirements contained
in SFAS No. 132, Employers'  Disclosures about Pensions and Other Postretirement
Benefits,  which it replaces and requires additional disclosure.  Additional new
disclosure  includes  actual mix of plan assets by category,  a  description  of
investment  strategies and policies  used, a narrative  description of the basis
for  determining  the  overall  expected  long-term  rate  of  return  on  asset
assumption  and aggregate  expected  contributions.  The Company does not expect
that the  adoption  of SFAS 132 will have a  material  affect  on its  financial
statements.


Note 2. Basic and Diluted Net Loss Per Share

The  Company  computes  net  loss per  share in  accordance  with  SFAS No.  128
"Earnings  per Share"  (SFAS No.  128).  Basic net loss per share is computed by
dividing  net  loss  available  to  common   stockholders   (numerator)  by  the
weighted-average  number of common shares outstanding  (denominator)  during the
period. Diluted net 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 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 loss per share  computations  for the  periods  presented
below (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                          2003         2002         2001
                                                      ----------    ----------    -------
<S>                                                   <C>           <C>           <C>
Net loss                                              $   (2,243)   $   (2,208)   $(1,859)
                                                      ==========    ==========    =======

Weighted average common stock outstanding (basic)         10,150        10,024      9,948
Dilutive effect of options                                  --            --         --
                                                      ----------    ----------    -------
Weighted average common stock outstanding (diluted)       10,150        10,024      9,948
                                                      ==========    ==========    =======

Net loss per share:
Basic                                                 $    (0.22)   $    (0.22)   $ (0.19)
                                                      ==========    ==========    =======
Diluted                                               $    (0.22)   $    (0.22)   $ (0.19)
                                                      ==========    ==========    =======
</TABLE>

                                       42
<PAGE>


Diluted  net loss per share for the  fiscal  years  ended  September  27,  2003,
September 28, 2002 and September 29, 2001 excludes all dilutive potential common
shares as their effect is  antidilutive.  At September  27, 2003,  September 28,
2002 and September 29, 2001,  1,491,343,  1,719,520 and 1,613,058 of outstanding
options respectively, were excluded since their effect was antidilutive.


Note 3 Balance Sheet Components

                                                           2003          2002
                                                         -------        -------
                                                             (in thousands)
Inventory:
     Raw materials and component parts                   $    39        $   193
     Work-in-process                                          23             54
     Finished goods                                          868          1,268
                                                         -------        -------
                                                         $   930        $ 1,515
                                                         =======        =======
Property and equipment:
     Computers and R&D equipment                         $ 2,222        $ 2,205
     Furniture and fixtures                                  508            508
                                                         -------        -------
                                                           2,730          2,713
     Accumulated depreciation                             (2,679)        (2,623)
                                                         -------        -------
                                                         $    51        $    90
                                                         =======        =======
Accrued expenses:
     Payroll-related expenses                            $   339        $   574
     Sales promotion expenses                                395            314
     Legal and professional fees                             327            373
     Warranty                                                430            430
     Other                                                   288            241
                                                         -------        -------
                                                         $ 1,779        $ 1,932
                                                         =======        =======


Note 4. Warranties

We provide for  estimated  future  warranty  costs upon  product  shipment.  The
specific  terms and  conditions  of those  warranties  vary  depending  upon the
product  sold  and  country  in which we do  business.  In the case of  hardware
manufactured by our sub-contract  manufacturers,  our warranties generally start
from the delivery date and continue as follows:

<TABLE>
<CAPTION>
Product                                                                         Warranty Periods
-------                                                                         ----------------
<S>                                                                            <C>
Managed switches                                                               Three to five years
Unmanaged Gigabit Switches, Gigabit Adapters                                    One to five years
Unmanaged switches, hubs, USB hubs, routers, fiber                              One to five years
Other - Adapters                                                                One to five years
AsantePrint and AsanteTalk print routers, Gig cables                            Limited Lifetime
</TABLE>

                                       43
<PAGE>

Longer  warranty  periods  are  provided  on  a  limited  basis  including  some
"lifetime" warranties on some of the Company's older legacy products.

From  time to  time,  some of the  Company's  products  may be  manufactured  to
customer   specifications  and  their  acceptance  is  based  on  meeting  those
specifications.  We historically have experienced minimal warranty costs related
to these products. Factors that affect our warranty liability include the number
of shipped units,  historical  experience and  management's  judgment  regarding
anticipated  rates of warranty claims and cost per claim. We assess the adequacy
of our recorded  warranty  liabilities every quarter and make adjustments to the
liability if necessary.

Changes in the Company's warranty liability, which is included as a component of
"Accrued expenses" on the Balance Sheets, during the fiscal year ended September
27, 2003 are as follows (in thousands):

Balance as of September 28, 2002                                          $ 430
Provision for warranty liability for sales during the fiscal year           305
Settlements made during the fiscal year                                    (305)
                                                                          -----

Balance as of September 27, 2003                                          $ 430
                                                                          -----


Note 5. Related Party Transactions

The  Company  has  a  supply   agreement  (the  "OSE   Agreement")  with  Orient
Semiconductor  Electronics,   Ltd.,  ("OSE").  OSE  and  one  of  its  principal
shareholders  own, in aggregate,  approximately  11.8% of the  Company's  Common
Stock as of September 27, 2003. 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 27, 2003, the Company's firm purchase  commitments  under
the OSE Agreement were insignificant.

For fiscal  2003,  2002,  and 2001,  the Company  sold,  at cost,  approximately
$7,000,  $37,000,  and  $100,000,  respectively,  of component  parts to OSE and
purchased $100,000, $500,000, and $1.3 million, respectively, of goods from OSE.

On March 16, 2000,  the Company  signed a Stock  Purchase  Agreement  with Delta
Networks Inc., and Delta International  Holdings Ltd. The Company issued 500,000
shares at $3.00 per  share,  amounting  to  $500,000  from Delta  Networks,  and
$1,000,000 from Delta International Holdings Ltd. During fiscal years 2003, 2002
and 2001, the Company  purchased  approximately  $2.7 million,  $3.2 million and
$4.8 million respectively, of goods from Delta and sold component parts totaling
approximately $14,000, $10,000 and $80,000,  respectively,  at cost to Delta. At
September 27, 2003, the Company had  approximately  $100,000 in accounts payable
to Delta and  approximately  $9,000 in receivables  from Delta, and at September
28, 2002 the Company had

                                       44
<PAGE>

approximately $700,000 in accounts payable to Delta and approximately $29,000 in
receivables from Delta.


Note 6. Income Taxes

There was no  provision  or benefit for income  taxes made in fiscal years 2003,
2002,  or 2001 as the  Company  incurred  losses and  provided a full  valuation
allowance against its deferred tax assets.

