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 30, 2000

                                       or

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

                 For the transition period from _____ to _______

                         COMMISSION FILE NUMBER 0-22632

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

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

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

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

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

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

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

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

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

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant,  based upon the closing  sale price of the Common  Stock on November
24,  2000,  as  reported  on the  OTC  (Over-the-Counter)  Bulletin  Board,  was
approximately  5,804,761.  Shares of Common Stock held by officers and directors
and their  affiliated  entities and related  persons have been  excluded in that
such persons may be deemed to be  affiliates.  This  determination  of affiliate
status is not necessarily conclusive for other purposes.

As of November 24, 2000,  the  Registrant  had 9,915,129  shares of Common Stock
outstanding.

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

                       DOCUMENTS INCORPORATED BY REFERENCE

Certain  sections of the  Registrant's  definitive  Proxy Statement for the 2000
Annual Meeting of  Stockholders  to be held on February 22, 2001 is incorporated
by reference in Part III of this Form 10-K to the extent stated herein.


<PAGE>


                                TABLE OF CONTENTS
                                                                         Page of
                                                                          Report
                               PART I

ITEM 1.  BUSINESS                                                            1

ITEM 2.  PROPERTIES                                                         14

ITEM 3.  LEGAL PROCEEDINGS                                                  14

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                15


                               PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
         STOCKHOLDER MATTERS                                                17

ITEM 6.  SELECTED FINANCIAL DATA                                            18

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

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

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                        27

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE                                46


                              PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                 47

ITEM 11. EXECUTIVE COMPENSATION                                             47

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT                                                         47

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                     47


                               PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
         FORM 8-K                                                           48

SIGNATURES                                                                  51

Asante,  FriendlyNet,  IntraCore,  NetStacker,  AsantePrint,  and AsanteFAST are
registered trademarks of Asante Technologies, Inc. Other product and brand names
may be trademarks of registered trademarks of their respective owners.

                                       i

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

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


                                     PART I

ITEM 1. BUSINESS

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

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

In 2000, the Company transformed its products and services to focus on providing
high-speed  local  area  network  and  Internet  access.  The  Company  sells to
distributors   and  resellers  who  serve  three   primary   customer   markets:
educational,  digital design,  and small business  markets or Small  Office/Home
Office (SOHO).

As the Internet market  continues to evolve and grow, the Company  believes that
three trends will create significant business opportunities for the Company:

o    Increasing demand to receive digital content (information, graphics, video,
     music, voice) locally and from the Internet;
o    Rapid acceptance and deployment of high-speed local area networks; and
o    Increasing  demand for  broadband  (high speed / high  bandwidth)  Internet
     access for small offices, home businesses and schools

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

                                       1

<PAGE>


Additionally, as business and users increasingly develop and use the internet as
a means  of  communication,  the need  for  increased  speed  and  bandwidth  is
increasing  phenomenally.  According to Infonetics,  Inc., in 1999 and 2000, the
number  of  home  Cable/DSL  installations  increased  to $372  million,  and is
projected to grow to $974 million in calendar 2000. This increased bandwidth has
enabled  users  previously  connecting  at 28.8 Kbps, or up to 56Kbps over their
analog phone lines, to access the internet at speeds of up to 1.5 Mbps, enabling
voice,  data,  music and video  transfers over the internet.  Additionally,  the
number of computer users and the use of digital voice, video, music and graphics
has increased  dramatically due to affordable higher speed processors,  the cost
effectiveness  of Fast Ethernet  (10/100,  or 100 Mbps)  networking and even the
emergence of affordable Gigabit Ethernet products.

The Company's  strategy is to  capitalize  on these trends with a  comprehensive
product and service portfolio  encompassing  innovative  technologies,  enhanced
strategic sales channels, and strategic partnerships.

Innovative technologies.

In fiscal  2000,  the  Company  invested  in  multi-service  networks to support
converged, high-speed data, voice and video networks. The Company also developed
Gigabit  Ethernet  products for our high-end  IntraCore  and  workgroup-oriented
FriendlyNet product lines.

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

The  Company  pioneered  integration  of  Internet  technology  into its network
products.  The Company  continues to  incorporate  these  technologies  into its
managed  switches and  Internet  access  products.  The Company was the first to
integrate  Intranet  technology into its new switches in the form of a built-in,
Java-enabled HTTP server.

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

Strategic sales channels.

By expanding its distribution  channels to meet the emerging Internet consumers,
Asante expects to grow its sales through strategic  partners and businesses that
sell  products  and  services  on  the  Internet,   while  continuing  to  build
traditional retail channels that provide revenue and profit opportunities.

                                       2

<PAGE>


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

Strategic Partnerships.

In fiscal 2000, the Company announced several strategic partnerships designed to
place the Company in a  leadership  position  in several  areas.  The  Company's
alliance with Apple Computer and Broadcom enabled the Company to not only be the
first Company to ship the industry's first Gigabit over Copper switches,  but to
offer it under $400 per port.  For its  advanced  system  business,  the Company
announced its  partnership  with IBM to develop future Layer 3 and above routing
switches.  Also,  the Company is focusing  its efforts  into  certain  strategic
business and  technical  relationships  to increase its strength and presence in
the market and to continue to introduce cutting edge technologies.

Our  technological  partners include  companies such as National  Semiconductor,
IBM,  Broadcom  and Apple  Computer,  Inc.,  as well as several  large  Internet
Service Providers (ISP's), and corporations.

In the  beginning  of fiscal  2001,  the Company  announced a  partnership  with
National  Semiconductor  with the goal to bring truly  affordable  Gigabit  over
Copper solutions to the market place with a Copper Gigabit Ethernet adapter card
priced under $150, versus comparable  products currently priced between $300 and
$400.

The  Company's key  competitive  advantages  are its ability to innovate  within
industry  standards and deliver  network  solutions  that are easier to install,
configure and manage.  Asante(R) is a strong brand name that is  well-recognized
in Apple Macintosh and SOHO markets.

The Company continues to develop and sell Ethernet and Fast Ethernet adapters to
customers who use Apple Macintosh and iMAC computers.  The Company  historically
has been heavily associated with Apple and therefore had focused its business on
selling  products  into the  Apple  after-market.  While the  Company  currently
designs  its  products  to work on all  computer  platforms  and  does  not rely
exclusively on new Apple product introductions,  a large portion of its sales in
the near  term are  expected  to be  related  to Apple  products.  Any  material
decrease in sales of Macintoshes, iMACs, and Power PCs, further incorporation by
Apple of networking connectivity into their products, or additional developments
adversely  affecting  Apple's  business could have a material  adverse effect on
sales of the  Company's  client  access  products,  which would  materially  and
adversely  affect the  Company's  business,  financial  condition and results of
operations.

Products

The  Company  offers  both  advanced,  or managed,  systems  products  (hubs and
switches) and simple,  easy to use  unmanaged  systems  products.  The Company's
advanced  switches,  and hubs allow more  sophisticated  users the  ability  for
increased   administration,   system   analysis,   identification   of   network
communication  problems,  and  security  among other  functions.  The  Company's
unmanaged products feature easy to use, Plug-and-Play operation for the customer
needing  convenient  connectivity at a cost-effective  price, or just needing to
extend an existing network.  The Company's  unmanaged,  or SOHO products include
Internet connectivity products (routers), hubs, switches, and adapter cards

                                       3

<PAGE>


Internet Connectivity Products (Routers)

During fiscal 1999, the Company introduced a family of routers designed to allow
multiple  SOHO or home  users to  connect  to the  Internet  at the same time at
increased  speeds.  In fiscal  2000,  the Company  introduced  its new family of
broadband Cable/DSL routers to meet the expanding demands of the rapidly growing
broadband market. The Company plans to introduce  additional Internet routers to
meet the changing  needs of the market.  Current  product  development  includes
wireless, DSL and other emerging technologies.

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

The  FriendlyNet  ISDN router allows up to four users to connect to the Internet
via one or two ISDN lines at speeds of up to eight times that of a standard 28.8
Kbps modem.

The FriendlyNet Dual 56K allows multiple users to simultaneously  connect at 112
Kbps, or up to 168 Kbps with additional modems.

Switch Products

Asante's  comprehensive  line of switches includes multiple families of switches
designed to meet the needs of both its vertical and horizontal market customers.

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

The IntraCore 9000 chassis  multi-service  switches are currently  Asante's most
sophisticated  managed  switches  designed to provide maximum  bandwidth for the
network  backbone  and other  high  congestion  situations,  and offer  multiple
services, hot swappable architecture,  as well as power redundancy. Each chassis
may support up to 192 10/100 ports, or 16 Gigabit ports, fiber or copper.  These
products  feature  advanced  management  cababilities  including  IPMG multicast
pruning  which  allows IS managers  to filter out  unwanted  internet  broadcast
messages and unwanted data,  VLAN (the ability to set up virtual LAN subgroups),
RMON (Remote Monitoring and management of the network),  SNMP mangement, as well
as prioritization.

The IntraCore 8000 series of stackable switches offer a similar software feature
set to the IntraCore  9000 series of products.  These  switches  offer true wire
speed (full Gigabit operation in full duplex mode, or bi-directionally)  Gigabit
performance,  and in a test by the Tolly  group in March  2000,  the Company was

                                       4

<PAGE>


rated as having the best value for performance available. Each switch comes with
24 built in 10/100 Ethernet  ports,  and can be stacked up to four switches high
to support up to 192 ports of  10/100,  or 96 10/100  ports and up to 12 Gigabit
ports in a single stack configuration.

The IntraCore 6500 series of 10/100/1000Mbps  switches were introduced in August
2000.  The  Company  believes  the  IntraCore  6524  offers  the best  value and
bandwidth of any Layer 2 switch in the market,  while offering an extremely rich
feature set  including  24 10/100 ports plus two GBICs for the addition of fiber
Gigabit, copper Gigabit, or 10/100 GBICs (a new, lower cost, standard allowing a
much more cost  effective  upgrade  path),  and a large  assortment  of advanced
multi-service.  In  addition,  the Company  plans to offer  stackability  to the
product line in the near future.

The IntraSwitch 6000 series 10/100 switches provide maximum  bandwidth for those
customers  requiring  solutions for high congestion  situations.  These products
feature an integrated HTTP management server with Java-enabled features, as well
as other advanced  functions.  The IntraSwitch 6000 series of switches currently
ships in a 24 port  configurations  and are based on the  Company's  proprietary
ASIC  (application   specific  integrated   circuit,  or  multi-function   chip)
technology. In addition, these switches offer the customer additional management
features and a migration path for those customers requiring a Gigabit backplane.

The  FriendlyNet  400/4000P/5000P  series switch family  features low cost, high
performance  10/100 Mbps unmanaged switches for smaller networks and other users
with high  bandwidth  needs.  The  switches  feature  NWay  auto-negotiation  to
automatically determine either 10 or 100 Mbps operation and currently come in 5,
8, 16, and 24 port configurations.

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

Gigabit Adapters and Other Gigabit Products

Gigabit Over Fiber Solutions

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

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

Gigabit Over Copper Solutions

In February 2000, the Company led the industry in introducing  the world's first
Gigabit  Ethernet over copper  unmanaged  system  products in  partnership  with
Broadcom  Communications,  Inc.  In July 2000,  the  Company  announced  a joint
partnership  with Apple  Computer  and  Broadcom in a drive to bring  affordable
Gigabit Ethernet over Copper to the desktop. The first switch product introduced
was the GX4 Model  400  switch,  which  delivers  over ten  times the  available
bandwidth per port of a standard 100 Mbps

                                       5

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(Fast  Ethernet)  connection,   and  can  transmit  and  receive  at  1000  Mbps
simultaneously, and comes with circuitry which self-corrects for the most common
types of wiring errors.

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

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

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

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

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

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

Fast Ethernet Adapter Cards

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

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

                                       6

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10BASE-T Systems and Adapter Cards

In fiscal 2000,  the trend for  sophisticated  users and many new businesses has
continued to move to 10/100  Ethernet  technology.  However,  the demand for low
cost 10 Mbps Ethernet  technology from more  price-sensitive  and home customers
remained.  In a  recent  article  in  Network  Computing,  demand  for  10  Mbps
technology  will continue to decline at a rate of 20-25% per year.  The trend to
10/100  technology is particularly  strong in the kindergarten  through grade 12
education  market and the  smaller  SOHO user in which the  Company has a strong
reputation and product name  recognition.  The Company expects that sales levels
in the 10 Mbps  market  will  continue  to  decline  as  pricing  for  switching
technology  and 10/100 Mbps shared  Ethernet  technology  have made  adoption of
these standards more attractive,  and the increasing use of Internet traffic and
data,  voice,  and video over the same cabling begins to necessitate  the use of
faster speeds for some applications.

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

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

Other Client  Access  Products.  Asante offers a family of converters to connect
LocalTalk devices to an Ethernet network.  These converters  connect from two to
eight devices such as printers to an Ethernet network. In addition,  the Company
offers  FriendlyNet  media  adapters to connect PC and  Macintosh  computers  or
printers with built-in Ethernet support to an Ethernet network.

Personal Connectivity: USB products

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

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

Software Products

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

                                       7

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In the first  quarter of fiscal 2000,  the Company  introduced  several  product
bundles  in its  FriendlyShare  family.  FriendlyShare  offers  home  and  small
business  users a simple  way to allow  IMAC's,  Macintoshes  to share  Internet
connections with other Macintoshes and PCs.  FriendlyShare  offers simplicity of
use,  automatic  server  configuration,  and has built-in two-way security along
with an  integrated  firewall  to  prevent  other  users and  remote  users from
accessing sensitive data.

Technology

The Company is a provider of leading edge  products in the  Ethernet  networking
industry.  The  Company  introduced  the first  100 Mbps  stackable  hub  system
products in 1995 and has  continued to bring new  technology to the market ahead
of competition. In addition, the Company continued to ship products based on its
proprietary  10/100 ASIC chip  allowing  the  Company to offer high  performance
switches at competitive prices. The Company is continuing its development of new
and enhanced  products for  connecting to the Internet and corporate  Intranets.
The Company has and will continue to focus efforts to expand its Gigabit product
line.

The Company was one of the first to ship fully  integrated  management  software
with its products,  providing powerful  capabilities only found in much costlier
third party software products.  In addition,  the Company has continued to offer
cutting edge  software  products  over the past several years such as NetDoubler
and FriendlyShare.

Marketing and Distribution

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

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

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

From time to time, the Company pursues OEM opportunities  which it believes make
sense to the Company's current business plan. These  relationships may typically
cause  fluctuations in the Company's  business based on the Company's ability to
locate,  or maintain various OEM opportunities and the ability of the Company to
offer cutting edge, cost effective  technology of interest to its OEM customers.
Despite sales  declines to OEM customers in fiscal 1998 through fiscal 2000, the
Company will continue to focus resources on obtaining additional, cost effective
agreements  with larger OEM  customers,  although there can be no assurance that
such  agreements  will be  obtained.  OEM  sales are  expected  to  continue  to
constitute a smaller portion of the Company's total sales in fiscal 2001.

                                       8

<PAGE>


International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for  approximately  23%,  24%, and 22% of the  Company's net sales in
fiscal years 2000, 1999, and 1998, respectively. The Company experienced reduced
sales in all three areas, primarily in Europe where sales declined approximately
35% since fiscal 1999 due to factors similar to those encountered  domestically.
Sales in Asia Pacific decreased  slightly in fiscal 2000,  compared to the prior
year due primarily to competition from Asia manufacturing and softness in demand
in Macintosh related products.

The Company  believes that it has good  relationships  with its distributors and
intends to continue to introduce new products through its existing  distribution
channels.  The Company encourages the marketing efforts of its distributors with
cooperative  advertising allowances and incentive-based rebates and promotes its
products  and builds brand name  recognition  by  extensive  trade  advertising,
participation  in industry  trade  shows,  and other  marketing  efforts.  As of
September,  2000,  the Company  supported the sales efforts of its  distributors
with 21 direct sales and support related employees located throughout the United
States who promote the Company's  products within assigned  territories and with
14 outside sales representatives.

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

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

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

                                       9

<PAGE>


capitalized,  there can be no assurance  that in the future one or more of these
distributors will not experience financial difficulties. Such difficulties could
have a material adverse effect on the Company.

In fiscal 1998, the Company adopted a limited lifetime  warranty of its existing
unmanaged  products and new 10/100 6000 series managed and 4000 series unmanaged
switches.  Most new products contain limited warranties ranging from one year to
five years.  These limited warranties exclude from lifetime coverage the fan and
power supply  included with its products,  due to the shorter life expectancy of
these parts. The Company has not encountered material warranty claims,  although
there can be no assurance that claims will not increase  substantially over time
as a result of the change to a limited  lifetime  warranty for a majority of the
Company's products.  Future warranty claims exceeding the Company's reserves for
warranty  expense  could  have an  adverse  effect  on the  Company's  business,
financial  condition and results of  operations.  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 30, 2000,  the Company had 12 employees  engaged in  engineering
and product  development.  During the fiscal  years 2000,  1999,  and 1998,  the
Company's  engineering and product development  expenses were approximately $3.0
million, $3.9 million, and $7.3 million, respectively.

The Company continues to invest  significant  resources in engineering  projects
and will  continue to focus  additional  resources as needed in order to develop
and bring to market additional high technology,  high demand products supporting
both its network systems and the  Intranet/Internet  markets. In particular,  in
fiscal 2001 and going  forward,  the Company will  continue to focus  additional
efforts in the areas of imbedded  software  design,  development  of  additional
switches and other  LAN-edge  devices,  WAN router  products,  wireless,  and on
system  integration.  The Company will also continue product development efforts
to expand its Gigabit product line.

                                       10

<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
Network,  Lite-on  Communications,  as  well as  other  manufacturers  based  in
California, Taiwan and China. Both OSE and Delta are stockholders of the Asante.
The  Company  believes  that its  quality  control  procedures  and the  quality
standards  of its  manufacturing  partners  have been  instrumental  in the high
performance and reliability of the Company's products. To date, customer returns
of the Company's products due to quality issues have not been material.

OSE and the Company's other  subcontract  manufacturers  purchase or manufacture
most components,  assemble printed circuit boards, and test and package products
for Asante on a purchase  order,  turnkey  basis.  In fiscal  2000,  the Company
purchased  $3.8  million of goods from OSE and  purchased  $7.9 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  supply through  alternative  sources.  The Company  believes that
alternative  manufacturers  are available;  however,  the  qualification of such
alternative  sources  and  the  commencement  of  volume  manufacturing  of  the
Company's  products could take a significant  period of time.  Accordingly,  any
reduction  or  interruption  of supply from its  existing  subcontractors  would
materially and adversely affect the Company's business,  financial condition and
results of  operations.  In addition,  the use of OSE,  Delta and other offshore
subcontractors  subjects  the Company to certain  risks of  conducting  business
internationally,  including changes in trade policy and regulatory requirements,
tariffs and other trade barriers and restrictions,  and changes in the political
or  economic  environment  in Taiwan  and other  countries  where the  Company's
subcontractors are located.

Although  the Company  generally  uses  standard  parts and  components  for its
products,  certain key components  used in the Company's  products are available
from only one source,  and others are  available  from only a limited  number of
sources.  Components  currently  available from only one source  include,  among
others,  custom integrated  circuits used in the Company's  intelligent hubs and
certain ASICs used in the  Company's  10/100 and Gigabit  switching  products as
well as ASIC's used in several of the  Company's  other  products  including the
Company's Print Router  products.  The Company does not have

                                       11

<PAGE>


a long-term  supply  agreement with any of its suppliers.  The Company  believes
that  certain  key  components  remain  in short  supply  and from  time to time
receives only limited  allocations  of these  products  which in prior years has
caused shipping delays of one or more of the Company's products.  If the Company
or any of its suppliers  experience  component shortages in the future or any of
its competitors have long-term supply  agreements under which it is possible for
them to  obtain  greater  supplies  of such  components  than the  Company,  the
Company's  business,  financial  condition  and results of  operations  could be
materially  and adversely  affected.  The Company also relies on OSE,  Delta and
other  subcontractors  to procure many of the  components  used in the Company's
products.  These  subcontractors  procure and stock components and subassemblies
based on the Company's purchase orders.

Competition

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

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

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

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

                                       12

<PAGE>


During  fiscal  2000,  a smaller  portion  of the  Company's  sales  represented
products  sold to OEMs than in fiscal  1999.  While the  Company has pursued and
will continue to pursue additional OEM agreements with larger  companies,  there
can be no assurance  that  existing  OEM  agreements  will  continue or that new
agreements  will be  obtained.  In addition,  since the Company  intends to seek
additional  large product  volume  arrangements,  the  acquisition  or loss of a
single large OEM customer or several smaller OEM customers would have a material
effect on the Company's revenues.  Unless the Company signs additional large OEM
agreements in the near future,  the Company expects that OEM sales will decrease
slightly as a percentage of total revenue in fiscal 2001.