Deferred  tax assets,  net,  comprise the  following  at September  27, 2003 and
September 28, 2002 (in thousands):

                                                           2003          2002
                                                         --------      --------
Deferred tax assets:
     Net operating losses                                $  7,936      $  5,141
     Research and development credits                       2,928         2,942
     Inventory-related reserves                             1,820         2,370
     Receivable and sales-related reserves                    510           687
     Compensation accruals                                    100           100
     Depreciation                                              98           103
     Other reserves and accruals                              128            91
                                                         --------      --------
         Total deferred tax assets                         13,520        11,434
         Valuation allowance                              (13,520)      (11,434)
                                                         --------      --------
                                                         $   --        $   --
                                                         ========      ========

The  Company   believes  that  sufficient   uncertainty   exists  regarding  the
realizability  of the deferred tax assets such that a full  valuation  allowance
was provided as of September 27, 2003 and September 28, 2002.

At September  27,  2003,  the Company had federal and state net  operating  loss
carryforwards  of approximately  $16.5 million and $11.1 million,  respectively,
available to offset  future  taxable  income which expire  beginning in 2018 and
2003,  respectively.  In  addition,  as of September  27, 2003,  the Company had
approximately  $1.9 million and approximately  $1.3 million of federal and state
research and development credits,  respectively. The federal credits will expire
beginning in 2012 if not utilized. The state tax credits will be carried forward
until utilized.

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

                                       45
<PAGE>

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


            `                                     2003        2002       2001
                                                -------     -------     -------
Tax (benefit) at U.S. statutory rate            $  (763)    $  (751)    $  (632)
State taxes, net of federal benefits               (131)       (106)        (90)
Other                                                44         192           6
Valuation allowance                                 850       1,051         716
                                                -------     -------     -------
                                                $   --      $   --      $   --
                                                =======     =======     =======


Note 7 Bank Borrowings

The Company has a bank line of credit that provides for maximum borrowings of up
to $2.0  million  and is  limited  to a  certain  percentage  (60%) of  eligible
accounts  receivable.  The  line  of  credit  is  subject  to  certain  covenant
requirements, including maintaining certain net tangible worth amounts. The line
of credit  agreement was set to expire in November  2003.  However,  the parties
entered  into an amendment to extend the line of credit term to January 31, 2004
during  which time the Company  negotiated  a renewal of its line of credit with
the bank. On February 11, 2004, the line of credit was renewed for a term of one
year with a  maturity  date of  January  30,  2005.  As of  February  11,  2004,
approximately  $500,000 was available on this line of credit and the Company was
in compliance with the covenants of the agreement.


Note 8. Stockholders' Equity

Preferred Stock

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

Stock Based Compensation Plans

As of September 27, 2003, the Company had granted options under five stock-based
compensation plans that are described below.

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

                                       46
<PAGE>

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 Directors Plan expired in October 30, 2003, and the
Company is in the process of drafting a replacement plan.

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.  The Key
Executive  Option Plan  expired in July 2003.  The Company is  currently  in the
process of drafting a replacement plan.

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

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>
                                                2003                             2002                            2001
                                   ---------------------------       ---------------------------       ---------------------------
                                                      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                  1,719,520          $   1.58       1,613,058          $   1.82       1,576,971          $   1.91
Granted                               29,000          $   0.10         230,726          $   0.17         125,500          $   0.81
Exercised                             (3,592)         $   0.19            --             --               (2,516)         $   0.87
Canceled                            (253,585)         $   2.48        (124,264)         $   2.22         (86,897)         $   1.74
                                   ---------                         ---------                         ---------
Ending Balance                     1,491,343          $   1.41       1,719,520          $   1.58       1,613,058          $   1.82
                                   =========                         =========                         =========
</TABLE>

                                       47
<PAGE>

The following table summarizes  information  about stock options  outstanding at
September 27, 2003:

<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>
      $0.0800 - $0.2800                             194,581            8.26          $0.20             72,040          $0.21
      $0.6400 - $0.8125                              46,650            7.33          $0.79             25,900          $0.79
      $0.8750 - $0.8750                             197,100            5.87          $0.88            195,433          $0.88
      $0.9000 - $1.000                               83,900            6.10          $0.94             81,500          $0.94
      $1.0320 - $1.0320                             600,000            5.85          $1.03            600,000          $1.03
      $1.6250 - $2.3750                             155,437            5.93          $1.98            137,378          $1.98
      $2.5000 - $4.6250                             149,150            2.72          $3.15            149,150          $3.14
      $5.0000 - $6.3125                              57,325            2.90          $5.69             57,325          $5.69
      $6.5000 - $6.5000                               1,000            2.79          $6.50              1,000          $6.50
      $6.8750 - $6.8750                               6,200            3.08          $6.88              6,200          $6.88
                                                  ---------                                         ---------
      $0.0800 - $6.8750                           1,491,343            5.79          $1.41          1,325,926          $1.52
                                                  =========                                         =========
</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  2003,  2002,  and 2001,  risk free
interest  rates  ranging  at the date of grant  from  2.90% to  6.79%;  expected
average volatility of 85%, 120%, and 119%, respectively; an expected option term
of four years,  and no expected  dividends.  The weighted  average fair value of
stock options granted under the plans for fiscal 2003, 2002, and 2001 was $0.16,
$0.17, and $0.69, 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  2003,  2002,  and 2001 were  79,909,
62,839, and 88,202 shares of common stock, respectively,  at an average price of
$0.07, $0.15, and $0.64, respectively.  On September 27, 2003, 264,102 shares of
common stock were available for future purchase.

                                       48
<PAGE>

The fair  value of the  employee's  purchase  rights  under  SFAS No.  123,  was
estimated using the Black-Scholes model with the following  assumptions used for
grants during fiscal 2003, 2002, and 2001: risk free interest rates ranging from
2.90% to  6.73%,  respectively,  expected  volatility  of 85%,  120%,  and 119%,
respectively,  an  expected  option  term of six months  for all  years,  and no
expected dividends. The weighted average fair value of stock purchased under the
Purchase Plan for fiscal 2003,  2002,  and 2001,  was $0.43,  $0.15,  and $0.72,
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 loss and net
loss per share for fiscal  2003,  2002,  and 2001 would have been as follows (in
thousands, except per share amounts):

                                          2003           2002           2001
                                      -----------    -----------     ----------
Net loss:
     As reported                      $    (2,243)   $    (2,208)    $   (1,859)
     Pro forma                        $    (2,324)   $    (2,397)    $   (2,084)

Net loss per share
     As reported
         Basic and diluted            $     (0.22)   $     (0.22)    $    (0.19)
     Pro forma
         Basic and diluted            $     (0.23)   $     (0.24)    $    (0.21)


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 9. Commitments

The Company has an operating  lease for its main facility that expires on August
31, 2004. Other leases for sales offices expire through 2005. Rent expense under
such operating leases aggregated approximately $720,000, $714,000, and $692,000,
for fiscal  2003,  2002,  and 2001,  respectively.  Certain  leases  require the
Company to pay a portion of facility operating expenses.