A significant  percentage of the Company's  sales in fiscal 1999 and fiscal 2000
was derived from  products  designed for use with  Macintosh  Power PC, and iMAC
computers.  Sales of these  products as a percentage of total  Company  revenue,
excluding OEM sales,  have steadily  declined over the last several years due to
Apple's  competition in the Company's  adapter card market and  incorporation of
Ethernet into the  motherboard  of a large portion of its products,  and Apple's
decline  in market  share.  However,  the  Company  expects  that  sales of such
products will  continue to represent a substantial  portion of its net sales for
the  foreseeable  future.  There can be no  assurance  that unit  sales of these
products will continue at their  present  levels or increase in the future.  Any
material adverse  developments in Apple's business could have a material adverse
effect on sales of the Company's client access products,  which would materially
and adversely affect the Company's business,  financial condition and results of
operations.  See Item 7:  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations.

Proprietary Rights

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

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.

                                       13

<PAGE>


Employees

As of  September  30,  2000,  the  Company  had 70  employees,  including  12 in
engineering  and product  development,  23 in  manufacturing  operations,  21 in
marketing,  sales and support services, and 14 in corporate administration.  The
number of  employees  reflects a reduction  in  workforce  from fiscal 1999 as a
result of the restructuring which began in the third quarter of fiscal 1998, and
activities designed to streamline operations.

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

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


ITEM 2. PROPERTIES

The  Company's  headquarters,  including  its  executive  offices and  corporate
administration,   manufacturing,   marketing,   sales  and   technical   support
facilities,  are  located in San Jose,  California.  The Company  occupies  this
14,700 square foot facility under a lease that expires on August 31, 2004,  with
an option to extend for an additional five years. During 1999 the Company closed
the majority of its leased sales  offices in connection  with its  restructuring
activities.  The Company currently has leased sales offices in Utah, and Oregon.
The Company  believes  that its  existing  facilities  are  adequate to meet its
requirements  for  the  foreseeable  future  and  that  suitable  additional  or
substitute  space will be available as needed.  See Note 8 of Notes to Financial
Statements.


ITEM 3. LEGAL PROCEEDINGS

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

On September  13, 1996, a complaint was filed by Datapoint  Corporation  against
the   Company   and  six  other   companies   individually   and  as   purported
representatives of a defendant class of all manufacturers,  vendors and users of
Fast Ethernet-compliant,  dual protocol local-area network products, for alleged
infringement of United States letters Patent Nos.  5,077,732 and 5,008,879.  The
complaint  sought  unspecified  damages  in  excess  of  $75,000  and  permanent
injunctive  relief.  The  Company  filed a  response  to the  complaint  denying
liability. The case was consolidated, for purposes of claim interpretation only,
with similar cases filed against several other defendants,  which include, among
others, Intel Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems.  On April 16,  1998,  the Special

                                       14

<PAGE>


Master  appointed  by the  court  issued  a  report  agreeing  in most  material
respects,  with the  defendants'  interpretation  of the alleged  patent claims.
Subsequently,  and by order dated  November 23, 1998, the District Court adopted
without  modification the findings of the Special Master and the recommendations
of the Magistrate Judge regarding claim  interpretation of the  patents-in-suit.
The Court  ordered  dismissal  of the case and entered  judgment in favor of the
defendants. Plaintiff has filed an appeal of the judgment to the Federal Circuit
Court of Appeal,  which is now  pending.  A ruling on the appeal is not expected
until the year 2001.

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


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 2000.


EXECUTIVE OFFICERS OF THE COMPANY

The executive  officers of the Company,  their ages as of December 10, 2000, and
certain information regarding each of them are as follows:

                                       15

<PAGE>


   Name                Age                  Position with the Company
   ----                ---        ----------------------------------------------
Wilson Wong            53         President and Chief Executive Officer
Rusty Callihan         51         Vice President of Sales
Anthony Contos         37         Vice President of Finance and Administration
Jim Hsia               38         Vice President of Marketing
Robert Young           57         Vice President of Operations
John Jeng*             44         Vice President of Operations

*Mr. Jeng resigned as Vice President of Operations in April, 2000.

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

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

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

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

Mr Robert  Young  joined  the  Company  in  December  1998,  has  served as Vice
President of Operations  since  October 2000.  Mr. Young assumed the position of
Vice President of Operations previously held by Mr. John Jeng. From October 1998
to October 2000, he served as the Company's  Director of Quality  Control.  From
June 1996 to October  1998,  Mr. Young was self employed as a Real Estate Agent.
From  February  1995  to  June  1996,  Mr  Young  was  a  Manufacturing  Quality
Consultant. From November 1993 to February 1995, Mr. Young was Vice President of
Operations for Apaq Technogy.

                                       16

<PAGE>


                                     PART II

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

The  following  table sets forth the high and low sale prices for the  Company's
Common Stock.  The Company's  Common Stock traded on the NASDAQ  National Market
under the trading symbol ASNT until September 30, 1999, when the NASDAQ Listings
Qualifications  Panel removed the Company's stock from trading on the NASDAQ NMS
System as a result of the Company's  inability to maintain a net tangible  asset
value of at least $4 million as required by NASDAQ National  Market  Maintenance
Standards to maintain its listing.  Consequently,  effective September 30, 1999,
the Company's Common Stock traded on the OTC  (Over-the-Counter)  Bulletin Board
under the trading symbol ASNT.OB.

Fiscal 2000                         High                 Low
---------------------------------------------------------------------
First quarter                      $5  1/8             $  11/16
Second quarter                     $3  3/8             $1 11/16
Third quarter                      $2  5/8             $   7/8
Fourth quarter                     $2  1/8             $   7/8


Fiscal 1999                         High                 Low
---------------------------------------------------------------------
First quarter                      $2  1/2             $1
Second quarter                     $1 31/32            $  13/16
Third quarter                      $1                  $   9/16
Fourth quarter                     $2  1/4             $   3/4


As of November 30, 2000,  there were 101 stockholders of record of the Company's
Common  Stock.  The Company has not paid cash  dividends on its Common Stock and
does not plan to pay cash dividends in the foreseeable future.

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

In March 2000,  the Company  sold  500,000  shares of its common stock for gross
proceeds  of $1.5  million.  The shares were sold to one  corporate  entity in a
private transaction. The shares were issued pursuant to a claimed exemption from
registration  under  Section  4(2) of the  Securities  Act of 1933 as a  private
placement to one investor which acquired the shares with investment intent.

                                       17

<PAGE>


Under a stock  repurchase  plan approved  September 16, 1998,  the Company could
repurchase up to 500,000 shares of its outstanding Common Stock over a period of
up to one year.  Pursuant to this program,  the Company had  repurchased  67,000
shares of its common stock for $117,200 as of October 2, 1999 and 15,500  shares
of its common stock for $28,400 as of October 3, 1998.

As of September 30, 2000, the Company has reissued 66,850 of the Treasury shares
to satisfy its Employee Stock Purchase Plan (ESPP) activities.


<TABLE>
ITEM 6. SELECTED FINANCIAL DATA

<CAPTION>
(In thousands, except per share data)                                                   Year ended
                                                         --------------------------------------------------------------------------
                                                           2000            1999             1998             1997            1996
                                                         --------        --------         --------         --------        --------
<S>                                                      <C>             <C>              <C>              <C>             <C>
Statement of Operations Data:
Net sales                                                $ 29,280        $ 37,488         $ 51,433         $ 83,279        $ 66,990
Income (loss) from operations                            $    200        $(13,863)        $(12,450)        $  2,331        $ (1,338)

Net income (loss)                                        $    392        $(14,161)        $(14,435)        $  1,926        $   (457)

Diluted net income (loss) per share                      $   0.04        $  (1.53)        $  (1.57)        $   0.21        $  (0.05)

Balance Sheet Data:
Working Capital                                          $  3,251        $    751         $ 13,645         $ 26,727        $ 25,101

Total assets                                             $ 13,222        $ 13,345         $ 30,359         $ 40,567        $ 39,966

Stockholders' equity                                     $  3,679        $  1,682         $ 15,850         $ 29,874        $ 26,909
</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 thereof and should not be given undue  reliance.  Actual results may
vary materially from those projected.

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

Results of Operations

The following table sets forth certain selected financial  information expressed
as a  percentage  of net sales for the fiscal  years ended  September  30, 2000,
October 2, 1999, and October 3, 1998, respectively:

                                       18

<PAGE>


                                             2000         1999           1998
                                            ------       ------         ------
Net sales                                    100.0%       100.0%         100.0%
Cost of sales                                 63.4         86.8           69.9
                                            ------       ------         ------
Gross profit                                  36.6         13.2           30.1
                                            ------       ------         ------
Operating expenses:
   Sales and marketing                        20.2         33.6           32.2
   Research and development                   10.4         10.4           14.3
   General and administrative                  5.3          6.1            7.0
   Restructuring                                 -           -              0.8
                                            ------       ------         ------
     Total operating expenses                 35.9         50.1           54.3
                                            ------       ------         ------
Income (loss) from operations                  0.7        (37.0)         (24.2)
Interest and other income (expense), net       0.6         (0.8)           0.9
                                            ------       ------         ------
Income (loss) before income taxes              1.3        (37.8)         (23.3)
Provision (benefit) for income taxes             -          -              4.8
                                            ------       ------         ------
Net income (loss)                              1.3%       (37.8)%        (28.1)%
                                            ======       ======         ======


Net Sales

Net sales  decreased 21.9% to $29.3 million in fiscal 2000 from $37.5 million in
fiscal 1999.  Net sales were $51.4  million in fiscal 1998.  The decrease in net
sales from fiscal 1999 to fiscal 2000 was due to several factors including heavy
competitive  pressures  and the  continued  incorporation  of Ethernet  onto the
motherboard  of Apple's  newer  computers  causing a continued  decline in older
connectivity  products of approximately  $4.7 million, a reduction in unmangaged
hubs of $2.1  million due to price  declines  and  reduction in sales of 10 Mbps
product,  a reduction in managed  systems of $2.2 million due to the  continuing
decline in shared systems,  and the late introduction of the Company's IntraCore
8000 and 9000 switches due to delays in availability  of certain  ASIC's.  These
decreases were partially  offset by  introduction of the Company's new unmanaged
Gigabit products, Cable/DSL routers, and USB products.

In fiscal  2000 and  1999,  one  customer,  Ingram,  accounted  for 48% and 42%,
respectively, of the Company's total sales. This customer represented 33% of the
Company's sales in fiscal 1998.

The  decrease  in net sales from  fiscal  1998 to fiscal 1999 was due to several
factors  including a decrease in OEM sales of $2.2 million,  which declined from
$3.5  million  to $1.3  million,  a decline  in  connectivity  product  sales of
approximately  $6.7 million due to heavy  competitive  price  pressures  and the
continued  incorporation  of  Ethernet  onto the  motherboard  of Apple's  newer
computers  causing a continued  decline in older adapter card sales, a reduction
in sales for older 10 Mbps  unmanaged  shared hubs of $0.5 million due primarily
to price decreases,  the reduction of  approximately  $2.0 million of sales into
the distributor  channel,  and a decrease of approximately $5.5 million of sales
of the Company's older managed system  products.  These decreases were partially
offset by increases in sales of the Company's 10/100 unmanaged hubs and switches
of  approximately  $2.0  million and an increase in print  router  sales of $1.2
million.

International sales,  primarily to customers in Europe, Canada and Asia Pacific,
accounted  for 23%,  24%, and 22% of net sales in fiscal 2000,  1999,  and 1998,
respectively  as a  percentage  of total  sales.  This  decline  was caused by a
decline in sales in Europe due primarily to price decreases and competition from
Asian  manufacturers.  The Company  believes  that its newer  product lines will
offset to some extent the decline  from in  international  sales which  occurred
from  fiscal  1999 to 2000.  Sales in Asia  Pacific  and

                                       19

<PAGE>


Canada for fiscal  2000  remained  fairly  flat,  compared to fiscal  1999.  The
Company will continue to focus its efforts on increasing  sales  internationally
over the next  several  quarters  but  cannot be sure that its  efforts  will be
successful.

Although  the  proportion  of  international  sales  increased  in fiscal  1999,
compared  to fiscal  1998,  the  Company  experienced  reduced  sales in Europe,
Canada,  and  Asia  Pacific,  but  primarily  in  Canada  where  sales  declined
approximately  40% since fiscal 1998 due to factors similar to those encountered
domestically.  Sales in Asia Pacific declined 54% in fiscal 1999 compared to the
prior year due  primarily  to the  continuation  of the weak Asian  economy  and
softness  in demand in Apple  Macintosh  related  products  that began in fiscal
1998. As a result of continuing declines, the Company closed is sales offices in
Taiwan and the United Kingdom during fiscal 1999.

The Company believes heavy  competitive  pressures that began in fiscal 1998 and
extended  through 2000 will continue  during  fiscal 2001.  Although the Company
experienced  significant  unit increases in several of its product lines such as
its 10/100 PCI adapter card and USB products, price declines offset increases in
unit sales. The Company believes that the competition in the markets in which it
competes  has  intensified  and will  continue  to  intensify  as  existing  and
potential  competitors introduce competing products.  Consequently,  the Company
anticipates  that the selling  prices of its existing  products will continue to
decline and that sales of older managed  products and adapter cards as a percent
of total sales will continue to decline in fiscal 2001.

Cost of Sales and Gross Profit

The Company's  gross profit as a percentage  of net sales  increased to 36.6% in
fiscal 2000 from 13.2% in fiscal 1999.  The gross profit as a percentage  of net
sales was 30.1% in fiscal 1998.  The increase in fiscal 2000  compared to fiscal
1999 was primarily due to tighter controls over inventories, improved management
of product  life cycles  leading to reduced  write-offs  of  obsolete  products,
reduced channel  discounts,  and reduced price protection  activities  resulting
from reduced levels of inventory in the distributor channel.  Additionally,  the
Company has realized overhead  benefits from moving its manufacturing  offshore.
The decrease  during fiscal 1999,  compared to fiscal 1998, was due primarily to
the  decreased  sales levels and inventory  write-offs  of the  Company's  older
legacy adapter cards,  managed system products and component level  inventories.
During fiscal 2000, sales prices  continued to be affected by heavy  competitive
pricing  pressures.  In response to this,  the Company has brought to market and
plans to continue to bring to market lower cost replacement  products.  Although
the Company  believes it is in a  competitive  position at present,  the Company
will  continue  to take  additional  measures  going  forward  to  maintain  its
competitiveness in the market place.

The 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 $5.9 million in fiscal 2000 compared to $12.6
million in fiscal 1999, or a decrease of 53.0%.  Fiscal 1999 sales and marketing
expenses  decreased  $4.0 million,  or 24%,

                                       20

<PAGE>


compared to $16.6 million in fiscal 1998.  As a percentage  of net sales,  sales
and marketing  expenses were 20.2%,  33.6%,  and 32.2% in fiscal 2000, 1999, and
1998,  respectively.  The reduced  fiscal  2000  expenditures,  reflect  tighter
controls over advertising,  Co-operative  advertising  programs,  and mail order
related expenditures,  reduction of unprofitable channels, reduced personnel and
related costs, and the effect of lower revenue levels. The decrease in sales and
marketing expenses since fiscal 1998 was due primarily to decreases in personnel
and related costs, tradeshow participation, outside service related costs, which
were partially offset by increases in outside  representatives,  advertising and
product  collateral  related  costs and a write-off  of $0.7  million in prepaid
advertising credits.

The Company  expects  that its sales and  marketing  expenses  will  increase in
fiscal 2001 in absolute  dollars,  but should remain fairly flat as a percent of
total sales.

Research and Development

Research and development  expenses  decreased by 21.7% to $3.0 million in fiscal
2000, from $3.9 million in fiscal 1999.  Research and development  expenses were
$7.3  million  in fiscal  1998.  As a  percentage  of net  sales,  research  and
development  expenses were 10.4%,  10.4%,  and 14.3%, in fiscal 2000,  1999, and
1998,  respectively.  The decrease in research  and  development  expenses  from
fiscal  1999  to  fiscal  2000  was  due  to  decreases  in  personnel   related
expenditures as a result of lower staffing levels, and depreciation expense. The
decrease in research and  development  expenses  from fiscal 1998 to fiscal 1999
was due to decreases in prototype materials,  personnel,  and outside consulting
services  primarily related to the Company's  strategic decision to leverage the
engineering  expertise of certain of its key suppliers.  The reduced spending in
these areas  resulted from  decreased  product  development  activities  for the
Company's  proprietary  10/100  switch  ASIC  and  reduced  recruitment  related
expenses, which were partially offset by the Company's write-off of certain idle
fixed assets related to its research and development activities.

The Company  expects that  spending on research and  development  in fiscal 2001
will  increase  in  comparison  to fiscal 2000 in  absolute  dollars,  while the
Company will  continue to leverage the  engineering  expertise of its  strategic
partners.

General and Administrative

General and  administrative  expenses  decreased  to $1.6 million in fiscal 2000
from $2.3 million in fiscal 1999. General and administrative  expenses were $3.6
million in fiscal 1998. As a percentage of net sales, general and administrative
expenses  were  5.3%,  6.1%,  and 7.0% in fiscal  years  2000,  1999,  and 1998,
respectively.  The decrease in general and  administrative  expenses in absolute
dollars in fiscal 2000 is primarily related to reduced consulting, personnel and
outside service related expenditures. The decrease in general and administrative
expenses in absolute  dollars in fiscal 1999 compared  with 1998,  was primarily
related to reduced consulting, legal, outside service related expenditures,  and
personnel related costs.

The Company expects that general and administrative expenses will remain flat or
increase  slightly in fiscal 2001 in absolute dollars and may increase  slightly
as a percent of total sales.

                                       21

<PAGE>


Restructuring

During the third quarter of fiscal 1998, the Company restructured its operations
to  re-establish  the  strategic  direction  of the Company and better align its
operating expenses with anticipated revenues.  Although the Company has realized
the  benefit  of  a  reduced  cost   structure  and  other   benefits  from  the
restructuring of operations, these benefits have been offset somewhat by reduced
product sales and margins.

The Company  also  recorded  during the third  quarter of fiscal 1998 a $400,000
reserve  for  personnel  and  related  costs   associated  with  a  company-wide
restructuring  plan. These costs included  employee  severance costs,  benefits,
outplacement costs,  termination costs, and employee assistance expenses related
to the  realignment.  The  reduction  in  force  in  fiscal  1998  consisted  of
approximately 40 employees,  primarily from the sales and marketing departments.
The Company had utilized  all of the  restructuring  reserve  recorded in fiscal
1998 by October 2, 1999.

The  Company's  action  plan  included  the  release of  proprietary  ASIC-based
switches,  development of retail  channels,  changes in the Company's  financial
model,  and realignment of its cost  structure,  designed to better position the
Company  going  forward  and  which  the  Company  believes  will  leverage  its
strengths.

Income Taxes

The Company  recorded no provision for federal and state income taxes for fiscal
2000 due  principally  to a valuation  allowance  on deferred  tax assets  being
recorded and the Company's net operating loss carry forwards were  sufficient to
offset any significant tax liability.  The Company has recorded a full valuation
allowance on its deferred tax assets as sufficient  uncertainty exists regarding
its  recoverability.  The Company's effective tax rate was 0.0% for fiscal 2000,
1999, and (20.6%) for fiscal 1998.

Factors Affecting Future Operating Results

The  Company  operates in a rapidly  changing  and  growing  industry,  which is
characterized  by  vigorous  competition  from both  established  companies  and
start-up  companies.   The  market  for  the  Company's  products  is  extremely
competitive both as to price and capabilities.  The Company's success depends in
part on its  ability  to  enhance  existing  products  and  introduce  new  high
technology  products.  The  Company  must also bring its  products  to market at
competitive  price  levels.   Unexpected  changes  in  technological  standards,
customer demand and pricing of competitive  products could adversely  affect the
Company's  operating results if the Company is unable to respond effectively and
timely to such  changes.  The  industry is also  dependent  to a large extent on
proprietary  intellectual  property  rights.  From time to time the  Company  is
subject to legal  proceedings  and claims in the  ordinary  course of  business,
including  claims of  alleged  infringement  of  patents,  trademarks  and other
intellectual property rights. Consequently,  from time to time, the Company will
be required to prosecute or defend against alleged infringements of such rights.

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

                                       22

<PAGE>


attract and retain highly qualified personnel,  who are in great demand. None of
the Company's key employees are subject to a non-competition  agreement with the
Company. Unless vacancies are promptly filled, the loss of current key employees
or the Company's  inability to attract and retain other  qualified  employees in
the future  could  have a material  adverse  effect on the  Company's  business,
financial  condition  and  results  of  operations.  The job  market  in the San
Francisco Bay Area is  characterized  by fierce  competition,  rapidly  changing
salary structures,  and a shortage of the workforce in general. As of the end of
the Company's fiscal year,  unemployment in the Bay Area is  approximately  only
1.6%. These conditions could affect the Company's  ability to retain and recruit
a sufficiently qualified workforce.

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

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

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

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

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

                                       23

<PAGE>


OEM market could materially  adversely affect the Company's business,  financial
condition and results of operations.

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

Successfully  addressing the factors discussed above is subject to various risks
discussed in this report,  as well as other  factors that  generally  affect the
market for stocks of high technology  companies.  These factors could affect the
price of the Company's stock and could cause such stock prices to fluctuate over
relatively short periods of time.