Future  minimum lease  payments  under these leases at September 27, 2003 are as
follows (in thousands):

             Year
             ----
             2004                                       821
             2005                                         9
                                                   --------
                                                   $    830

As of September 27, 2003,  none of the Company's  existing  facilities are being
subleased.

                                       49
<PAGE>

Note 10. 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. The Company does not believe
that any of these  legal  proceedings  or claims  are  likely to have a material
adverse effect on the Company's  results of operations,  financial  condition or
cash flows.

In September 1999, certain inventory having a cost of approximately $400,000 was
seized  by  the  United  States   Customs  for  the  alleged   improper  use  of
certification  marks owned by Underwriters  Laboratories  Inc. ("UL").  In March
2003,  the US Attorney  and the Company  entered into a final  settlement  under
which the seized  inventory  was  returned  to the  Company  and the Company was
obligated to pay $57,000, and remove improper marks from the product.


Note 11. Subsequent Event

On December 18, 2003, the Company signed a Letter of Intent with UNETEK, for the
private  investment  of funds with the Company for  approximately  $3.0 million.
Additionally, on December 23, 2003, the Company entered into a new, non-binding,
Letter of Intent to merge with Oblique,  Inc. The Merger was  conditioned  upon,
among other  things,  an  expedited  due  diligence  period,  and several  other
factors,  including  an  expedited  process  to  arrive at a  Definitive  Merger
Agreement with certain  minimum  acceptable  terms including a bridge funding of
approximately  $1.0 million.  The Company  plans on proceeding  with only one of
these transactions,  however, and the Board of Directors is currently evaluating
each of these proposals.

                                       50
<PAGE>

Unaudited  Quarterly  Results Of Operations  (In  Thousands  Except Net Loss Per
Share):

Fiscal 2003                                 Quarter Ended
--------------------------------------------------------------------------------

                        September 27      June 28     March 29       December 28
                        ------------      -------     --------       -----------

Net sales                 $ 2,933         $ 2,677      $ 2,564        $ 3,834
Gross profit              $   897         $   910      $   997        $ 1,447
Net loss                  $  (579)        $  (600)     $  (755)       $  (309)
Net loss per share        $ (0.06)        $ (0.06)     $ (0.07)       $ (0.03)

Fiscal 2002                                  Quarter Ended
--------------------------------------------------------------------------------

                        September 27      June 28     March 29       December 28
                        ------------      -------     --------       -----------

Net sales                  $ 3,371        $ 4,002      $ 3,904        $ 3,959
Gross profit               $ 1,291        $ 1,426      $ 1,452        $ 1,317
Net loss                   $   (42)       $  (413)     $  (627)       $(1,126)
Net loss per share         $ (0.00)       $ (0.04)     $ (0.06)       $ (0.11)

                                       51
<PAGE>



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

As previously reported on Form 8-K filed with the SEC on August 5, 2003, on July
28,  2003,  the  Company  dismissed  PricewaterhouseCoopers  LLP  ("PWC") as its
independent  accountants  subject  to  completion  of  services  related  to the
restatement of the Company's  financial  statements as of September 28, 2002 and
September  29, 2001 and for each of the three  fiscal  years in the period ended
September  28,  2002.  The  Company's  amended  Form 10-K for  fiscal  year 2002
reflecting  the  restatement  was filed with the SEC on  January  5,  2004.  The
Company's  Audit  Committee  participated in and approved the decision to change
independent accountants.

The reports of  PricewaterhouseCoopers  LLP on the financial  statements for the
past two fiscal years  contained no adverse opinion or disclaimer of opinion and
were not  qualified  or modified as to  uncertainty,  audit scope or  accounting
principle.

In  connection  with its audits for the two most recent fiscal years and through
July 28, 2003, there have been no disagreements with  PricewaterhouseCoopers LLP
on any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure, or auditing scope or procedure,  which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.

The Company engaged Odenberg,  Ullakko,  Muranishi & Co. LLP ("OUMC") as its new
independent  accountants as of July 28, 2003.  During the two most recent fiscal
years and  through  July 28,  2003,  the  Company  has not  consulted  with OUMC
regarding  either (i) the  application  of accounting  principles to a specified
transaction,  either  completed or proposed;  or the type of audit  opinion that
might be rendered on the Company's financial  statements,  and neither a written
report was provided to the Company or oral advice was provided  that the Company
concluded was an important factor  considered by it in reaching a decision as to
the accounting,  auditing or financial  reporting issue; or (ii) any matter that
was  either  the  subject  of a  disagreement,  as that term is  defined in Item
204(a)(1)(iv)  of  Regulation  S-K and the related  instructions  to Item 304 of
Regulation  S-K,  or a  reportable  event,  as  that  term  is  defined  in Item
304(a)(1)(v) of Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES

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

                                       52
<PAGE>

specified in Securities  and Exchange  Commission  rules and forms,  and include
controls  and  procedures  designed  to ensure that  information  required to be
disclosed by the Company in such reports is accumulated and  communicated to the
Company's  management,  including the principal  executive officer and principal
financial   officer,   as  appropriate  to  allow  timely  decisions   regarding
disclosure.

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

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

                                       53
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT


The directors and executive officers of the Company, their ages as of January
30, 2004, and certain information regarding each of them are as follows:

<TABLE>
<CAPTION>
   Name                 Age                    Position with the Company                 Director Since
   ----                 ---                    -------------------------                 --------------
<S>                      <C>              <C>                                                 <C>
Wilson Wong              56               Chairman, President and Chief Executive
                                             Officer                                          1988
Jeff Lin                 53               Chief Operating Officer and Director                1988
Edmond Y. Tseng          56               Director                                            1989
Michael D. Kaufman*                       Director                                            1995
Rusty Callihan           54               Vice President of Sales
Anthony Contos           40               Vice President of Finance and Administration
Steven Dix               44               General Manager and Senior Vice President Sales
                                             and Marketing
Jim Hsia                 41               Vice President of Product Marketing and Business
                                              Development
Chiu K. Fung             56               Vice President of Operations
</TABLE>

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

Mr. Wong  co-founded  the Company in 1988,  and has served as  President,  Chief
Executive  Officer and Chairman of the Board of Directors since January 1, 1999.
Mr. Wong also continues to serve as Vice President of Engineering.  Prior to his
return to the Company as Vice  President of  Engineering  on September 10, 1998,
Mr.  Wong was Chief  Executive  Officer of Pixo Arts  Corporation.  From 1994 to
August 1997, he served as Vice  President  and General  Manager for the Company.
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. Lin  co-founded  the Company in 1988, and has been a director of the Company
since 1988.  He rejoined the Company as an executive  officer in June 2002.  Mr.
Lin is also a General  Partner of Proton  Management  Consulting  located in San
Jose, a venture  management  company.  Prior to that, Mr. Lin served as Chairman
and Chief Executive Officer of United Optical Networks International, a supplier
of fiber optic components,  and as Chairman of FITGlobal,  an online transaction
company.  Prior to that,  Mr. Lin was President and Chief  Executive  Officer of
Lite-On Communications Corporation,  which is an internetworking company located
in Taiwan. Lite-on Communications is a subsidiary of Lite-On Group, which is one
of Asante's OEM suppliers in Asia. Mr. Lin co-founded Asante Technologies,  Inc.
(the "Company") in 1988, and served as

                                       54
<PAGE>

President,  Chief Executive  Officer and Chairman of the Board of Directors from
July 1994 until  December  31, 1998.  Since his  resignation  as  President  and
Chairman  of the Board of  Directors,  Mr. Lin has  served as a Director  of the
Company.  Mr. Lin also held the position of Vice President of  Engineering  from
November 1997 until August 1998.  From June 1993 through July 1994, he served as
Vice President,  General  Manager of Network  Systems  Business for the Company.
From 1991 to 1993, he served as the Company's Chairman of the Board of Directors
and Chief Operating Officer.  From 1988 to 1991, Mr. Lin served as the Company's
Vice  President of  Operations  and  Engineering,  Chief  Financial  Officer and
Secretary.

Mr. Tseng has served as President and Chief  Executive  Officer of OSE,  Inc., a
semiconductor  products  company  which serves as the exclusive  North  American
sales representative for Orient Semiconductor  Electronics,  Ltd., since January
1990. Orient Semiconductor Electronics,  Ltd. is one of Asantes OEM suppliers in
Asia.  See  "Security  Ownership of Directors,  Officers and Certain  Beneficial
Owners" and  "Certain  Relationships  and Related  Transactions."  Prior to that
time, Mr. Tseng was the Director of Engineering at Condata, Inc., an electronics
products and engineering consulting company.

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

Mr.  Steven Dix  rejoined the company in October  2003 and  currently  serves as
Senior Vice President and General Manager.  Mr. Dix initially joined the company
in 1993 and served as Director of Int'l Sales and Marketing until 1994. Prior to
rejoining  the company Mr. Dix was the VP of Sales and  Marketing  for  NETGEAR,
Inc.  from Feb 1996  until  March  2003.  He has held  senior  sales  management
positions with Borland, SysKonnect and Farallon Computing

Mr. Jim Hsia joined the Company in September  1999 and served as Vice  President
of Marketing for the Company.  Mr. Hsia now serves as Vice  President of Product
Marketing and Business  Development.  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.

                                       55
<PAGE>

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

There are no family  relationships among the directors and executive officers of
the Company.

Board Meetings and Committees

The Board of Directors  of the Company held a total of eight  meetings and acted
by written  consent two times during the fiscal year ended  September  27, 2003.
During fiscal 2003, no director  attended  fewer than 75% of the meetings of the
Board of Directors and its committees upon which such director served. The Board
of Directors has an Audit Committee and a Compensation  Committee.  The Board of
Directors  has no  nominating  committee  or any  committee  performing  similar
functions.

The information  contained in the following  sections entitled "Audit Committee"
and "Audit Committee Report" shall not be deemed to be "soliciting  material" or
to be  "filed"  with the  Securities  and  Exchange  Commission,  nor shall such
information  be  incorporated  by  reference  into any future  filing  under the
Securities Act of 1933, as amended,  or the Securities  Exchange Act of 1934, as
amended,  except to the extent that the Company  specifically  incorporates such
information by reference into such filing.

Audit Committee

The Audit  Committee of the Board of Directors,  which consisted of Mr. Lin, Mr.
Kaufman (who resigned in August, 2003) and Mr. Tseng, met three times during the
last fiscal year of the Company.  The  Company's  Common Stock trades on the OTC
(Over-the-Counter) Bulletin Board, and, accordingly,  the Company is not subject
to the rules of the Nasdaq Stock Market.  During the last fiscal year, the Audit
Committee did not consist solely of members who are independent directors within
the meaning of Rule  4200(a)(14)  of the Market  Place Rules of the Nasdaq Stock
Market.  The Board of  Directors  has  adopted a written  charter  for the Audit
Committee,   the  functions  of  the  Audit  Committee  include,  among  others:
recommending  to the Board of  Directors  the  retention of  independent  public
accountants,  subject to  stockholder  approval;  reviewing  and  approving  the
planned scope,  proposed fee  arrangements  and results of the Company's  annual
audit;  reviewing and  evaluating  the Company's  accounting  principles and its
system of internal  accounting  controls;  and reviewing the independence of the
Company's independent accountants.

                                       56
<PAGE>

Audit Committee Report for the Fiscal Year ended September 27, 2003

The Audit Committee has reviewed and discussed the audited financial  statements
of the Company for the fiscal year ended  September  27, 2003 with the Company's
management. The Audit Committee has discussed with Odenberg,  Ullakko, Muranishi
& Co. LLP, the Company's independent public accountants, the matters required to
be discussed by Statement on Auditing Standards No. 61, Communication with Audit
Committees.

The Audit  Committee  has also received the written  disclosures  and the letter
from Odenberg,  Ullakko,  Muranishi & Co. LLP required by Independence Standards
Board  Standard No. 1,  Independence  Discussion  with Audit  Committees and the
Audit Committee has discussed the independence of Odenberg, Ullakko, Muranishi &
Co. LLP with that firm. The Audit Committee reviewed non-audit services provided
by its  independent  accountants  for the last fiscal year, and determined  that
those services did not impair the accountants' independence. The Audit Committee
is also responsible for handling  disagreements  with the Company's  independent
accountants or the termination of their engagement.

Based on the Audit  Committee's  review and discussions  noted above,  the Audit
Committee  recommended  to the Board of  directors  that the  Company's  audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended  September  27, 2003 for filing  with the  Securities  and
Exchange Commission.  In addition,  the Audit Committee reviewed and recommended
to the Board that Odenberg,  Ullakko, Muranishi & Co. be retained by the Company
for the fiscal year ending October 4, 2004.

                                          Submitted by The Audit Committee
                                          Jeff Yuan-Kai Lin
                                          Edmond Y. Tseng

Compensation Committee

The  Compensation  Committee of the Board of Directors,  which during the fiscal
year ended September 27, 2003,  consisted of Mr. Kaufman (who resigned in August
2003) and Mr. Tseng, met four times during the year. The Compensation  Committee
reviews and approves the Company's executive compensation policy,  including the
salaries and target bonuses of the Company's  executive  officers.  In addition,
the Compensation Committee administers the Company's stock plans, which includes
recommending  or approving  the grant of options to new and  existing  employees
(including officers and employee directors).

Compensation Committee Interlocks and Insider Participation

For the  fiscal  year ended  September  27,  2003,  the  Compensation  Committee
consisted of Mr. Kaufman (who resigned in August 2003) and Mr. Tseng, neither of
who is an officer of the Company.