Liquidity and Capital Resources

During fiscal 2000,  the Company's  operating  activities  provided cash of $0.1
million.  During  fiscal  1999 and  1998,  the  Company's  operating  activities
utilized $3.9 million and $4.0 million, respectively.

During fiscal 2000, net cash provided by operating activities resulted primarily
from the net income of $0.4  million and a reduction in accounts  receivable  of
$1.2  million.  Such  cash  provided  was  partially  offset by an  increase  in
inventory of $2.0 million,  and reductions in accounts  payable and  shareholder
payable  of $1.3  million  and  $0.6  million,  respectively.  Depreciation  and
amortization and provisions for losses of inventory  totaled $2.6 million.  Days
of sales outstanding in accounts  receivable,  net,  decreased to 30 days at the
end of fiscal 2000 compared to 45 days at the end of fiscal 1999.

Net cash  provided by or used in investing  activities in fiscal 2000 and fiscal
1999 was insignificant.  In fiscal 2000, 1999, and 1998 respectively,  purchases
of property and equipment totaled $0.1, $0.1, and $0.7 million, respectively. In
fiscal 2000, net cash provided by financing activities amounted to $1.6 million,
due primarily to private  placement equity amounting to $1.5 million.  In fiscal
1999,  cash  provided by, or used in  financing  activities  was  insignificant.
During fiscal 1998,  the Company  generated  cash from  financing  activities of
approximately  $0.4 million from the exercise of employee  stock options and the
Company's  employee  stock  purchase  plan. On September 23, 1998, the Company's
Board of Directors  approved a stock repurchase program whereby up to 500,000 of
the Company's  outstanding  common stock could be repurchased in the open market
from time to time. The Company did not repurchase  shares during fiscal 2000. As
a result of such repurchase  program the Company  repurchased  51,500 shares for
$89,000 in fiscal 1999 and 15,500 shares for $28,000 in fiscal 1998.

At September 30, 2000,  the Company had cash,  cash  equivalents  and short-term
investments  of $6.4  million as  compared  to $4.8  million at October 2, 1999.
Working capital was $3.2 million at September

                                       24

<PAGE>


30, 2000, compared to $0.8 million at October 2, 1999. The Company has a line of
credit that provides for maximum  borrowings of $5.0 million,  primarily limited
to a certain  percentage of eligible accounts  receivable and eligible inventory
and bears interest at the bank's prime rate plus  2.0%-2.75%  dependent upon the
Company's  performance  during the year. As of December 6, 2000, the Company had
renewed  this line of  credit,  which  will  expire on  December  6,  2001.  The
Company's  ability  to borrow  under this line is  subject  to  compliance  with
covenants related to financial performance and condition.

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

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

The Company believes that its current cash and cash  equivalents,  together with
cash expected to be generated by operations and existing credit facilities, will
be  sufficient  to fund its  operations  and meet capital  requirements  through
fiscal 2001. However, the Company has incurred  substantial  operating losses in
the past and may seek  additional  financing.  If additional  funds are required
there can be no  assurance  that such funds will be available at all or on terms
favorable to the Company and its stockholders.

Year 2000 Issue

The Company  established  a formal  program  with a project team to address this
issue and  achieve  readiness.  The Company  believed it had no material  issues
related to the year 2000 issue,  and did not  experience  any  material  adverse
effect due to the year 2000 issue.

Recent Accounting Pronouncements

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities".  The new standard  requires  companies to
record  derivatives on the balance sheet as assets or  liabilities,  measured at
fair  value.  Gains or losses  resulting  from  changes  in the  values of those
derivatives  will be reported in the  statements  of operations or as a deferred
item, depending on the use of the derivatives and whether they qualify for hedge
accounting.  The key criterion for hedge  accounting is that the derivative must
be highly effective in achieving  offsetting changes in fair value or cash flows
of the hedged  items  during the term of the hedge.  The Company will adopt SFAS
No. 133 in fiscal year 2001.  Although the Company can not determine the impact,
if any,  that  the  adoption  of SFAS  No.  133  will  have on its  consolidated
financial  statements,  the Company  believes  that the effect on its  financial
statements will be immaterial.

                                       25

<PAGE>


In December 1999, the staff of the  Securities  and Exchange  Commission  issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize  revenue and provides  guidance for
presentation  of revenue  and for  disclosure  related  to  revenue  recognition
policies  in  financial  statements  filed  with  the  Securities  and  Exchange
Commission.  The effective date of this  pronouncement  is the fourth quarter of
the fiscal year beginning  after December 31, 2000. We believe that adopting SAB
101 will not have a material  impact on our  financial  position  and results of
operations.

In March 2000, the Financial  Accounting  Standards  Board ("FASB")  issued FASB
Interpretation No. 44 ("FIN 44") Accounting for Certain  Transactions  involving
Stock Compensation an interpretation of APB Opinion No. 25. FIN 44 clarifies the
application  of Opinion 25 for (a) the  definition  of employee  for purposes of
applying  Opinion 25, (b) the criteria for determining  whether a plan qualifies
as  a   noncompensatory   plan,  (c)  the  accounting   consequence  of  various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for an  exchange  of stock  compensation  awards in a  business
combination.

FIN 44 was effective July 1, 2000, but certain other  provisions  cover specific
events that occur after  either  December 15,  1998,  or January 12,  2000.  The
adoption  of the  provisions  of FIN 44 did not have a  material  effect  on the
financial position, or results of the Company.


Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk. As of September 30, 2000,  the Company's cash and investment
portfolio  comprised  primarily  money  market  securities,  and did not include
fixed-income  securities.   Due  to  the  short-term  nature  of  the  Company's
investment portfolio, an immediate 10% increase in interest rates would not have
a material effect on the fair market value of the Company's portfolio. Since the
Company  has the ability to  liquidate  this  portfolio,  it does not expect its
operating  results or cash flows to be  materially  affected to any  significant
degree  by the  effect  of a  sudden  change  in  market  interest  rates on its
investment portfolio.

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

                                       26

<PAGE>


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         Index to Financial Statements and Financial Statement Schedule

Financial Statements:

  Report of Independent Accountants                                          28

  Balance Sheets at September 30, 2000, and October 2, 1999                  29

  Statements of Operations for the years ended September 30, 2000,
    October 2, 1999, and October 3, 1998                                     30

  Statements of Stockholders' Equity for the years ended
    September 30, 2000, October 2, 1999, and October 3, 1998                 31

  Statements of Cash Flows for the years ended September 30, 2000,
    October 2, 1999, and October 3, 1998                                     32

  Notes to Financial Statements                                              33

  Quarterly Results of Operations (unaudited)                                46

Financial Statement Schedule:

  Schedule II - Valuation and Qualifying Accounts and Reserves               53

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

                                       27

<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS



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

In our  opinion,  the  financial  statements  listed in the  accompanying  index
present  fairly,  in all material  respects,  the  financial  position of Asante
Technologies, Inc. at September 30, 2000 and October 2, 1999, and the results of
its  operations  and its cash  flows for each of the three  years in the  period
ended  September 30, 2000 in conformity  with  accounting  principles  generally
accepted in the United  States of America.  In  addition,  in our  opinion,  the
financial statement schedule listed in the accompanying index present fairly, in
all  material  respects,   the  information  set  forth  therein  when  read  in
conjunction with the related financial  statements.  These financial  statements
and  financial  statements  schedule  are the  responsibility  of the  Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements and financial  statements  schedule based on our audits. We conducted
our audits of these statements in accordance with auditing  standards  generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable  assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence  supporting the amounts and  disclosures  in the financial  statements,
assessing the  accounting  principles  used and  significant  estimates  made by
management,  and evaluating the overall  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
San Jose, California
October 30, 2000, except for note 10,
as to which the date is December 1, 2000

                                       28

<PAGE>


<TABLE>
                                                      ASANTE TECHNOLOGIES, INC.

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


<CAPTION>
                                                                                                    September 30,        October 2,
                                                                                                         2000                1999
                                                                                                       --------            --------
<S>                                                                                                    <C>                 <C>
Assets

Current assets:
     Cash and cash equivalents                                                                         $  6,433            $  4,808
     Accounts receivable, net of allowance for doubtful accounts,
         rebates and sales returns of $4,193 and $5,771 in 2000
         and 1999 respectively                                                                            3,233               4,414
     Inventory                                                                                            2,605               2,663
     Prepaid expenses and other current assets                                                              523                 529
                                                                                                       --------            --------
            Total current assets                                                                         12,794              12,414


Property and equipment, net                                                                                 261                 713
Other assets                                                                                                167                 218
                                                                                                       --------            --------
            Total assets                                                                               $ 13,222            $ 13,345
                                                                                                       ========            ========

Liabilities and stockholders' equity

Current liabilities:
     Accounts payable                                                                                  $  3,776            $  5,027
     Accrued expenses                                                                                     5,437               5,705
     Payable to stockholder                                                                                 330                 931
                                                                                                       --------            --------
            Total current liabilities                                                                     9,543              11,663
                                                                                                       --------            --------

Commitments and contingencies (Notes 8 and 9)


Stockholders' equity:
     Preferred stock, $0.001 par value; 2,000,000 shares authorized;
         no shares issued or outstanding in 2000 and 1999                                                                     --
     Common stock, $0.001 par value; 25,000,000 shares authorized;
         9,912,463 and 9,301,272  shares issued and outstanding in
         2000 and 1999 respectively                                                                          10                   9
     Additional paid-in capital                                                                          28,360              26,873
     Treasury Stock                                                                                        --                  (117)
     Accumulated deficit                                                                                (24,691)            (25,083)
                                                                                                       --------            --------
            Total stockholders' equity                                                                    3,679               1,682
                                                                                                       --------            --------
            Total liabilities and stockholders' equity                                                 $ 13,222            $ 13,345
                                                                                                       ========            ========

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

                                                                 29

<PAGE>


<TABLE>
                                                      ASANTE TECHNOLOGIES, INC.