                                       57
<PAGE>

Mr. Tseng is the President and Chief Executive Officer and Dr. Duh is a director
of OSE,  Inc., a  semiconductor  products  company which serves as the exclusive
North American sales representative for Orient Semiconductor  Electronics,  Ltd.
("OSE").  The Company subcontracts the manufacturing of a substantial portion of
its products through OSE. Under the Company's  arrangement with OSE, the Company
purchases certain components from third party vendors and sells these components
to OSE at cost.  OSE  purchases  or  manufactures  other  components,  assembles
printed  circuit  boards,  and tests and packages  products for the Company on a
purchase order basis. The Company is obligated to purchase  products only to the
extent it has signed firm  purchase  commitments  with OSE.  During fiscal 2001,
2002 and 2003,  the  Company's  purchases  from OSE totaled $1.3  million,  $0.5
million and $0.1  million,  respectively.  The  Company's  arrangement  with OSE
provides  for  payment  terms of 45 days from date of  receipt of  product.  The
Company sells certain component parts to OSE with payment terms similar to those
granted to the Company.  OSE and its affiliates are significant  stockholders of
the Company.  A portion of the purchases from OSE included payments to OSE, Inc.
See "Security Ownership of Directors, Officers and Certain Beneficial Owners."


             COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

In fiscal  2003,  the  Compensation  Committee  ("Committee")  consisted  of Mr.
Kaufman (who resigned in August 2003) and Mr.  Tseng,  neither of whom is or has
been an employee of the Company.  The Committee is responsible for reviewing the
compensation  and  benefits for the  Company's  executive  officers,  as well as
supervising  and making  recommendations  to the Board on  compensation  matters
generally.  The  Committee  also  administers  the  Company's  stock  option and
purchase  plans and makes grants to executive  officers  under the Company's Key
Executive Stock Plan and 2001 Stock Option Plan.

The Committee  held four meetings  during fiscal 2003.  The following  report is
submitted on behalf of the Compensation Committee.

Compensation Policies

The Company  operates in the high technology  industry,  characterized  by rapid
changes  and extreme  competition.  The Board's  compensation  philosophy  is to
provide cash and equity incentives to the Company's executive officers and other
employees  to  attract  highly  qualified  personnel  in order to  maintain  the
Company's competitive  position.  The Board's compensation program goals are to:
attract,  retain and motivate  qualified  executive  officers and  employees who
contribute  to the  Company's  long-term  success;  align  the  compensation  of
executive officers with the Company's business  objectives and performance;  and
align  incentives for executive  officers with the interests of  stockholders in
maximizing value.

                                       58
<PAGE>

Compensation Components

The compensation for executive  officers  generally  consists of salary,  annual
incentives and stock option awards.

Base Salary.  The salaries of each of the executive  officers of the Company are
generally based on salary levels of similarly sized  companies,  primarily those
located in Silicon Valley. The Committee reviews generally available surveys and
other published  compensation data. The compensation of the executive  officers,
including the Chief Executive  Officer,  are generally  reviewed annually by the
Committee  and/or  the  Board and  adjusted  on the  basis of  performance,  the
Company's results for the previous year and competitive  conditions.  Due to the
Company's   recurring   operating  losses  and  beginning  in  April  2001,  the
Compensation  Committee  recommended  and the  Company  implemented  a temporary
salary reduction program which effects all salaries over certain minimum levels.
Such salary reduction program affects primarily  executive officer  compensation
and was implemented as part of the Company's cost cutting efforts.

Bonuses. The Company's intention is to develop bonus compensation plans designed
to reward the Company's  executive  officers  based on the  Company's  financial
performance. There is no bonus plan in place for officers at this time.

The Company has a profit sharing plan approved by the Board of Director's during
fiscal 2001. However, there were no bonuses earned under the profit sharing plan
during fiscal year 2003. This plan covers all active, full-time employees of the
Company  who have been with the  Company  for a  certain  minimum  period of the
applicable fiscal year. Cash payments under the plan shall be made subsequent to
the Company's applicable fiscal year and be based on yearly net income.

Equity-Based Compensation. The Company enables all eligible employees, including
executive  officers other than Mr. Wong, to purchase the Company's  Common Stock
at a discount by  participating  in the Company's  1993 Employee  Stock Purchase
Plan. In addition,  the Company  periodically  grants to its executive  officers
stock options under the 2001 Stock Plan, and the Key Executive  Plan, and grants
to other  employees stock options under the 2001 Stock Plan, in order to provide
additional  incentive  for  such  persons.  The  Committee  believes  that  such
incentive  promotes  the  long-term  interests  of the  Company's  stockholders.
Options  generally vest over a four-year  period to encourage  option holders to
continue employment with the Company.  In granting options,  the Committee takes
into account each individual's  level of  responsibility  within the Company and
such individual's expected future contribution,  as well as the number of shares
and outstanding options already held by the individual.  The Board has adopted a
stock option  grant  policy,  pursuant to which  employees  (including  officers
except for Mr. Wong) may receive annual stock option grants,  generally on their
review date with the Company,  in amounts  based on certain  criteria  including
continuous  time with the Company,  current  salary,  responsibilities,  and job
performance.  Employees may also be entitled to receive additional

                                       59
<PAGE>

option grants where the employee's job has significantly  changed through growth
or promotion.  The exercise price of all options is the market price on the date
of grant.

Compensation of Chief Executive Officer

The process of determining  the  compensation  for the Company's Chief Executive
Officer and the  factors  taken into  consideration  in such  determination  are
generally  the  same  as  the  process  and  factors  used  in  determining  the
compensation  of all of the executive  officers of the Company.  In fiscal 2003,
the  Company  decreased  the  pay  rates  of  most  employee's,   including  the
compensation of Mr Wong, as part of the Company's salary reduction program.

Tax Deductibility of Executive Compensation

Section  162(m) of the Code  limits  the  federal  income tax  deductibility  of
compensation  paid to the Company's Chief  Executive  Officer and to each of the
other four most highly compensated  executive  officers.  The Company may deduct
such   compensation  only  to  the  extent  that  during  any  fiscal  year  the
compensation  paid to any such  individual  does not exceed  $1,000,000,  unless
compensation  is  performance-based   and  meets  certain  specified  conditions
(including  stockholder  approval).  Based on the Company's current compensation
plans and  policies,  the Committee  does not  anticipate,  for the  foreseeable
future,  that the Company will lose any  significant tax deduction for executive
compensation.

This report presented herein was approved by a motion of the Board of Directors.

                                  FOR THE COMPENSATION COMMITTEE

                                         Edmond Tseng


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's  Common Stock,  to file reports of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the  Securities  and Exchange  Commission  (the
"SEC").  Such  executive  officers,  directors  and 10%  stockholders  are  also
required by SEC rules to furnish the  Company  with copies of all Section  16(a)
forms they file.  Based solely upon its review of copies of such forms  received
by it, or on written  representations  from  certain  reporting  persons that no
other filings were required for such persons,  the Company believes that, during
the fiscal year ended September 27, 2003, its executive officers,  directors and
10% stockholders complied with all applicable Section 16(a) filing requirements.

                                       60
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

The following table sets forth all compensation received by the Named Officers
for services rendered to the Company in all capacities for fiscal years ended
September 29, 2001, September 28, 2002; and September 27, 2003:



<TABLE>
<CAPTION>
                                                                                          Long-Term
                                                  Annual Compensation                 Compensation Awards
                                          -------------------------------------       -------------------
                                                                                               Number
Name and Principal Position                                                    Restricted    of Shares
---------------------------                                     Other Annual      Stock      Underlying    LTIP      All Other
                                  Year     Salary     Bonus     Compensation     Awards       Options     Payouts  Compensation (1)
                                  ----     ------     -----     -------------    ------       -------     -------  ----------------
                                                                     ($)
<S>                             <C>          <C>        <C>           <C>           <C>        <C>          <C>       <C>
Wilson Wong                     2003         84,000     -             -             -            --         -           609
President and Chief Executive   2002        114,108     -             -             -            --         -           920
Officer                         2001        162,662     -             -             -            --         -           789
  Chairman of the Board
Jeff Lin (2)                    2003         84,000     -             -             -            --         -           326
Chief Operating Officer         2002         49,002     -             -             -            --         -           132
Rusty Callihan                  2003         87,519     -             -             -            --         -          5,335
Vice President of Sales         2002        162,473     -             -             -          2,500        -           759
                                2001        170,845     -             -             -          1,000        -           551

Anthony Contos                  2003        115,696     -             -             -            -          -           214
Vice President Finance &        2002        127,669     -             -             -          5,000        -           222
Administration and Secretary    2001        136,412     -             -             -          2,573        -           248

Jim Hsia                        2003        114,216     -             -             -            -          -           208
Vice President of Marketing     2002        131,721     -             -             -          2,500        -           256
                                2001        142,059     -             -             -          1,000        -           261

</TABLE>
-----------------------------------
(1)  Amount  consists  of  premiums  paid by the  Company  for  life  insurance,
     including   compensation  relating  to  over  $50,000  Life  Insurance  and
     Executive Life.

(2)  Mr. Jeff Lin rejoined the Company as an officer on June 1, 2002.

Stock Based Compensation Plans

As of September 27, 2003, the Company had granted options under five stock-based
compensation plans that are described below.

                                       61
<PAGE>

The 2001 Stock  Option  Plan  allows  for  issuance  of  options to the  Company
employees and  consultants  to purchase a maximum of 1,000,000  shares of common
stock  plus  7% of the  outstanding  common  shares  as of the  last  day of the
immediately preceding year beginning in fiscal year 2002.

The 2000 Non-Statutory Stock Option Plan which allows for issuance of options to
the Company employees and consultants to purchase a maximum of 120,000 shares of
common stock.

The Directors' Stock Option Plan is described under the section "Compensation of
Directors"

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.  The Key
Executive  Option Plan  expired in July 2003.  The Company is  currently  in the
process of redrafting a new plan to replace it.

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  2003,  2002,  and 2001 were
79,909, 62,839, and 88,202 shares of common stock,  respectively,  at an average
price of $0.07, $0.15, and $0.64,  respectively.  On September 27, 2003, 264,102
shares of common stock were available for future purchase.

Option Grants in Last Fiscal Year

The following table sets forth certain information with respect to stock options
granted to each of the Named Officers during the fiscal year ended September 27,
2003. In accordance  with the rules of the Securities  and Exchange  Commission,
also shown below is the potential  realizable  value over the term of the option
(the period from the grant date to the  expiration  date) based on assumed rates
of stock  appreciation  of 5% and 10%,  compounded  annually.  These amounts are
based  on  certain  assumed  rates  of  appreciation  and do not  represent  the
Company's estimate of future stock price.  Actual gains, if any, on stock option
exercises will be dependent on the future performance of the Common Stock.

                                       62

<PAGE>


                        Option Grants in Last Fiscal Year

                                Individual Grants

<TABLE>
<CAPTION>
                                                                                                 Potential Realizable
                                                                                                   Value at Assumed
                                                                                                   Annual Rates of
                           Number of                                                                 Stock Price
                             Shares       % of Total Options                                         Appreciation
                           Underlying         Granted to        Exercise                         for Option Term (3)
                        Options Granted      Employees in         Price                          -------------------
         Name                 (1)           Fiscal Year (2)     Per Share    Expiration Date         5%           10%
         ----                 ---           ---------------     ---------    ---------------         --           ---
<S>                          <C>                 <C>              <C>            <C>               <C>          <C>
Rusty Callihan               2,500               1.51%            0.120           5/1/12             $189         $478
Anthony Contos               5,000               3.02%            0.120           5/1/12             $377         $956
Jim Hsia                     2,500               1.51%            0.120           5/1/12             $189         $478
Chiu K. Fung                10,000               6.03%            0.280          11/2/11            1,761        4,463
                             3,000               1.81%            0.120           5/1/12             226.          574
Jeff Lin                    10,000               6.03%            0.2800         11/2/11           $1,761       $4,463
</TABLE>
------------------------
(1)  All options were granted under either the Company's  2001 Stock Option Plan
     or the Company's Key Executive Stock Plan and have exercise prices equal to
     the fair  market  value on the grant  date.  All  options  vest and  become
     exercisable  over a four-year  period,  generally at the rate of 25% on the
     first  anniversary  of the date of grant  and  1/48 per  month  thereafter,
     subject to the option holder's continued employment with the Company. Under
     the  foregoing  plans,  the Board  retains  discretion to modify the terms,
     including the prices, of outstanding options

(2)  Based on options to  purchase  an  aggregate  of 79,909  shares  granted in
     fiscal 2003.

(3)  Potential gains are net of exercise price, but before taxes associated with
     exercise.  These amounts  represent  certain  assumed rates of appreciation
     only, based on the Securities and Exchange  Commission rules. Actual gains,
     if any, on stock option  exercises are dependent on the future  performance
     of the Common Stock,  overall  market  conditions  and the option  holders'
     continued  employment  through the vesting period. The amounts reflected in
     this table may not necessarily be achieved.