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


<CAPTION>
                                                                                                   Year ended
                                                                                ---------------------------------------------------
                                                                              September 30,         October 2,            October 3,
                                                                                  2000                 1999                  1998
                                                                                --------             --------              --------
<S>                                                                             <C>                  <C>                   <C>
Net sales                                                                       $ 29,280             $ 37,488              $ 51,433
Cost of sales                                                                     18,555               32,557                35,959
                                                                                --------             --------              --------
Gross profit                                                                      10,725                4,931                15,474
                                                                                --------             --------              --------

Operating expenses:
     Sales and marketing                                                           5,930               12,609                16,587
     Research and development                                                      3,042                3,883                 7,346
     General and administrative                                                    1,553                2,302                 3,591
     Restructuring                                                                  --                   --                     400
                                                                                --------             --------              --------
          Total operating expenses                                                10,525               18,794                27,924
                                                                                --------             --------              --------

Income (loss) from operations                                                        200              (13,863)              (12,450)
Interest and other income (expense), net                                             192                 (298)                  477
                                                                                --------             --------              --------
Income (loss) before income taxes                                                    392              (14,161)              (11,973)
Provision (benefit) for income taxes                                                --                   --                   2,462
                                                                                --------             --------              --------
Net income (loss)                                                               $    392             $(14,161)             $(14,435)
                                                                                ========             ========              ========

Basic income (loss) per share                                                   $   0.04             $  (1.53)             $  (1.57)
                                                                                ========             ========              ========
Diluted income (loss) per share                                                 $   0.04             $  (1.53)             $  (1.57)
                                                                                ========             ========              ========

Shares used in per
     share calculation
     Basic                                                                         9,620                9,282                 9,206
                                                                                ========             ========              ========
     Diluted                                                                      10,014                9,282                 9,206
                                                                                ========             ========              ========

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

                                                                 30

<PAGE>


<TABLE>
                                                      ASANTE TECHNOLOGIES, INC.

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


<CAPTION>
                                                                                                          Retained
                                                         Common Stock          Additional                  Earnings /     Total
                                                   ------------------------     Paid-in      Treasury    (Accumulated  Stockholders'
                                                     Shares        Amount       Capital        Stock        Deficit)      Equity
                                                   ----------    ----------    ----------    ----------    ----------    ----------
<S>                                                 <C>          <C>           <C>           <C>           <C>           <C>
Balances as of September 27, 1997                   9,121,601    $        9    $   26,352    $     --      $    3,513    $  29,874
Common stock issued under stock plans                 164,292          --             430                                      430
Tax benefit from employee stock
     transactions                                                                       9                                        9
Repurchase of common stock                            (15,500)         --                           (28)                       (28)
Net loss                                                                                                      (14,435)     (14,435)
                                                   ----------    ----------    ----------    ----------    ----------    ----------
Balances as of October 3, 1998                      9,270,393             9        26,791           (28)      (10,922)      15,850

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

Repurchase of common stock                            (51,500)         --                           (89)                       (89)
Net loss                                                                                                      (14,161)     (14,161)
                                                   ----------    ----------    ----------    ----------    ----------    ----------
Balances as of October 2, 1999                      9,301,272             9        26,873          (117)      (25,083)       1,682

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

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

Net income                                                                                                        392          392
                                                   ----------    ----------    ----------    ----------    ----------    ----------
Balances as of September 30, 2000                   9,912,463    $       10    $   28,360    $     --      $  (24,691)   $   3,679
                                                   ==========    ==========    ==========    ==========    ==========    ==========

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

                                                                 31

<PAGE>


<TABLE>
                                                      ASANTE TECHNOLOGIES, INC.

                                                      STATEMENTS OF CASH FLOWS
                                                           (In thousands)


<CAPTION>
                                                                                                        Year ended
                                                                                           ----------------------------------------
                                                                                        September 30,     October 2,      October 3,
                                                                                             2000            1999            1998
                                                                                           --------        --------        --------
<S>                                                                                        <C>             <C>             <C>
Cash flows from operating activities:
      Net income (loss)                                                                    $    392        $(14,161)       $(14,435)
      Adjustments to reconcile net income (loss) to
        net cash provided by (used in) operating activities:
          Depreciation and amortization                                                         563             986           1,417
          Provision for doubtful accounts receivable                                             19             341             528
          Loss due to write-off of idle assets                                                    4             425            --
          Deferred income taxes                                                                                --             3,606
      Changes in operating assets and liabilities:
          Accounts receivable                                                                 1,162           3,573            (543)
          Inventory                                                                              58           5,010           4,407
          Prepaid expenses and other current assets                                               6           2,755          (2,811)
          Accounts payable                                                                   (1,251)         (2,687)          2,756
          Accrued expenses and other                                                           (268)            906             (59)
          Payable to stockholder                                                               (601)         (1,065)          1,119
                                                                                           --------        --------        --------
                   Net cash provided by (used in) operating activities                           84          (3,917)         (4,015)
                                                                                           --------        --------        --------

Cash flows from investing activities:
      Purchases of property and equipment                                                      (115)           (120)           (653)
      Other                                                                                      51            --               178
                                                                                           --------        --------        --------
                   Net cash used in investing activities                                        (64)           (120)           (475)
                                                                                           --------        --------        --------

Cash flows from financing activities:
      Issuance of common stock                                                                1,605              82             439
      Repurchase of common stock                                                               --               (89)            (28)
                                                                                           --------        --------        --------
                   Net cash provided (used in) by financing activities                        1,605              (7)            411
                                                                                           --------        --------        --------

Net increase (decrease) in cash and cash equivalents                                          1,625          (4,044)         (4,079)
Cash and cash equivalents at beginning of year                                                4,808           8,852          12,931
                                                                                           --------        --------        --------
Cash and cash equivalents at end of year                                                   $  6,433        $  4,808        $  8,852
                                                                                           ========        ========        ========

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

                                                                 32

<PAGE>


                            ASANTE TECHNOLOGIES, INC.

                          NOTES TO FINANCIAL STATEMENTS


Note 1. The Company and Summary of Significant Accounting Policies

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

In fiscal  years 1999 and 1998,  the  Company  incurred  substantial  losses and
negative cash flows from  operations  and as of September 30, 2000,  the Company
had an accumulated deficit of $24,691,000. For the year ended September 30, 2000
the Company  recorded  income from  operations of $200,000 and cash inflows from
operating activities of $84,000.

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

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

The Company  historically  has been heavily  associated with Apple and therefore
had focused its business on selling products into the Apple after-market.  While
the Company currently designs its products to work on all computer platforms and
does not rely on new Apple product  introductions,  a large portion of its sales
in the near term are  expected  to be related to Apple  products.  Any  material
decrease in sales of Macintoshes, iMACs, and Power PCs, further incorporation by
Apple of networking connectivity into their products, or additional developments
adversely  affecting  Apple's  business could have a material  adverse effect on
sales of the  Company's  client  access  products,  which would  materially  and
adversely  affect the  Company's  business,  financial  condition and results of
operations.

Management estimates and assumptions

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the

                                       32

<PAGE>


reported  amounts of revenue and expenses  during the reporting  period.  Actual
results could differ from those estimates.

Revenue recognition

Revenue  from  product  sales to  customers is  recognized  upon  shipment,  and
reserves are provided for estimated returns. Sales to distributors are generally
subject to agreements  allowing  certain  rights of return and price  protection
with  respect  to  unsold  merchandise  held by the  distributor.  Reserves  for
distributor  returns are established based on historical  returns  experience at
the time the related  revenue is  recorded.  Reserves for price  protection  are
established based on actual price reduction programs.  Additionally, the Company
provides a reserve for incentive rebates to distributors,  warranty  obligations
and cooperative advertising at the time the related revenue is recorded.

Cash, cash equivalents and short-term investments

Cash  equivalents  consist  primarily  of  highly  liquid  investments  in  U.S.
government and corporate debt securities with  insignificant  interest rate risk
and  original  maturity  periods  of  three  months  or  less  at  the  date  of
acquisition.  The Company  considers all  investments  with initial  maturity or
purchase  periods  of  greater  than 90 days to be  short-term  investments.  At
September 30, 2000 and October 2, 1999,  the Company did not hold any short-term
investments.

Concentration of credit risk

Financial  instruments that potentially subject the Company to concentrations of
credit risk consist  principally of cash  equivalents  and accounts  receivable.
Accounts  receivable  are  typically  unsecured  and are derived from  worldwide
distributor  and  customer   revenues.   The  Company  performs  ongoing  credit
evaluations of its customers and maintains reserves for potential credit losses;
historically,  such  losses  have  been  within  management's  expectations.  At
September 30, 2000 and October 2, 1999,  four  customers  accounted for 62%, and
63%, respectively,  of the accounts receivable balance. In fiscal 2000 and 1999,
one customer accounted for 48% and 42%, respectively, of the Company's sales. In
fiscal year 1998, sales to the Company's  largest customer  accounted for 33% of
the Company's sales.

Inventory

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

Property and equipment

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

Loss due to write-off of idle assets

In fiscal 1999 the Company  identified  certain  assets  used for  research  and
development  activities  that were no longer  being used and the  Company had no
plans to use the assets in the foreseeable future. Accordingly,  the assets were
removed from service and are currently held for resale. The Company recognized a
loss due to  write-off  of these idle assets of  $425,000,  which was charged to
research  and  development  expense,   being  the  previous   classification  of
depreciation expense arising from these assets. The loss reflects the difference
between the carrying  value and the expected net proceeds from sale. The

                                       34

<PAGE>


Company  estimated  the net  proceeds  based on the market value of similar used
equipment, less the cost of disposal. In the event that a buyer can not be found
the  equipment  will be  scrapped.  The Company does not expect the net proceeds
from sale or the scrap value of the assets to be significant.

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

Stock-based compensation

The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees"  and related  interpretations  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).

Accounting for certain transactions involving stock compensation

In March 2000, the Financial  Accounting  Standards  Board ("FASB")  issued FASB
Interpretation No. 44 ("FIN 44") Accounting for Certain  Transactions  involving
Stock Compensation an interpretation of APB Opinion No. 25. FIN 44 clarifies the
application  of Opinion 25 for (a) the  definition  of employee  for purposes of
applying  Opinion 25, (b) the criteria for determining  whether a plan qualifies
as  a   noncompensatory   plan,  (c)  the  accounting   consequence  of  various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for an  exchange  of stock  compensation  awards in a  business
combination.

FIN 44 was effective July 1, 2000, but certain other  provisions  cover specific
events that occur after  either  December 15,  1998,  or January 12,  2000.  The
adoption  of the  provisions  of FIN 44 did not have a  material  effect  on the
financial position, or results of the Company.

                                       35

<PAGE>


Fair value of financial instruments

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

Comprehensive income

Effective  October 2, 1999, the Company  adopted the provisions of SFAS No. 130,
"Reporting  Comprehensive  Income".  SFAS  No.  130  establishes  standards  for
reporting  comprehensive income and its components in its financial  statements.
The Company had no items of other comprehensive income during any of the periods
presented.

Reclassifications

Certain  previously  reported  amounts in the fiscal 1999 and 1998 statements of
operations have been reclassified to conform to the 2000 presentation.