Option Exercises and Holdings

The following  table provides  information  with respect to option  exercises in
fiscal 2002, by the Named Officers and the value of such  officers'  unexercised
options at September 27, 2003:

                                       63

<PAGE>

Aggregated  Option  Exercises  in Last  Fiscal Year and Fiscal  Year-End  Option
Values



<TABLE>
<CAPTION>
                                                        Number of Shares
                                                     Underlying Unexercised            Value of Unexercised
                                                          Options at                 In-the-Money Options at
                                                        Fiscal Year-End                 Fiscal Year-End (1)
                                                  -------------------------------   ---------------------------
                        Shares
                       Acquired        Value
Name                  on Exercise    Realized      Exercisable    Unexercisable     Exercisable     Unexercisable
----                  -----------    --------      -----------    -------------     -----------     -------------
<S>                       <C>           <C>          <C>              <C>              <C>              <C>
Wilson Wong               --            --           600,000            -               $ 0              $ 0
Jeff Lin                                             15,000           5,000            $ 750            $ 750
Anthony Contos            --            --           72,922           6,031            $ 581           $1,355
Jim Hsia                                             52,888           2,962            $ 269            $ 656
Rusty Callihan            --            --           60,083           3,417            $ 269            $ 656
Chiu K. Fung              --            --           13,250           9,750            $ 983           $ 1,448
</TABLE>
----------------------
(1)  Market  value of  unexercised  options  is  based on the  price of the last
     reported sale of the Company's  Common Stock on the OTC  (Over-the-Counter)
     Bulletin  Board of $0.43 per share on September  26, 2003 (the last trading
     day for fiscal 2003),  minus the exercise  price.  Does not include options
     that had an exercise price greater than $0.43.


Compensation of Directors

Directors who are employees of the Company receive no fees for services provided
as members  of the Board of  Directors,  but are  reimbursed  for  out-of-pocket
expenses  incurred in  connection  with  attendance  at meetings of the Board of
Directors and its committees.

Directors who are not employees of the Company  receive a fee of $1,000 for each
meeting attended and are also reimbursed for out-of-pocket  expenses incurred in
connection  with their  attendance at meetings of the Board of Directors and its
committees.

Non-employee  Directors are also entitled to  participate  in the Company's 1993
Directors' Stock Option Plan (the "Directors' Plan"). The Directors' Plan, which
was adopted by the Board of  Directors in  September  1993,  and approved by the
stockholders  in October  1993,  authorizes a total of 300,000  shares of Common
Stock for issuance  pursuant to options  granted under the Directors'  Plan. The
Directors' Plan provides for an automatic grant of 40,000 shares of Common Stock
to each non-employee Director on the date on which such individual first becomes
a  director.  As  approved  by  stockholders  at the 1996  Annual  Shareholder's
Meeting,   an  amendment  to  the  Directors'   Plan  also  provides  that  each
non-employee  Director  will be granted  additional  options for the purchase of
10,000  shares of Common Stock at the Board  meeting  immediately  following the
annual anniversary date of the non-employee  Director's  commencement of service
on the Board of Directors.

                                       64
<PAGE>

Initial  options  granted  under this plan have terms of ten years and typically
the shares  underlying the option vest over four years at the rate of 25% on the
one year  anniversary  date, with the remaining  shares vesting monthly in equal
increments over the remaining three years. Subsequent options granted under this
plan have a term of ten years and typically vest over the four years at the rate
of 25% annually from the  anniversary  date.  The exercise  price of each option
granted  equals 100% of the fair market  value of the Common  Stock on the grant
date,  based on the  closing  price of the Common  Stock as  reported on the OTC
(Over-the-Counter)  Bulletin  Board.  Options  granted under the Directors' Plan
must be exercised within three months following the end of the optionee's tenure
as a director of the Company,  or within six months after the  termination  of a
director's tenure due to death or disability;  options not so exercised are then
cancelled and may be reissued pursuant to the 1993 Directors' Stock Option Plan.
The Directors' Plan is designed to work automatically,  without  administration;
to the extent  administration is necessary,  however, such services are provided
by those who administer the Company's stock plans.  The Directors' Plan has been
structured so that options  granted to  non-employee  Directors  will qualify as
transactions  exempt from Section 16(b) of the Securities  Exchange Act of 1934,
as amended,  pursuant to Rule 16b-3 promulgated thereunder.  The Director's Plan
expired on October 30, 2003 and the  Company is in the process of  redrafting  a
new plan to replace it.


ITEM 12.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT AND
          RELATED STOCKHOLDER MATTERS

The  following  table sets forth certain  information  known to the Company with
respect to beneficial ownership of the Company's Common Stock as of December 31,
2003,  by (i) each  beneficial  owner of more  than 5% of the  Company's  Common
Stock,  (ii) the Company's  Chief  Executive  Officer and each of the four other
most  highly  compensated  executive  officers  during  the  fiscal  year  ended
September 27, 2003, (collectively, the "Named Officers"), (iii) each director of
the Company and (iv) all directors  and  executive  officers of the Company as a
group. Except as otherwise indicated, each person has sole voting and investment
power  with  respect  to all  shares  shown as  beneficially  owned,  subject to
community property laws where applicable.

                                       65
<PAGE>



                                                        Shares       Percentage
                                                     Beneficially   Beneficially
Beneficial Owner                                        Owned          Owned
------------------                                     --------        ------
Jeff Yuan-Kai Lin (1)                                 1,173,000        11.6%
Wilson Wong (2)                                       1,774.250        17.5%
Dr. Eugene C.Y. Duh (3)                               1,199,504        11.8%
OSE, Ltd.(4)(5)                                          25,293        0.02%
MK GVD Fund(6)                                          500,000         4.9%
Michael D. Kaufman(6)                                     8,333         0.1%
Delta International Holding, Ltd(7)                     333,333         3.3%
Delta Networks, Inc.(7)                                 166,667         1.6%
Edmond Tseng(8)(9)                                       98,333         1.0%
Rusty Callihan(10)                                       60,083          *
Anthony Contos (11)                                      72,922          *
Jim Hsia(12)                                             58,299          *
Chiu K. Fung(13)                                         13,250          *
All directors and executive officers as a group       5,483.267        54.0%
(9 persons)


*Represents less than one percent of the outstanding Common Stock.

-----------------------
(1)  The  address  for Mr.  Lin is 821 Fox  Lane,  San Jose,  California  95131.
     Includes 15,000 shares issuable under stock options  exercisable  within 60
     days of December 31, 2003.

(2)  The  address  for Mr.  Wong is 821 Fox Lane,  San Jose,  California  95131.
     Includes 587,498 shares issuable under stock options  exercisable within 60
     days of December 31, 2003.

(3)  The address for Dr. Duh is Orient Semiconductor Electronics, Ltd., No. 12-2
     Nei Huang S. Rd., NEPZ Kaohsiung 81120, Taiwan, ROC.

(4)  Dr. Duh is a Director  of OSE Ltd.  As such,  Dr. Duh may be deemed to be a
     beneficial owner of these shares.

(5)  Dr. Duh is a Director and Mr. Tseng is President of OSE, Inc. As such,  Dr.
     Duh, Mr. Tseng, and OSE Ltd. may be deemed to be beneficial owners of these
     shares.