Segment information

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

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

                                              2000           1999           1998
                                              ----           ----           ----
United States                                  77%            76%            78%
Europe                                         15             18             14
Other                                           8              6              8
                                              ---            ---            ---
                                              100%           100%           100%
                                              ===            ===            ===


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

Recently issued accounting pronouncements

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities".  The new standard  requires  companies to
record  derivatives on the balance sheet as assets or  liabilities,  measured at
fair  value.  Gains or losses  resulting  from  changes  in the  values of those
derivatives  will be reported in the  statements  of operations or as a deferred
item, depending on the use of the derivatives and whether they qualify for hedge
accounting.  The key criterion for hedge  accounting is that the derivative must
be highly effective in achieving  offsetting changes in fair value or cash flows
of the hedged  items  during the term of the hedge.  The Company will adopt SFAS
No. 133 in fiscal year 2001.  Although the Company can not determine the impact,
if any, that the adoption of SFAS No. 133 will have on its financial statements,
the  Company  believes  that the  effect  on its  financial  statements  will be
immaterial.

In December 1999, the staff of the  Securities  and Exchange  Commission  issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize  revenue and provides  guidance for
presentation  of revenue  and for  disclosure  related  to  revenue  recognition
policies  in  financial  statements  filed  with  the  Securities  and  Exchange
Commission.  The

                                       36

<PAGE>


effective  date of this  pronouncement  is the fourth quarter of the fiscal year
beginning  after Q1  2001.  We  believe  that  adopting  SAB 101 will not have a
material impact on our financial position and results of operations.


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

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

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


<CAPTION>
                                                                                  2000              1999               1998
                                                                                --------          --------           --------
<S>                                                                             <C>               <C>                <C>
Net income (loss)                                                               $    392          $(14,161)          $(14,435)
                                                                                ========          ========           ========

Weighted average common stock outstanding (basic)                                  9,620             9,282              9,206
Effect of dilutive warrants and options                                              394              --                 --
                                                                                --------          --------           --------
Weighted average common stock outstanding (diluted)                               10,014             9,282              9,206
                                                                                ========          ========           ========

Net income (loss) per share:
     Basic                                                                      $   0.04          $  (1.53)          $  (1.57)
                                                                                ========          ========           ========
     Diluted                                                                    $   0.04          $  (1.53)          $  (1.57)
                                                                                ========          ========           ========
</TABLE>


Diluted  net loss per share for the years  ended  October 2, 1999 and October 3,
1998,  excludes  all  dilutive  potential  common  shares  as  their  effect  is
antidilutive.  At October 2, 1999,  and October 3, 1998,  options  and  warrants
outstanding of 1,762,512, and 1,584,539, respectively, were excluded since their
effect was antidilutive.

                                       37

<PAGE>


Note 3. Balance Sheet Components

                                                          2000           1999
                                                         -------        -------
                                                             (in thousands)

Inventory:
     Raw materials and component parts                   $   449        $   177
     Work-in-process                                         154            173
     Finished goods                                        2,002          2,313
                                                         -------        -------
                                                         $ 2,605        $ 2,663
                                                         =======        =======
Property and equipment:
     Computers and R&D equipment                         $ 6,183        $ 6,246
     Furniture and Fixtures                                1,492          1,480
                                                         -------        -------
                                                           7,675          7,726
     Accumulated depreciation                             (7,414)        (7,013)
                                                         -------        -------
                                                         $   261        $   713
                                                         =======        =======
Accrued expenses:
     Payroll-related expenses                            $ 1,079        $ 1,227
     Sales promotion expenses                              2,205          2,059
     Legal and professional fees                             811            997
     Warranty                                                570            572
     Other                                                   772            850
                                                         -------        -------
                                                         $ 5,437        $ 5,705
                                                         =======        =======


Note 4. Restructuring and Other Costs

During the third quarter of fiscal 1998, the Company restructured its operations
to  re-establish  the  strategic  direction  of the Company and better align its
operating expenses with anticipated revenues.  The Company's  restructuring plan
included  the  realignment  of cost  structure  designed to better  position the
Company going forward.

The Company  also  recorded  during the third  quarter of fiscal 1998 a $400,000
reserve  for  personnel  and  related  costs   associated  with  a  company-wide
restructuring  plan.  These costs include employee  severance  costs,  benefits,
outplacement costs,  termination costs, and employee assistance expenses related
to  the  realignment.  The  reduction  in  force  consisted  of a  reduction  of
approximately 40 employees,  primarily from the sales and marketing departments.
The Company had utilized all of the  restructuring  reserves  recorded in fiscal
1998 by October 2, 1999.

In  addition,  the  Company  recorded in fiscal  1998  charges of  $550,000  for
inventory write-downs related to the discontinuation of several of the Company's
adapter card and transceiver  products and $575,000 for  write-downs  related to
property and equipment and idle facilities costs. These charges were recorded in
cost of sales and general and administrative expenses, respectively.

                                       38

<PAGE>


Note 5. Related Party Transactions

The  Company  has  a  supply   agreement  (the  "OSE   Agreement")  with  Orient
Semiconductor  Electronics,   Ltd.,  ("OSE").  OSE  and  one  of  its  principal
shareholders  own, in aggregate,  approximately  12.7% of the  Company's  Common
Stock as of September 30, 2000. Under the OSE Agreement,  the Company  purchases
from and sells to OSE certain component parts, at cost. The Company is obligated
to  purchase  goods only to the extent it has signed firm  purchase  commitments
with OSE. At September 30, 2000, the Company had firm purchase commitments under
the OSE Agreement of approximately $0.5 million.

For fiscal 2000,  1999, and 1998 the Company sold, at cost,  approximately  $0.2
million, $0.8 million, and $2.5 million, respectively, of component parts to OSE
and purchased $3.7 million,  $8.4 million,  and $8.2 million,  respectively,  of
goods  from  OSE.  Amounts   classified  as  "payable  to  stockholder"  in  the
accompanying  balance  sheets are solely  related to the  purchases of inventory
from OSE.

On March 16, 2000,  the Company  signed a Stock  Purchase  Agreement  with Delta
Networks.  Inc and Delta International  Holdings Ltd. The Company issued 500,000
shares at $3.00 as a private  placement of funds from Delta Networks,  amounting
to $500,000, and from Delta International Holdings Ltd, amounting to $1,000,000.
During fiscal year 2000,  the Company  purchased  approximately  $7.9 million of
goods  from  Delta and sold  approximately  $0.4  million  at cost to Delta.  At
September  30, 2000 the Company has  approximately  $2.3 million on its accounts
payable to Delta and approximately $0.2 million on its receivable from Delta.


Note 6. Income Taxes

The provision for income taxes comprises the following (in thousands):


                                             2000           1999          1998
                                          ---------       -------       -------
Current:
     Federal                              $    --         $  --         $(1,008)
     State                                     --            --            (136)
                                          ---------       -------       -------
         Total current                         --            --          (1,144)
                                          ---------       -------       -------
Deferred:
     Federal                                   --            --           2,689
     State                                     --            --             917
                                          ---------       -------       -------
         Total Deferred                        --            --           3,606
                                          ---------       -------       -------
                                          $    --         $  --         $ 2,462
                                          =========       =======       =======

                                       39

<PAGE>


Deferred  tax assets,  net,  comprise the  following  at September  30, 2000 and
October 2, 1999 (in thousands):

                                                           2000          1999
                                                         --------      --------
Deferred tax assets :
     Net operating losses                                $  5,346      $  5,554
     Research and development credits                       2,230         2,131
     Receivable- and sales-related reserves                 2,085         2,277
     Inventory-related reserves                             2,232         2,180
     Compensation accruals                                    228           206
     Depreciation                                             204           109
     Other reserves and accruals                            1,500         1,478
                                                         --------      --------
         Total deferred tax assets                         13,825        13,935
         Valuation allowance                              (13,825)      (13,935)
                                                         --------      --------
                                                         $   --        $   --
                                                         ========      ========


The  Company   believes  that  sufficient   uncertainty   exists  regarding  the
realizability  of the deferred tax assets such that a full  valuation  allowance
was taken as of September 30, 2000.

At September  30,  2000,  the Company had federal and state net  operating  loss
carryforwards of  approximately  $14.4 million and  approximately  $9.1 million,
respectively,  available to offset future taxable income which expire  beginning
in 2018 and 2003,  respectively.  In  addition,  as of September  30, 2000,  the
Company had approximately $1.4 million and approximately $0.8 million of federal
and state research and development  credits,  respectively.  The federal credits
will expire beginning in 2012 if not utilized.

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

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

                                                   2000        1999       1998
                                                  -------    -------    -------
Tax expense/(benefit) at U.S. statutory rate      $    14    $(4,815)   $(4,071)
State taxes, net of federal benefits                 --         (776)      (537)
Research and development credits                     --          (25)    (1,551)
Other                                                  96        366        (64)
Valuation allowance                                  (110)     5,250      8,685
                                                  -------    -------    -------
                                                  $  --      $  --      $ 2,462
                                                  =======    =======    =======

                                       40

<PAGE>


Note 7. Stockholders' Equity

Preferred Stock

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

Stock Repurchase Program

In September 1998, the Company's Board of Directors  approved a stock repurchase
program  whereby  up to  500,000  shares of the  Company's  common  stock may be
purchased in the open market from time to time.  Pursuant to this  program,  the
Company had  repurchased  67,000  shares of its common  stock for $117,200 as of
October 2, 1999 and 15,500  shares of its common stock for $28,400 as of October
3, 1998.

As of September 30, 2000, the Company has reissued 66,850 of the Treasury shares
to satisfy its Employee Stock Purchase Plan (ESPP) activities.

Stock Based Compensation Plans

As of September 30, 2000, the Company had five  stock-based  compensation  plans
that are described below.

The 1990  Stock  Option  Plan  allows  for the  issuance  of  options to Company
employees and  consultants  to purchase a maximum of 4,597,333  shares of common
stock.  This plan expired as of May 24, 2000, and has been temporarily  replaced
by the 2000 Nonstatutory  Stock Option Plan which allows for issuance of options
to the Company employees and consultants to purchase a maximum of 120,000 shares
of common stock.

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

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

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

                                       41

<PAGE>


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

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


<CAPTION>
                                             2000                             1999                              1998
                                 ---------------------------       ---------------------------       ---------------------------
                                                    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                1,762,512          $   4.93       1,584,539          $   4.93       1,919,607          $   5.72
Granted                            257,866          $   1.45       1,663,005          $   1.45         743,010          $   3.03
Exercised                          (29,643)          --                 --             --              (27,978)         $   4.61
Canceled                          (413,764)         $   4.48      (1,485,032)         $   4.48      (1,050,100)         $   5.08
                                ----------                        ----------                        ----------
Ending Balance                   1,576,971          $   2.03       1,762,512          $   2.03       1,584,539          $   4.93
                                ==========                        ==========                        ==========
</TABLE>

<TABLE>
The following table summarizes  information  about stock options  outstanding at
September 30, 2000:


<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>
$0.8750 - $0.8750                     273,166              8.79        $     0.8750        182,743           $     0.8750
$0.9375 - $0.9375                      80,125              8.82        $     0.9375         25,893           $     0.9375
$1.0320 - $1.0320                     600,000              8.84        $     1.0320        249,999           $     1.0320
$1.6250 - $1.9375                     199,772              9.04        $     1.8933         44,167           $     1.8787
$1.9380 - $2.3750                      50,950              8.04        $     2.3029         19,913           $     2.3499
$2.5000 - $2.5000                     160,482              6.88        $     2.5000        104,115           $     2.5000
$3.8750 - $6.3125                     164,096              5.13        $     4.9791        155,440           $     4.9625
$6.5000 - $6.5000                       2,000              5.78        $     6.5000          2,000           $     6.5000
$6.8750 - $6.8750                       6,200              6.07        $     6.8750          6,090           $     6.8750
$7.5000 - $7.5000                      40,000              2.94        $     7.5000         40,000           $     7.5000
                                    ---------                                              -------
$0.8750 - $7.5000                   1,576,791              8.09        $     1.9043        830,360           $     2.3586
                                    =========                                              =======
</TABLE>


Under SFAS No. 123, the fair value of each option grant is estimated on the date
of grant using the Black-Scholes  model with the following  assumptions used for
grants during fiscal 2000, 1999, and 1998, risk free interest rates ranging from
4.6% to 6.79% respective of grant date; expected average volatility of 65%, 57%,
and 67%,  respectively;  an expected option life of four years,  and no expected
dividends.  The

                                       42

<PAGE>


weighted  average fair value of stock options granted under the plans for fiscal
2000, 1999, and 1998 was $1.51, $0.73, and $1.68, 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 100,000  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  2000,  1999,  and 1998 were  81,548,
82,380, and 136,314 shares of common stock, respectively, at an average price of
$0.99, $1.00, and $2.27, respectively. As of September 30, 2000, the Company has
reissued  66,850 of the Treasury  shares to satisfy its Employee  Stock Purchase
Plan (ESPP)  activities during fiscal 2000. On September 30, 2000, 51,660 shares
of common stock were available for future purchase.

The fair value of the employee's  purchase  rights under SFAS No. 123, which was
estimated using the Black-Scholes model with the following  assumptions used for
grants during fiscal 2000, 1999, and 1998: risk free interest rates ranging from
4.55% to 6.73%, respective of commencement date of the offering period, expected
volatility of 65%, 57%, and 60%,  respectively,  an expected  option life of six
months for both years,  and no expected  dividends.  The  weighted  average fair
value of stock purchased under the Purchase Plan for fiscal 2000, 1999, and 1998
was $0.99, $1.00, and $2.27, respectively.

If compensation  expense under these plans had been determined  pursuant to SFAS
No. 123, the  Company's  net income  (loss) and net income  (loss) per share for
fiscal 2000, 1999, and 1998 would have been as follows (in thousands, except per
share amounts):

                                        2000            1999            1998
                                    ------------    -----------      ----------
Net income (loss):
     As reported                    $        392    $   (14,161)     $  (14,435)
     Pro forma                      $         43    $   (14,614)     $  (15,433)

Net income (loss) per share
     As reported
         Basic                      $       0.04    $     (1.53)     $    (1.57)
         Diluted                    $       0.04    $     (1.53)     $    (1.57)
     Pro forma
         Basic                      $       0.00    $     (1.57)     $    (1.68)
         Diluted                    $       0.00    $     (1.57)     $    (1.68)


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.

                                       43

<PAGE>


Note 8. Commitments and Contingencies

The Company has an operating  lease for its main facility that expires on August
31, 2004.  Various other leases for sales  offices  expire  through  2004.  Rent
expense under such operating leases aggregated approximately $705,000,  $970,800
and 1,012,000 for fiscal 2000,  1999,  and 1998,  respectively.  Certain  leases
require the Company to pay a portion of facility operating expenses.

Approximate  future  minimum lease  payments under these leases at September 30,
2000 are as follows (in thousands):

             Year
             ----
             2001                                     $     686
             2002                                           705
             2003                                           729
             2004                                           748
                                                      ---------
                                                      $   2,868
                                                      =========

The Company  recorded  income of  approximately  $150,800,  and $226,200  during
fiscal 1999,  and 1998,  respectively,  under sublease  agreements,  the last of
which  expired in June 1999.  As of September  30, 2000,  none of the  Company's
existing facilities are being subleased.


Note 9. Litigation

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

On September  13, 1996, a complaint was filed by Datapoint  Corporation  against
the   Company   and  six  other   companies   individually   and  as   purported
representatives of a defendant class of all manufacturers,  vendors and users of
Fast Ethernet-compliant,  dual protocol local-area network products, for alleged
infringement of United States letters Patent Nos.  5,077,732 and 5,008,879.  The
complaint  sought  unspecified  damages  in  excess  of  $75,000  and  permanent
injunctive  relief.  The  Company  filed a  response  to the  complaint  denying
liability. The case was consolidated, for purposes of claim interpretation only,
with similar cases filed against several other defendants,  which include, among
others, Intel Corporation, IBM Corporation, Cisco Systems, Bay Networks, and Sun
Microsystems.  On April 16,  1998,  the Special  Master  appointed  by the court
issued  a report  agreeing  in most  material  respects,  with  the  defendants'
interpretation  of the alleged patent claims.  Subsequently,  and by order dated
November 23, 1998, the District Court adopted without  modification the findings
of the Special Master and the  recommendations of the Magistrate Judge regarding
claim interpretation of the patents-in-suit.  The Court ordered dismissal of the
case and entered  judgment in favor of the  defendants.  Plaintiff  has filed an
appeal of the  judgment to the  Federal  Circuit  Court of Appeal,  which is now
pending. A ruling on the appeal is not expected for several months.

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

                                       44

<PAGE>

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


Note 10. Subsequent Event

In October,  the line of credit which expired on October 26, 2000,  was extended
pending  negotiation  of a new line. As of December 1, 2000,  the line of credit
was renewed.

                                       45

<PAGE>



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

Fiscal 2000                                      Quarter Ended
--------------------------------------------------------------------------------

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



Fiscal 1999                                    Quarter Ended
--------------------------------------------------------------------------------

                               October 2      July 3       April 3     January 2
                               ---------      ------       -------     ---------
Net sales                       $  9,102     $  7,914     $  8,867     $ 11,605
Gross profit                    $  3,108     $   (629)    $  1,000     $  1,452
Net loss                        $   (432)    $ (4,641)    $ (4,670)    $ (4,418)
Net loss per share              $   (.05)    $   (.50)    $   (.50)    $   (.48)


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

Not applicable.

                                       46

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Pursuant to General  Instruction G(3) to Form 10-K, the information  required by
this Item concerning the Company's directors is incorporated by reference to the
information  contained  in the  section  captioned  "Proposal  One - Election of
Directors"  in the  Company's  definitive  Proxy  Statement  for the 2000 Annual
Meeting of Stockholders (the "Proxy  Statement") to be filed with the Commission
within 120 days after the end of the Company's  fiscal year ended  September 30,
2000.

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

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


ITEM 11. EXECUTIVE COMPENSATION

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


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                       47

<PAGE>


                                     PART IV

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

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

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

              (3)  Exhibits - See Exhibit Index at page 49 of this Form 10-K.

         (b)  The  Registrant  did not file or  amend  any  reports  on Form 8-K
              during the last  quarter of the fiscal  year ended  September  30,
              2000.

         (c)  See Exhibit Index at page 49 of this Form 10-K.

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

                                       48

<PAGE>


EXHIBIT INDEX

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

        3.1       Certificate of Incorporation of Registrant. (1)

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

        3.1B      Certificate of Retirement of Stock of Registrant.

        3.2       By Laws of Registrant. (1)

        4.1       Form of Common Stock certificate.(1)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

       23.1       Consent of Independent Accountants.

       27.1       Financial Data Schedule.

                  *    The item listed is a compensatory plan.

                                       49

<PAGE>


                  (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.

                                       50

<PAGE>


                                   SIGNATURES

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


                  December 22, 2000

                                                   ASANTE TECHNOLOGIES, INC.


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


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

                                       51

<PAGE>


                                POWER OF ATTORNEY

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

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


<CAPTION>
                  Signature                                        Title                                         Dates
--------------------------------------------   ----------------------------------------------------  -------------------------
<S>                                            <C>                                                        <C>
/s/WILSON WONG                                 President, and Chief Executive Officer                     December 22, 2000
--------------------------------------         (Principal Executive Officer) and Director
     (Wilson Wong)


/s/ ANTHONY CONTOS                             Vice President of Finance and Administration               December 22, 2000
--------------------------------------          (Principal Finance and Accounting Officer)
     (Anthony Contos)


/s/ MICHAEL KAUFMAN                            (Director)                                                 December 22, 2000
--------------------------------------
     (Michael Kaufman)


/s/ EDMOND TSENG                               (Director)                                                 December 22, 2000
--------------------------------------
     (Edmond Tseng)


/s/ JEFF YUAN KAI LIN                          (Director)                                                 December 22, 2000
--------------------------------------
     (Jeff Yuan Kai Lin)
</TABLE>

                                                                 52

<PAGE>


<TABLE>
                                                             SCHEDULE II

                                                      ASANTE TECHNOLOGIES, INC.

                                                  VALUATION AND QUALIFYING ACCOUNTS
                                                           (In thousands)


<CAPTION>
                                                                                         Additions
                                                                         Balance at      Charge to                        Balance at
                                                                         Beginning       Costs and                           End of
Description                                                              of Period        Expenses        Deductions         Period
-----------                                                              ---------        --------        ----------         ------
<S>                                                                        <C>             <C>              <C>              <C>
Year ended October 3, 1998:
     Allowance for doubtful accounts,
       price protection and distributor rebates                            $ 3,317         $ 3,408          $(3,740)         $ 2,985

     Allowance for sales returns                                             1,405             (17)            (229)           1,159
                                                                           -------         -------          -------          -------
                                                                           $ 4,722         $ 3,391          $(3,969)         $ 4,144
                                                                           =======         =======          =======          =======


Year ended October 2, 1999:
     Allowance for doubtful accounts,
       price protection and distributor rebates                            $ 2,985         $ 3,128          $(1,506)         $ 4,607

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


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

     Allowance for sales returns                                             1,164             267             (323)           1,108
                                                                           -------         -------          -------          -------
                                                                           $ 5,771         $ 1,072          $(2,650)         $ 4,193
                                                                           =======         =======          =======          =======
</TABLE>

                                                                 53