(6)  The address for MK GVD Fund and Mr. Kaufman is 2471 E. Bayshore Road, Suite
     520,  Palo Alto,  California  94303.  Mr.  Kaufman and  Gregory  Lahann are
     general  partners of MK GVD Management.  Each of these  individuals  shares
     voting and investment power with respect to the shares held by MK GVD Fund,
     and therefore may be deemed to be beneficial owners of such shares.

(7)  Delta  International  Holding,  Ltd, and Delta  Networks,  Inc. are related
     parties,  and  therefore  may be  deemed  to be  beneficial  owners of such
     shares.

(8)  The  address  for  Edmond  Tseng is Orient  Semiconductor,  Inc.,  2221 Old
     Oakland Rd, San Jose, CA 95131.

(9)  Includes 55,000 shares issuable under stock options  exercisable  within 60
     days of December 31, 2003.

(10) All shares indicated are issuable under stock options exercisable within 60
     days of December 31, 2003.

(11) All shares indicated are issuable under stock options exercisable within 60
     days of December 31, 2003.

(12) Includes 52,888 shares issuable under stock options  exercisable  within 60
     days of December 31, 2003.

(13) All shares indicated are issuable under stock options exercisable within 60
     days of December 31, 2003.
                                       66
<PAGE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Delta Electronics Group of Companies includes Delta Networks, Inc. and Delta
International Holdings, Ltd. who owns 166,667 and 333,333,  respectively, of the
Company's  common stock,  which together  represents  approximately  5.0% of the
common stock of the Company.  The Company  subcontracts  the  manufacturing of a
substantial  portion of its products  through Delta  Networks,  Inc.  ("Delta").
Under the  Company's  arrangement  with  Delta,  the Company  purchases  certain
components from third party vendors and sells these components to Delta at cost.
Delta  purchases or manufactures  other  components,  assembles  printed circuit
boards,  and tests and  packages  products  for the Company on a purchase  order
basis.  The Company is obligated to purchase  products only to the extent it has
signed firm purchase  commitments  with Delta.  During fiscal 2002 and 2003, the
Company's   purchases   from  Delta  totaled  $3.2  million  and  $2.7  million,
respectively. The Company's arrangement with Delta provides for payment terms of
90 days from date of receipt of product.  The Company  sells  certain  component
parts to Delta with payment terms similar to those granted to the Company. Delta
and  its  affiliates  own in  aggregate  approximately  5% of the  Company.  See
"Security Ownership of Certain Beneficial Owners and Management"

                                       67
<PAGE>

                                     PART IV

ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES

Pursuant to SEC Release No.  33-8183 (as amended by release No.  33-8183A),  the
disclosure  requirements  of this Item are not effective until the Annual Report
on Form 10-K for the Company's first fiscal year ending after December 15, 2003.


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

         (a)  (1) Financial  Statements - See Index to Financial  Statements and
                  Financial Statement Schedule at page 30 of this Form 10-K.

              (2) Financial   Statement   Schedule  -  See  Index  to  Financial
                  Statements and Financial Statement Schedule at page 30 of this
                  Form 10-K.

              (3) Exhibits - See Exhibit Index at page 69 of this Form 10-K.

         (b)  The Registrant filed or amended the following  reports on Form 8-K
              during the last  quarter of the fiscal  year ended  September  27,
              2003:

              (1) On August 5, 2003 the Company  filed a Form 8-K  reporting  an
                  Item  4  event  relating  to  the  change  of  its  certifying
                  accountants.

              (2) On August 14, 2003 the Company  filed a Form 8-K  reporting an
                  Item 9 event regarding the Company's  intention to restate its
                  historical  financial  statements  from  fiscal  year 2002 and
                  prior.

              (3) On September  17, 2003 the Company  filed a Form 8-K reporting
                  an  Item 5  event  regarding  its  termination  of the  Merger
                  Agreement  with  Oblique,  Inc. and the signing of a Letter of
                  Intent to merge with Acorn Campus.

         (c)  See Exhibit Index at page 69 of this Form 10-K.

         (d)  See Index to Financial Statements and Financial Statement Schedule
              at page 30 of this Form 10-K.

                                       68
<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 Odenberg, Ullakko, Muranishi & Co. LLP


                                       69
<PAGE>

23.2     Consent of PricewaterhouseCoopers LLP

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

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

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

32.2     Certification by CFO pursuant to Section 906 of the  Sarbanes-Oxley Act
         of 2002

         *        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.

                                       70


<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.

March 5, 2004
                                    ASANTE TECHNOLOGIES, INC.



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


                                    By: /s/Robert Pendergrass
                                        Robert Pendergrass
                                        Interim Chief Financial Officer
                                        and Secretary

                                       71
<PAGE>


                                POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE  PRESENTS,  that each person whose  signature  appears
below constitutes and appoints Wilson Wong and Robert  Pendergrass,  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                  March  5, 2004
----------------------------             (Principal Executive Officer) and Director
       (Wilson Wong)

/s/ Robert Pendergrass                   Acting Chief Financial Officer, President of           March  5, 2004
----------------------------             Finance and Administration (principal
    (Robert Pendergrass)                 Finance and Accounting Officer)

/s/ Edmond Tseng                         Director                                               March  5, 2004
----------------------------
      (Edmond Tseng)

/s/ Jeff Yuan Kai Lin                    Director                                               March  5, 2004
----------------------------
    (Jeff Yuan Kai Lin)
</TABLE>


                                       72
<PAGE>


                                   SCHEDULE II

                            ASANTE TECHNOLOGIES, INC.

                        VALUATION AND QUALIFYING ACCOUNTS
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                 Additions
                                                   Balance at    Charged to                   Balance at
                                                   Beginning     Costs and                      End of
Description                                        of Period      Expenses     Deductions       Period
-----------                                        ---------      --------     ----------       ------
<S>                                                 <C>           <C>            <C>           <C>
Year ended September 29, 2001
      Allowance for doubtful accounts,
         price protection and distributor rebates   $ 2,043       $   974        $(1,111)       $ 1,906

      Allowance for sales returns                       568            36           (172)           432
                                                    -------       -------        -------        -------

                                                    $ 2,611       $ 1,010        $(1,283)       $ 2,338
                                                    =======       =======        =======        =======

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

Year ended September 28, 2002:
     Allowance for doubtful accounts,
       price protection and distributor rebates     $ 1,906       $   864        $(1,334)       $ 1,436

     Allowance for sales returns                        432            75           (173)           334
                                                    -------       -------        -------        -------
                                                    $ 2,338       $   939        $(1,507)       $ 1,770
                                                    =======       =======        =======        =======

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

Year ended September 27, 2003:
     Allowance for doubtful accounts,
       price protection and distributor rebates     $ 1,436       $ 1,029        $(1,486)       $   979

     Allowance for sales returns                        334           228           (345)           217
                                                    -------       -------        -------        -------
                                                    $ 1,770       $ 1,257        $(1,831)       $ 1,196
                                                    =======       =======        =======        =======

</TABLE>

                                       72